On June 8, 2021, the White House published a set of reports on the 100-day interagency reviews (“Reports”) conducted pursuant to Executive Order 14017 (“Supply Chain EO”), which assessed supply chain risks and vulnerabilities for several supply chains, including those relating to semiconductor manufacturing and advanced packaging, and made policy recommendations to address those risks.

The Reports suggest that export controls on semiconductor-related equipment and technology can help protect the technological advantage of the United States in semiconductors by limiting the export of items that would contribute to the development of advanced semiconductor capabilities in countries of concern.  In particular, the Reports recommend that the US government:

  • Target and implement export controls that can support policy actions to identify and address vulnerabilities in the semiconductor manufacturing and advanced packaging supply chain;
  • Target and implement export controls on critical semiconductor equipment and technologies to address supply chain vulnerabilities; and
  • Collaborate and coordinate with key supplier allies and partners on effective multilateral controls.

The recommendations are broadly scoped, and the Reports do not recommend or preview more specific export controls that the US government might implement itself, or develop with its allies or partners.  However, the Reports are suggestive of several categories of items that might be targeted with enhanced export controls (e.g., additional export licensing requirements based on particular export control classification numbers).  In particular, the Reports identify significant competitive advantages enjoyed by US-based providers of electronic design automation tools and semiconductor intellectual property cores at the semiconductor design stage.  At the manufacturing stage, the Reports identify US strengths in the production of front-end semiconductor manufacturing equipment (e.g., etching, doping, deposition, and polishing or chemical mechanical planarization) and back-end testing equipment.  Companies that export such items will want to closely monitor any potential export control-related developments.

Key Takeaways

  1. The Reports recommend that the US government target and implement export controls on semiconductor-related equipment and technologies.
  2. Companies that export semiconductor-related equipment and technologies from the United States should monitor any potential export control-related development that follow from the Reports.
  3. Non-US companies that transfer semiconductor-related equipment and technologies to China may need to consider the potential impact of heightened multilateral controls on their business.

The post United States: Biden Administration Supply Chain Reports Deeper Dive #3: White House 100-Day Review of Semiconductor and Advanced Packaging Supply Chain Recommends Strengthening Export Control appeared first on Global Compliance News.

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Welcome to our Virtual Global Trade Conference, a virtual offering for all our clients and friends worldwide. Baker McKenzie’s international trade compliance lawyers from around the world discussed the major developments impacting international trade, in nine one-hour sessions which took place from 13 to 15 July 2021.

Session 1: Overview & Trade Policy Landscape

Speakers: John Rood (Former U.S. Under Secretary of Defense for Policy), John McKenzie, Rod Hunter, Sunny Mann, Pablo Bentes

Topics discussed:

  • Globalization in an era of geopolitics
  • Biden Administration trade policy 6 months in
  • CFIUS and international foreign investment regulation developments
  • The evolving foreign investment regime landscape
  • World Trade Organization: Prospects and Key Priorities
  • America’s Supply Chain Focus: Supply Chain Executive Order, ICTS Executive Order, NDAA s. 889 and Buy American initiatives

https://video.bakermckenzie.com/embed?id=a9008024-d67a-423e-994d-ac5e3f156614

Session 2: Export Control Developments

Speakers: Janet Kim, Paul Amberg, Alex Lamy, Alison Stafford Powell, Ben Smith

Topics discussed:

  • Emerging and foundational technologies: implementation of the mandate of the ECRA
  • New military and military intelligence end-user/military end-use export control requirements
  • Huawei-specific “foreign direct product” rule and related licensing for 5G
  • BIS Entity List proliferation and implications
  • Hong Kong: Update on the implications of the changed status of Hong Kong
  • European and UK export control developments
    • Implications of BREXIT and divergence of regulatory approaches and requirements
    • New UK guidance on technology exports, cloud computing and remote access
  • Encryption amendments and Wassenaar Amendments implementation

https://video.bakermckenzie.com/embed?id=f36572b2-df34-4a07-9206-825bcd7ec3b5

Session 3: Economic Sanctions

Speakers: Alison Stafford Powell, Alex Lamy, Ben Smith, Kerry Contini, Sylwia Lis

Topics discussed:

  • Burma/Myanmar
  • Iran – Prospects for US rejoining the JCPOA
  • Russia
    • Major new Russia-focused sanctions authorities for Specified Harmful Foreign Activities
    • NordStream II
    • CBW sanctions
    • Implications of designation of the FSB as a NPWMD sanctioned party
    • European sanctions
    • Russian response
  • Venezuela
  • Belarus
  • EU/UK Sanctions developments and prospects post-BREXIT
  • New UK global anti-corruption sanctions

https://video.bakermckenzie.com/embed?id=e139f806-516f-4d89-86e0-f07af6ca2fc9

Session 4: Spotlight on China Trade Developments – Part 1

Speakers: Alison Stafford Powell, Kerry Contini, Aleesha Fowler, Eunkyung Kim Shin, Andrew Rose

Topics discussed:

  • Sanctions against China
    • China-related Entity List Sanctions
    • OFAC sanctions programs used against China
    • Investment Restrictions in certain Chinese Military Companies – EO 13959 and EO 14032
    • Hong Kong Autonomy Act implementation
    • European Union, UK sanctions against China
  • Trade compliance and ESG Risks and mitigation in China-related supply chains
    • State Department Advisory
    • CBP withhold release orders
    • Modern Slavery and Human Trafficking Laws
    • California Transparency in Supply Chains Act
    • Section 307 of the Tariff Act and CAATSA provisions on North Korean labor
  • Semiconductor and Advanced Packaging initiative (BIS)

https://video.bakermckenzie.com/embed?id=6c466c54-eda4-47d7-90c5-697dd90c93ea

Session 5: Spotlight on China Trade Developments – Part 2

Speakers: John McKenzie, Ivy Tan, Weng Keong Kok, Vivian Wu, Iris Zhang

Topics discussed:

  • Implementation of the Chinese export control law
  • MOFCOM’s new export control compliance program guidelines
  • China’s Encryption Law and Announcement 63: import and export restrictions
  • MOFCOM’s Order No. 4: Implementing China’s Unreliable Entity List System
  • MOFCOM’s “Blocking” Regulation: Rules on Counteracting Unjustified Extra-Territorial Application of Foreign Legislation and Other Measures and China’s response to US and foreign sanctions
  • Implementation of China’s National Security Law in Hong Kong
  • Status and Prospects for the U.S.-China Phase One Trade Agreement

https://video.bakermckenzie.com/embed?id=16ab4f6a-c727-405a-b778-c640244c0315

Session 6: Import and Customs Developments

Speakers: John McKenzie, Alison Stafford Powell, Christine Streatfeild, Gene Tien

Topics discussed:

  • Customs Valuation
  • First sale and the CIT decision in U.S. v. Meyer
  • Transfer pricing and customs valuation
  • Section 301 Developments
  • Challenge to China lists 3-4: HMTX case status
  • The Ireland/Northern Ireland Border Issue
  • USTR product exclusion procedures
  • Country of origin analysis (USMCA and “products of China” for section 301 purposes)
  • Digital Services Tax Developments and Section 301 investigations
  • ICTS – Developments Towards Protecting the Information and Communications Technology and Services Supply Chain (EO 13873) and Protecting American’s Sensitive Data (EO 14034)

https://video.bakermckenzie.com/embed?id=e07f1d9c-54b5-4e9e-a10b-67b67564622d

Session 7: Export Control and Economic Sanctions Enforcement

Speakers: Alison Stafford Powell, Terry Gilroy, Jess Nall, Helena Engfeldt, Tristan Grimmer, Sam Kramer

Topics discussed:

  • Leading Cases: Lessons Learned
  • Export Control and Economic Sanctions Enforcement Trends
  • Expectations of Regulatory Authorities (DoJ, OFAC, OEE)
  • Ransomware – Trade compliance and data privacy issues in ransomware attacks
  • Focus on cryptocurrency and blockchain issues in sanctions compliance cases

https://video.bakermckenzie.com/embed?id=200ce767-5eb2-4d97-a08c-5cadda29b5ef

Session 8: Trade Agreements Developments

Speakers: John McKenzie, Adriana Ibarra-Fernandez, Paul Burns, Jenny Revis, Ivy Tan

Topics discussed:

  • USMCA: What we have learned in the past 18 months
  • Comprehensive Pacific Partnership: Prospects for US participation
  • The challenge of the Regional Comprehensive Economic Partnership (RCEP)
  • Prospects for a US− UK Free Trade Agreement
  • European Union − UK Free Trade Agreement
  • Various UK trade agreement initiatives
  • Transpacific Partnership (without the United States)

https://watch.bakermckenzie.com/embed?id=88290106-a956-4e5a-822e-36ea0a4606be

Session 9: Trade Developments – Rest of the World

Speakers: John McKenzie, Brian Cacic, Junko Suetomi, Weng Keong Kok, Alessandra Machado, Virusha Subban

Topics discussed:

  • Canada
  • Japan
  • ASEAN
  • Brazil
  • South Africa

https://video.bakermckenzie.com/embed?id=1db6989e-e83c-4358-96dd-cb0f1df76305

The post Multijurisdictional: 2021 Virtual Global Trade Conference appeared first on Global Compliance News.

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By Michael Parisi, Vice President, Business Development & Adoption, HITRUST

Breaches, ransomware, and other cybersecurity attacks are often introduced through third-party vulnerabilities. Underscoring this high degree of risk, the Ponemon Institute reports, “Over half of organizations have experienced a data breach caused by third parties that led to the misuse of sensitive or confidential information.”

All vendors are considered third parties, but not all third parties are vendors. Third parties can be any partner with whom your organization exchanges data or shares network connectivity – including through internet portals. Third-Party Risk Management has always been challenging in healthcare and is even more difficult now with an ever-increasing level of information security threats, along with the added demands caused by COVID-19.

“Over half of organizations have experienced
a data breach caused by third parties.”

Source: “A Crisis in Third-Party Remote Access Security,” 2021 report conducted by the Ponemon Institute

COVID-19 Conditions May Have Increased Risk Exposure

Third-Party Risk Management Venn Diagramm
As unprecedented events unfolded in response to the pandemic, healthcare organizations took extraordinary measures to serve their communities by quickly ordering test kits, treatment materials, medical supplies, personal protective equipment, and more. In many cases, these urgent demands forced short-circuiting the usual, more thorough third-party vetting and evaluation processes. In addition, requirements to capture, store, communicate, and report both patient and business operations information – sometimes to and from temporary remote locations such as parking lot tents – added an unprecedented layer of complexity and vulnerability to third-party information security and management. The proliferation of TeleMedicine collaboration through virtual networking introduced yet another risk factor where shared data could be compromised.

Because vendors were fast-tracked during a time of need and PHI sharing started happening in new ways, healthcare supply chain ecosystems may now include business partner vulnerabilities that pose residual threats that organizations do not even realize are present. The most prudent approach today is for healthcare organizations to look closely at the current risk profile of all their third-party relationships.

Proactively Addressing the Current State of Third-Party Risk Management

Protecting sensitive patient data requires close teamwork because of the mutual dependencies between large hospitals, smaller care facilities, physicians, and other care specialists, as well as pharmacies, medical suppliers, and supply chain partners. Because of this heavy collaboration, healthcare professionals must provide quality information protection assurances to each other to safely conduct business.

Now that healthcare is slowly returning to a more normal state of operations, it is an ideal time to go back and identify, assess, and manage third-party risk – some of which may have been introduced during the early days of the pandemic. This proactive process includes understanding the inherent risks associated with third-party relationships and obtaining appropriate, comprehensive, and transparent assurances that address those risks. In fact, under the HIPAA Omnibus Rule, some of the Privacy Rule and all of the Security Rule enforcement now apply directly to Business Associates and their subcontractors. This increase in shared breach requirements and compliance reviews means that Covered Entities have ongoing responsibilities to review Business Associate compliance and include appropriate liability protections in their third-party agreements.

Solidifying TPRM Programs Adds Immediate and Long-Term Benefits

Enhancing information risk management programs is a responsible and fiscally sound strategy. According to the HIPAA Journal, based on an IBM Security report published in 2019, the average cost of a data breach in the healthcare sector is $6.45 million, the highest cost of any industry. Using the latest industry best practices to address and manage information exchange within and between third parties reduces threats, adds peace of mind, and establishes a solid foundation for the future. With a strong third-party risk management program in place, it is far easier to perform due diligence activities and more confidently add vendors, suppliers, and business partners going forward.

Introducing… The HITRUST Assessment XChange

Whether your TPRM is part of an existing Governance Risk Compliance program or operates as a stand-alone function, chances are you can use additional resources to help ensure that business partners are not adding risk into your data management systems, and to identify current risk levels of which you may not be aware. The HITRUST Assessment XChange™ (The XChange) is a managed service offering designed to augment, complement, and extend an organization’s risk management program. Under your guidance, the XChange team will assume much of the administrative burden of working with your third-party network to evaluate levels of risk and obtain the appropriate levels of assurances. By relying on the HITRUST Assessment XChange to streamline and simplify third-party risk management tasks, your risk management team will have far more time to devote to more strategic activities.

To further explore strategies that cost-effectively enhance Third-Party Risk Management programs, visit HITRUST Booth #7401 at the HIMSS Global Health Conference & Exhibition in Las Vegas, August 9-13th.

Schedule a meeting with HITRUST at HIMSS.

For more information about HITRUST Assessment XChange, or any of the HITRUST information protection solutions – Call: 214-618-9300 or Email: getinfo@hitrustax.com.

For more about the HITRUST Assessment Exchange.


About the Author

michael-parisi-thumbMichael Parisi, Vice President of Business Development & Adoption, HITRUST

Michael Parisi has led over 500 controls-related engagements and has extensive experience with third-party assurance reporting including HITRUST readiness, HITRUST certification, SOC 1, SOC 2, SOC 3, Agreed Upon Procedure, and customized AT-101 engagements. Michael is deeply involved with helping customers leverage the advantages of the HITRUST Assessment XChange for third parties. He has extensive knowledge of financial reporting and regulatory standards through his external audit and consulting experience, including Sarbanes Oxley, HIPAA, NIST, CMS, and state-specific standards. He is an active member of ISACA and IAPP.

The post Your Healthcare Third-Party Risk Management Program May Be Overdue for a Check-Up appeared first on HITRUST Alliance.

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USMCA Implementing Regulations

On July 6, 2021, US Customs and Border Protection (CBP) and the US Department of the Treasury (Treasury) published in the Federal Register the notice for the USMCA Implementing Regulations Related to the Marking Rules, Tariff-rate Quotas, and Other USMCA Provisions interim final rule. The interim rule is effective July 1, 2021.

The rule amends CBP regulations to include implementing regulations for the preferential tariff treatment and related customs provisions of the United States-Mexico-Canada Agreement (USMCA). The USMCA applies to goods from Canada and Mexico entered for consumption, or withdrawn from warehouse for consumption, on or after July 1, 2020. The interim rule:

  • amends the Code of Federal Regulations (CFR) to implement the provisions in Chapters 1, 2, 5, and 7 of the USMCA related to general definitions, confidentiality, import requirements, export requirements, post-importation duty refund claims, drawback and duty-deferral programs, general verifications and determinations of origin, commercial samples, goods re-entered after repair or alteration in Canada or Mexico, and penalties.
  • makes amendments to apply the marking rules in determining the country of origin for purposes for goods imported from Canada or Mexico and for other purposes specified by the USMCA.
  • includes amendments to add the sugar-containing products subject to a tariff-rate quota under Appendix 2 to Annex 2-B of Chapter 2 of the USMCA to the CBP regulations governing the requirement for an export certificate.
  • makes conforming amendments for the declaration required for goods re-entered after repair or alteration in Canada or Mexico, recordkeeping provisions, and the modernized drawback provisions.

Comments are due on September 7, 2021, and may be filed in Docket number USCBP-2021-0026 at http://www.regulations.gov.

Additional USMCA implementing regulations are forthcoming in an interim final rule to be published in the Federal Register.

NPRM – non-preferential rules of origin

Also on July 6, 2021, CBP and Treasury published in the Federal Register a notice of proposed rulemaking and request for comments on Non-Preferential Origin Determinations for Merchandise Imported from Canada or Mexico for Implementation of the USMCA (NPRM).

The NPRM is a proposed amendment to the CBP regulations regarding non-preferential origin determinations for goods imported from Canada or Mexico under the USMCA. The amendment proposes that CBP will extend certain tariff-based rules of origin for preferential determinations found at 19 CFR part 102 (“part 102 rules” (formerly the “NAFTA marking rules”) to all non-preferential determinations for goods imported from Canada or Mexico. The NPRM also proposes to modify for consistency the CBP regulations for certain country of origin determinations for government procurement.

Since 1994 when first introduced, the part 102 rules have provided a standardized method for determining the country of origin for customs purposes of goods imported from Canada or Mexico and CBP has concluded that extending the application of these rules would provide continuity for importers. CBP is proposing to amend the scope of these rules to reduce the burden on importers to declare two different countries of origin for the same imported good and so that the substantial transformation standard will be applied consistently to all goods imported from Canada or Mexico under the USMCA.

Advantages to streamlining the use of these rules for both preferential and non-preferential origin claims include eliminating the need for importers to request multiple non-preferential country of origin determinations from CBP for the same good and for CBP to issue rulings with multiple non-preferential origin determinations on goods imported from Canada or Mexico. If this proposal is adopted, there will no longer be rulings that conclude that a good imported from Canada or Mexico has two different origins under the USMCA depending on whether for country of origin marking or for other customs purposes.

In the interim final rule published concurrently with the NPRM, CBP amended the CBP regulations to include additional USMCA implementing regulations including amendments to the part 102 rules. Those amendments facilitate the transition from the NAFTA to the USMCA by maintaining the status quo for country of origin for marking determinations. Comments are due on August 5, 2021,and may be filed in Docket number USCBP-2021-00X25 at http://www.regulations.gov.

The post US: US USMCA Regulations interim final rule effective July 1 (comments requested); USMCA Notice of Proposed Rulemaking on non-preferential rules of origin released for comment appeared first on Global Compliance News.

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In brief

On 9 July 2021, President Biden issued his Executive Order on Promoting Competition in the American Economy (EO) (Fact Sheet here) signaling support for severe limitation of post-employment noncompete restrictions–a move likely to add fuel to the fire of states passing laws to limit the use of post-employment noncompetes. The EO Fact Sheet states that the banning or limiting of noncompetes will “[m]ake it easier” for employees to “change jobs[.]” Though employers may balk, given Biden’s campaign promises and support for passage of the Protecting the Right to Organize (PRO) Act (see our prior blog here), employers should not be surprised.


Key takeaways

While not at all unexpected, President Biden’s EO is catapulting the use of post-employment noncompetes to the forefront of conversations and business planning for US employers. So, what to do now?

  • Employers should stay updated on noncompete laws in states where they have employees, given the continuing trend of states enacting or amending laws to further restrict noncompetes.
  • Employers should expect action by the FTC in line with the EO–but should also keep an eye out for anticipated legal challenges to FTC action.
  • Employers should inventory and review their noncompete agreements, ensure the agreements continue to comply with applicable law, and take any steps necessary to bring errant agreements back into compliance.
  • Employers should consider the impact on any wide-spread rulemaking to how the organization manages employee-raiding/poaching, maintenance of trade secrets and confidential information and M&A.
  • Finally, for employers with multi-national workforces, this may also signal a re-evaluation of the company’s use of noncompetes globally.

In more detail

The EO encourages the Chair of the Federal Trade Commission (FTC) to exercise the FTC’s statutory rulemaking authority to “curtail the unfair use of noncompete clauses and other clauses or agreements that may unfairly limit worker mobility.” It is uncertain whether that rulemaking will entirely ban or just limit noncompete agreements; focus on restricting noncompetes for all workers or just those considered more vulnerable (such as low wage earners); restrict nonsolicit agreements along with noncompetes; or preempt state law.

The EO also encourages the Attorney General and the Chair of the FTC to consider revising the October 2016 Antitrust Guidance for Human Resource Professionals “to better protect workers from wage collusion” by (as the Fact Sheet explains) strengthening antitrust guidance to prevent the suppression of wages or reduction of benefits through employer collaboration and sharing of wage and benefit information. As we explained in a recent client alert, a push to scrutinize competition issues in labor markets was already in play, tracing back to the 2016 Antitrust Guidance, in which the Department of Justice and FTC alerted companies that “naked” wage-fixing and no-poaching agreements could be prosecuted criminally, and that employers competing to hire or retain the same employees are “competitors” from an antitrust perspective.

It’s important to note, however, that the EO itself does not change current law. As such, employers do not need to take particular immediate action. Employers can anticipate rulemaking by the FTC, however, and may want to prepare by evaluating their noncompetes sooner rather than later-including whether they are necessary, especially for particular groups of employees FTC action under the EO is likely to protect (such as non-executive employees, manual laborers, or low-wage earners).

State trend to protect lower wage employees from noncompetes

What is the current landscape and what’s trending? Nine states have enacted legislation limiting the use of noncompete agreements for low-wage earners in recent years, including Illinois, Massachusetts, Washington, and Oregon. The trend followed the Obama White House’s 2016 State Call to Action on Non-Compete Agreements, calling on states to ban noncompete clauses for certain categories of workers (including workers under a certain wage threshold). Even before the focus on low-wage earners, there was a growing trend of states enacting and amending legislation to restrict the use of noncompetes against employees. For instance, similar to California (see chart, below), both North Dakota (HB 1351) and Oklahoma (Title 15 O.S. section 219A) prohibit employers from entering into noncompetes with employees, and only allow noncompetes between the seller and the buyer in the sale of business goodwill, or between partners in the dissolution of a partnership (and, in North Dakota, the disassociation of one partner from a continuing partnership).

Most recently, Washington, D.C. enacted the Ban on Non-compete Agreements Amendments Act of 2020, which has been described as the strictest ban on noncompetes in the US and which will (subject to extremely narrow exceptions) make noncompetes entered into after the law’s effective date void and unenforceable. The Illinois General Assembly also recently passed a bill–expected to be signed by Governor Pritzker by 28 August, 2021–amending  the state’s noncompete statute that will, among other things, prohibit employers from entering into noncompetes with employees earning USD 75,000 a year or less (with a graduated salary threshold increase to USD 90,000 in 2037). Besides restrictions on noncompete agreements, the new Illinois law also prohibits employers from entering into nonsolicit agreements with employees earning USD 45,000 a year or less (with a graduated salary threshold increase to USD 52,500 in 2037). Further, while New York does not have a statute concerning trade secrets or noncompete agreements in employment generally (the only state without one), in February 2021, the Trade Secrets Committee of the New York City Bar published a report proposing that New York State enact a statute to regulate the use of noncompete agreements by creating a rebuttable presumptive prohibition on using noncompetes for lower-salary employees.

The chart below provides a quick comparison of current restrictions on noncompetes in several notable jurisdictions.

Jurisdiction Statute Are “traditional noncompetes” (i.e., agreements restricting post-employment conduct) allowed?   Additional information
California Cal. Bus. & Prof. Code §§ 16600-16607 No, with limited exceptions in connection with  the sale of a business (including the sale of goodwill); dissolution of a partnership or disassociation of a partner from a partnership; and dissolution of or termination of an ownership interest in an LLC. Employers can use other means to protect trade secrets and other information (including confidentiality and non-disclosure agreements).
District of Columbia Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Law 23-209) (not effective until funded-anticipated effective date Fall 2021) No, subject to narrow profession-based exceptions (unpaid volunteers, law members elected or appointed to office within any religious organization, babysitters, and medical specialists (defined as licensed physicians who have completed residency with a total compensation of USD 250,000 per year)).Note: Defines a “non-compete provision” as a provision of a written agreement between an employer and an employee that prohibits the employee from being employed, either during or after the employee’s employment, by another person or operating the employee’s own business. Employers still may use confidentiality and non-solicitation agreements.Does not apply to noncompete agreements before the Act’s effective date, but does apply retroactively to workplace policies (i.e., workplace policies that prohibit the employee from being employed, either during or after their employment, by another person or operating the employee’s own business, are invalidated).Requires all employers to provide specific written notice (regardless of use of noncompetes) under the Act. Notice must be given (1) ninety calendar days after the Act becomes effective, (2) seven calendar days after an individual becomes an employee, and (3) fourteen calendar days after the employer receives a written request for notice from the employee.Employers can face liability for using noncompete provisions, and the Act makes it unlawful for an employer to retaliate against an individual for refusing to agree to, or failing to comply with, a prohibited noncompete provision.
Illinois SB 672 (expected to be signed into law on or before August 28, 2021; would be effective for any contract entered into after 1 January, 2022) No, unless several requirements are met: (1) the employee receives adequate consideration; (2) the covenant is ancillary to a valid employment relationship; (3) the covenant is no greater than is required for the protection of a legitimate business interest of the employer; (4) the covenant does not impose undue hardship on the employee; (5) the covenant is not injurious to the public; and (6) employers have provided employees with at least fourteen calendar days to review noncompete (and nonsolicitation) agreements and to advise them, in writing, of their right to consult with an attorney prior to signing the agreement.Bans noncompetes for (1) employees making USD 75,000 per year in earnings or less (the salary threshold would increase by USD 5,000 every five years until reaching USD 90,000 in 2037) and (2) employees who are separated due to COVID-19 or “circumstances that are similar to the COVID-19 pandemic unless enforcement of the covenant not to compete includes compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus compensation earned through subsequent employment during the period of enforcement.” The definition of “non-compete” excludes nonsolicitation agreements, confidentiality agreements, trade-secret and invention-assignment agreements, agreements entered into with the connection with the acquisition or disposition of an ownership interest in a business, “garden-leave clauses” and “no-reapplication clauses.” However, the bill bans customer and coworker nonsolicitation agreements for employees making USD 45,000 in earnings per year or less (the salary threshold would increase by USD 2,500 every five years until reaching USD 52,500 in 2037).Defines “adequate consideration” as (a) two years of continuous employment after signing the agreement; or (b) alternative consideration, such as “a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.”Adopts a “totality of the circumstances” standard for determining an employer’s legitimate business interest.
Massachusetts Massachusetts Noncompetition Agreement Act (MGL c. 149, § 24L) No, unless several requirements are met: (1) the agreement must be in writing, signed by both the employer and employee, and state the employee has the right to consult counsel prior to signing; (2) the employer provides notice of the agreement to the employee (the form and timing of which depends on when the employee is asked to sign the agreement–whether at the beginning or during employment–but noncompetes entered into during employment must be supported by consideration additional to continued employment); (3) the time restriction is for one year or less post-employment (unless the employee breaches his or her fiduciary duty or steals the employer’s property, in which case the noncompete can last up to 2 years); (4) it is “reasonable in scope”; (5) the employer has a “legitimate business interest”; (6) the noncompete includes a “garden leave” clause or other mutually-agreed consideration.However, Massachusetts bans noncompetes with employees who are classified as “non-exempt” under the FLSA, and prohibits noncompetes with employees who are terminated without cause or laid off. The restriction does not apply to other kinds of restrictive covenants, including non-disclosure agreements, assignment of invention provisions, and non-solicitation restrictions.“Reasonable in scope” means if it is (1) limited to the geographic areas in which the employee provided services or had a material presence or influence within the last 2 years of employment, and (2) limited to the specific types of services the employee provided during the last 2 years of employment.The law recognizes three legitimate business interests: trade secrets, confidential information, and employer goodwill.The “garden leave” clause requires the employer to pay the employee for the duration of the noncompete period at least 50 percent of the employee’s highest salary within the last 2 years of employment. The employer’s obligation to pay the garden leave is relieved only if the employee breaches the agreement.
Nevada Nevada Unfair Trade Practice Act (NRS Chapter 598A) No, unless several requirements are met: the noncompete (1) is supported by valuable consideration, (2) does not impose any restraint that is greater than required for the protection of the employer, (3) does not impose any undue hardship on the employee, and (4) imposes restrictions that are appropriate in relation to the valuable consideration supporting the non-competition covenant.However, noncompetes cannot apply to employees who are paid solely on an hourly wage basis, exclusive of any tips or gratuities. Employers cannot restrict a former employee from providing service to a former customer / client if the employee did not solicit the customer / client, or if the customer / client voluntarily chose to seek services from the former employee, and if the former employee is otherwise complying with the limitations of the noncompete. In addition, employers may not bring an action to enforce such restriction.
New York New York is currently the only state without a statute concerning trade secrets or noncompete agreements in employment generally. In February 2021, the Trade Secrets Committee of the New York City Bar published a report proposing that New York State enact a statute that would create a rebuttable presumptive prohibition on the use of noncompetes for lower-salary employees. New York courts will enforce noncompetes only if: (1) the restrictions are no greater than required to protect an employer’s “legitimate protectable interest,” (2) they do not impose undue hardship or cause injury to the public, and (3) they are reasonable in both duration and scope. Previously recognized protectable interests include an employer’s trade secret, an employer’s goodwill and an employer’s interest in preventing loss of an employee whose services are special, unique or extraordinary.
Oregon SB 169 (amended ORS 653.295 to further restrict noncompetes) (applies to agreements entered into on or after 1 January, 2022) No, unless several requirements are met:(1) the noncompete does not exceed 12 months from the employee’s termination; (2) the employee meets the income threshold for noncompete agreements of USD 100,533 in 2021 dollars (adjusted annually for inflation); (3) the employee is the equivalent of an “exempt” employee under the FLSA; (4) the employee is informed that the noncompetition agreement is a condition of employment in a written employment offer received by the employee at least two weeks before the first day of employment (or the employer imposes the noncompete on a subsequent bona fide advancement of an employee); (5) within 30 days after the date of the termination of the employee’s employment, the employer provides a signed, written copy of the terms of the noncompetition agreement to the employee; and (6) the employer has a “protectable interest.” Restrictions generally do not apply to covenants to solicit customers or employees of the prior employer.
“Protectable interest” means the employee must have access to trade secrets, competitively sensitive confidential business or professional information, or is employed as on-air talent by an employer in the broadcasting business.Employers can enforce noncompetes up to 12 months against employees who are not the equivalent of “exempt” under the FLSA or who do not meet the income threshold if the employer agrees in writing to provide the employee the greater of: (a) compensation equal to at least 50 percent of the employee’s annual gross base salary and commissions at the time of the employee’s termination; or (b) 50% of USD 100,533 (adjusted annually for inflation) for the time the employee is restricted from working.
Texas Texas Business and Commerce Code §15.50(a) No, unless several requirements are met:(1) they are ancillary to or part of an otherwise enforceable agreement at the time the agreement is made, and (2) to the extent that the noncompete contains limitations as to time, geographical area and scope of activity to be restrained, it is reasonable and does not impose a greater restraint than is necessary to protect the employer’s goodwill or other business interest. An employer’s restrictive covenants should be tied to (1) a confidentiality covenant in which the employer promises to provide the employee with confidential information, and then actually does provide such information; or (2) in limited instances, stock options designed to encourage the employee to develop goodwill with the employer’s customers.
Washington Chapter 49.62 RCW No, unless (1) they are against employees who earn in excess of USD 100,000 per year (or independent contractors who earn in excess of USD 250,000 per year); (2) they do not exceed 18 months; (3) any employee terminated as the result of a layoff is compensated during the noncompetition period; (4) mandatory noncompetition covenants are provided to prospective employees no later than the time the candidate accepts the job offer, and (5) independent consideration is provided to existing employees entering into noncompetition covenants. Agreements requiring the application of non-Washington law or adjudication outside of Washington are void.Noncompetition covenants entered into before 2020 must comply with the new law (effective 1 January, 2020).Employers face penalties for noncompetition covenants that do not comply with the new law.

For assistance with this and your other employment needs, contact your Baker McKenzie employment attorney.

Contributors: Bradford Newman and Jeffrey Martino.

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Background on Lawsuit

In a 8-1 decision issued last week, the U.S. Supreme Court seemingly brought an end to a 15-year lawsuit brought against Nestlé and Cargill by Malian citizens who claim to have been enslaved as children on the companies’ cocoa plantations located in the Ivory Coast.  Specifically, the plaintiffs alleged that Nestlé and Cargill knew the cocoa plantations used child labor, and aided and abetted the human rights abuses that they and other child laborers endured by providing financial and operational support to the plantation farmers. 

The plaintiffs brought their claims under the Alien Tort Statute (ATS)—an 18th century law that allows non-U.S. citizens to file a lawsuit in federal court for torts committed in violation of international law.  The lawsuit was initially filed in federal court in California, but was dismissed on grounds that the alleged injuries lacked a sufficient nexus to the U.S. because they occurred overseas, and because the only domestic conduct alleged by the plaintiffs amounted to general corporate activity.  The Ninth Circuit reversed the district court’s dismissal of the lawsuit and allowed it to go forward, finding that plaintiffs sufficiently pleaded a domestic application of the ATS because Nestlé’s and Cargill’s “major operational decisions” originated in the United States.  The companies then appealed to the Supreme Court, which agreed to hear the case in July 2020.

The Supreme Court’s Decision

In a brief opinion delivered by Justice Clarence Thomas, the Court explained that although the ATS does not apply extraterritorially (i.e., to conduct that occurred abroad), it may be applied in cases involving overseas conduct if the conduct relevant to the statute’s “focus” occurred in the United States.  The Court noted that while the parties disagree on what conduct is actually relevant to the “focus” of the ATS, this issue is moot here because nearly all of the conduct that plaintiffs allege aided and abetted forced labor occurred abroad in the Ivory Coast.  The Court further explained that while Nestlé and Cargill made financing and operational decisions in the U.S., such activity is common to most corporations and is insufficient to support a domestic application of the ATS. Eight of the nine Justices joined in this part of the opinion.

Apart from the issue of extraterritoriality, Justice Thomas (in a section of his opinion joined by Justices Gorsuch and Kavanaugh) wrote that a private right of action under the ATS has historically been reserved for three specific violations of international law: (1) violation of safe conducts; (2) infringement of the rights of ambassadors; and (3) piracy.  Justice Thomas reasoned that because none of these violations were alleged or at issue in plaintiffs’ lawsuit, they do not have a private right to sue under the ATS and the Court cannot create a cause of action that would allow them to do so—a job that belongs to Congress, not the courts.

Implications of Supreme Court Decision for Corporations

The Supreme Court’s decision in the Nestlé/Cargill case is a victory for the chocolate companies. But a question that remains unanswered is whether domestic corporations like Nestlé and Cargill can be held liable under the ATS at all—the very question upon which the Court initially granted cert. to hear the case.  Companies with global supply chains that rely on third party business partners should therefore continue to monitor and oversee compliance with applicable laws and regulations, including those which prohibit human rights abuses.  This is especially true in light of the increasing litigation brought by activist groups against large corporations, and recent Congressional bills that broadly require companies to disclose certain Environmental, Social and Governance (ESG) metrics—two developments that signal a push to hold companies accountable for labor abuses and other violations of law committed by their supply chain partners.

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In brief

Shelter-in-place or stay-at-home orders have been prevalent throughout the United States since March 2020 as state and local governments have sought to protect their citizens from the spread of the COVID-19 virus while at the same time reopen their economies in accordance with phased reopening plans. Keeping abreast of the evolving nature of these orders and plans as the spread of the virus continues to evolve is critical to the functioning of all businesses throughout the country.


Baker McKenzie has a team in place that has been advising clients real-time on these most critical issues since the first orders were enacted. We are pleased to provide this Tracker, which identifies the relevant state-wide shelter-in-place orders and their related expiration dates, as well as the applicable state-wide reopening plans, in each of the 50 United States plus Washington, D.C. The “What’s Open” table on each page highlights the reopening status of four major sectors (office, manufacturing, retail and bars/restaurants).

In addition, the Tracker includes links to the relevant quarantine requirements or recommendations for incoming travelers in each state plus Washington, D.C.

Key developments reflected in this week’s update to the Tracker include the following:

  • The following jurisdictions extended their state-wide orders and/or the duration of the current phase of their reopening plans: Colorado, Indiana, Iowa, George, New Mexico and Rhode Island. 
  • The following jurisdictions eased restrictions, mask requirements, advanced to the next phase of their reopening plan and/or lifted their Covid-19 orders: Arizona, Nebraska, Maine, Oregon and Washington.

You can also view our brochure which highlights key areas of expertise where we can support your business’s tracking and reopening plans. Please call or email your regular Baker McKenzie contact if you require additional analysis regarding these matters.

Last updated 9 July 2021

Download US Shelter-In-Place / Reopening Tracker

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Trade secrets are broad in scope and can be what provides your business with a competitive edge, ensures efficiencies and tracking, results in a better product or service and enables better marketing and identification of the target consumer. Yet when it comes to working with commercial partners in supply chains, the risk to this proprietary information can be put at risk. In our webinar, Protecting Trade Secrets in your Global Supply Chain, we look at how IMT businesses in particular can navigate the need to work with commercial partners whilst limiting the risk to their trade secrets.

Some key insights and takeaways from this discussion by our trade secret professionals are:

  • Trade secrets are important throughout the entire supply chain and production life cycle of IMT companies. Understanding where trade secrets are held throughout this cycle and how they are stored and shared is crucial to protecting the value of these assets, especially given the complexity of IMT supply chains.
  • We are seeing an increased reliance on trade secrets, often over, or in conjunction with, other traditional intellectual property such as patents. This trend towards reliance on trade secrets is due to the immediacy of the protection provided, the broad coverage and the absence for the need to formally register and associated costs of registering IP. This is particularly apparent in relation to fast paced technology sectors and in relation to trade secrets derived from data collection and analysis from within the supply chain.
  • IMT companies are deriving greater value from trade secrets and data (including data from their commercial partners within the supply chain). This presents a business opportunity, but the role of data in transforming companies and their manufacturing and business models is also complicated by complex IP, regulatory, and compliance considerations. IMT companies may find this particularly challenging, as they pivot from the traditional focus on manufacturing to new service provider business models, they are increasingly encountering issues outside of their core business expertise.
  • Once a trade secret is publicly available, any benefit of having the trade secret can be dramatically lost. People are the main risk factor for the loss of trade secrets. Effective and management and protection is therefore key. Prevention is the best protection.
  • Do not underestimate the significance of data privacy and cybersecurity. An effective trade secrets program includes strong preventive measures, careful selection of business partners, effective contractual safeguards, robust inventory and monitoring, and quick action in the event of a breach or leak. Penetration tests can be a useful weapon against hackers, but an appropriate contractual framework is essential where third party products and services will be impacted.
  • Governments and regulators are actively engaged on trade secrets, with many recent national improvements on local protection as well as implications for geopolitical and trade relationships and enforcement schemes.
  • We are seeing increasing trade secret disputes in China, with a significant proportion of such disputes in the IMT sector involving manufacturing and R&D activities.
  • In disputes, it will be for the trade secret owner to show how they proactively protect the “secrecy” of their trade secrets. Therefore, documenting adequate measures and protection, both within the company and in third party dealings, is vital, particularly when speed in commencing trade secrets proceedings is paramount.
  • Based on input from our webinar attendees, many companies are still in the early stages of understanding their trade secret assets. A majority of respondents were uncertain about their trade secrets inventory, how data privacy applied to their trade secrets, or rights in third party trade secrets used in their business.

If you would like to discuss any aspect of your trade secrets management and protection policies and practices, please reach out to our trade secrets specialists. They will be able to take you through an online trade secrets trade analysis to assist with identification, protection and enforcement of your trade secrets.

To view other available resources, visit our North America Trade Secrets Webinar and Video Chat Series andour 10 Best Practices for Trade Secrets Protection or join our Deciphering Data Webinar Series.

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In brief

Welcome to Baker McKenzie’s Government Procurement Update. Here you will find the latest guidance, trends and enforcement actions related to government procurement (both U.S. government contracting and International Financing Institutions), including suspension and debarment, bid protests, and False Claims Act defense. Calling upon our deep bench of 4000+ lawyers and legal professionals worldwide, we will occasionally invite guest practitioners to write about related topics in the criminal, civil, and administrative context. Readers can expect to find practical guidance and tips for compliance with public procurement policies as well as best practices for managing government inquiries and litigation.


Visit this page for monthly updates.

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On June 8, 2021, the White House published a set of reports on the 100-day interagency reviews (“Reports”) conducted pursuant to Executive Order 14017 (“Supply Chain EO”), which assessed supply chain risks and vulnerabilities for several supply chains, including those relating to semiconductor manufacturing and advanced packaging, and made policy recommendations to address those risks.

The Reports suggest that export controls on semiconductor-related equipment and technology can help protect the technological advantage of the United States in semiconductors by limiting the export of items that would contribute to the development of advanced semiconductor capabilities in countries of concern.  In particular, the Reports recommend that the US government:

  • Target and implement export controls that can support policy actions to identify and address vulnerabilities in the semiconductor manufacturing and advanced packaging supply chain;
  • Target and implement export controls on critical semiconductor equipment and technologies to address supply chain vulnerabilities; and
  • Collaborate and coordinate with key supplier allies and partners on effective multilateral controls.

The recommendations are broadly scoped, and the Reports do not recommend or preview more specific export controls that the US government might implement itself, or develop with its allies or partners.  However, the Reports are suggestive of several categories of items that might be targeted with enhanced export controls (e.g., additional export licensing requirements based on particular export control classification numbers).  In particular, the Reports identify significant competitive advantages enjoyed by US-based providers of electronic design automation tools and semiconductor intellectual property cores at the semiconductor design stage.  At the manufacturing stage, the Reports identify US strengths in the production of front-end semiconductor manufacturing equipment (e.g., etching, doping, deposition, and polishing or chemical mechanical planarization) and back-end testing equipment.  Companies that export such items will want to closely monitor any potential export control-related developments.

Key Takeaways

  1. The Reports recommend that the US government target and implement export controls on semiconductor-related equipment and technologies.
  2. Companies that export semiconductor-related equipment and technologies from the United States should monitor any potential export control-related development that follow from the Reports.
  3. Non-US companies that transfer semiconductor-related equipment and technologies to China may need to consider the potential impact of heightened multilateral controls on their business.

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Related Blog Posts

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