In December 2008, we issued a Client Alert summarizing the Consumer Product Safety Improvement Act of 2008 (the “CPSIA”) and the numerous regulations issued by the Consumer Product Safety Commission (the “CPSC”) interpreting that legislation. Since the enactment of the CPSIA and the issuance of those regulations, there has been much confusion in the various affected industries as to what actions are required by the legislation and concern over the impact of the new rules on businesses, particularly small businesses. Indeed, many businesses in the toy industry referred to February 10,2009 (the date the regulations were to have taken effect) as “National Bankruptcy Day” because of the profound impact the regulations were expected to have on small businesses. 

            Earlier this year, in response to the dramatic increase in the number of unsafe consumer products, particularly toys, in the U.S. marketplace, Congress passed the Consumer Product Safety Improvement Act of 2008 (the “CPSIA”).  The CPSIA has a sweeping impact on manufacturers and importers of consumer products.  As required by the CPSIA, the Consumer Product Safety Commission (the “Commission”) quickly issued regulations interpreting the new legislation as it is intended to apply to all consumer products and to the subcategory of children’s products, with the promise of more regulations to come.

While certification was required under the CPSA prior to the new legislation, the scope of the certification has been broadened to include other laws.  As a result, the certification is now required for many more consumer products.

Initially, there was confusion as to which parties were responsible for issuing the certificate: manufacturers, importers and/or private labelers.  The Commission recently issued a clarification: (i) for imported products, only the importer needs to issue the certificate; and (ii) for products manufactured in the United States, only the domestic manufacturer is required to issue the certificate (i.e., private labelers are not required to issue certificates).

The product testing may be done by the manufacturer itself, or the manufacturer may elect to have an independent third party laboratory test the product.  Although it is an added cost, one advantage of having an outside lab test the product is the potential defense it affords the manufacturer from product liability claims. 

            There are specific content and delivery requirements for the certificates.  The penalties for failing to supply an adequate certificate upon request by the Commission or the Customs and Border Patrol are quite harsh.  In addition to other civil and criminal penalties, the manufacturer risks that all products in the shipment will be destroyed.

            The CPSIA also includes a new, lower lead in paint limit that applies to all products.  This limit, currently at 600 ppm, will be reduced to 90 ppm on August 14, 2009.

The CPSIA requires that all children’s products that are subject to a children’s product safety rule must now be tested by an independent third party laboratory accredited by the Commission to assure compliance with applicable safety rules.  “Children’s products” are generally products that are designed or intended primarily for children age 12 and younger.  A list of accredited labs may be found on the Commission’s website.  The law does permit the establishment of manufacturer in-house testing laboratories, but imposes stringent requirements on those laboratories (which are called “firewalled labs”). 

            The effective date for this new third party testing requirement varies with the applicable safety rule.  The following is the schedule published by the Commission: 

            The CPSIA imposes a variety of other requirements in relation to children’s products, among them the following:

Ø      The acceptable lead level in children’s products has been significantly reduced.  New limits will be phased in over the next three years.  The first new limit takes effect on February 10, 2009 and reduces the acceptable amount of lead in children’s products to 600 ppm.  The Commission’s general counsel has issued an opinion that this requirement applies retroactively to products manufactured prior to February 10 and in inventory on February 10.  Not surprisingly, this opinion has generated a great deal of controversy and objection in the manufacturing community but as it stands, it reflects the likely enforcement position of the Commission.

Ø      The CPSIA requires the Commission to study and develop safety standards for infant and toddler products, such as cribs (including portable cribs, play pens and cribs used in hotels and child care facilities), toddler beds, high chairs, booster chairs, bath seats, gates and play yards, infant carriers, strollers, swings, and walkers.  While Congress gave the Commission some latitude in prioritizing its work, it directed the Commission to begin issuing the new regulations in August, 2009 and to continue to issue regulations at the pace of at least two per year. 

Ø      In August 2009, the Commission is also required to issue a new regulation mandating the use of postage-prepaid product registration cards, to be used in connection with product recalls and similar notifications.

Ø      The new law also requires manufacturers to affix a tracking label or permanent mark on all children’s products that identifies the source of the product, the date of manufacture and batch number.  Note that this new provision applies to children’s clothing and shoes in addition to toys and other children’s products.  This requirement will go into effect on August 14, 2009. 

Ø      The packaging for certain toys and games intended for use by children must contain a cautionary statement regarding choking hazards.  Further, if a product is required to carry this cautionary statement, all advertisements (including websites and catalogs) relating to the product must also contain the same cautionary statement.  The effective date of this requirement for website content is December 12, 2008; the effective date for printed materials (including catalogs) is February 10, 2009.

Ø      The CPSIA also prohibits the sale or distribution of any children’s toy or child care articles that contain certain levels of specified phthalates.  The Commission is directed to issue an interim rule governing phthalates on or before February 14, 2009.  Further regulation is contemplated, and the Commission will establish a Chronic Hazard Advisory Panel to study the effect of phthalates on children’s health.

NEW COBRA COVERAGE RULES IMPOSE ADDITIONAL FINANCIAL AND ADMINISTRATIVE  BURDENS ON EMPLOYERS

 The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) requires employers who employ twenty or more employees to allow terminated employees to elect continuation coverage.  The coverage will continue for eighteen months after termination, but the terminated employee can continue the coverage under certain circumstances.  COBRA requires employers to provide notice to employees that the coverage exists, and notice upon termination of the availability of the coverage.  Previously, employers could charge the terminated employee 102% of the premium for COBRA coverage. As a result of the American Recovery and Reinvestment Act (the “Act”), employers may now be required to help terminated employees defray the cost of healthcare. 

Antheil Maslow & MacMinn, LLP Hires Timothy M. White as New Associate

DOYLESTOWN, Pennsylvania (September 30, 2008) Antheil Maslow & MacMinn, LLP, a Bucks County-based full-service law firm, announced the addition of Timothy M. White as an Associate to the Firm. White will concentrate his practice in the areas of taxation, estate planning, business transactions, and litigation. He earned his Estate Planning Certificate from Temple University School of Law Graduate Tax Program, and is currently pursuing an LL.M. in Taxation. He received a B.A. from Michigan State University, and obtained his J.D. last year from Temple University School of Law. White is a member of the American, Pennsylvania and Bucks County Bar Associations.

Prior to becoming an attorney White worked for several Fortune 500 corporations, and while at Temple University School of Law he represented clients through the Small Business Development Center, was Associate Editor of the International Comparative Law Journal, and was involved with numerous student organizations. His latest position prior to joining the Firm was as Law Clerk to the Honorable Albert J. Cepparulo in the Bucks County Court of Common Pleas. Said White about joining Antheil Maslow & MacMinn, LLP, “Through my association with the Estate Planning Council, I got to know a number of attorneys from AMM and learned that they had a real group dynamic. I am pleased to be a part of the AMM team.”