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A Guide to Understanding Anti-Assignment Clauses

Introduction

With the increasing trend of globalization in the business world, Israeli companies and investors are commonly entering into agreements with U.S.-based entities. One of the most frequently found clauses in U.S. commercial agreements is an anti-assignment provision that prevents either or both of the parties from assigning the agreement to a third party prior to receiving the consent of the non-assigning party. Many transactions will also require the due diligence review of a large number of U.S. commercial agreements that the target has entered into. The following post will provide an overview and general guidance on the proper analysis of anti-assignment clauses.

Silent Provision and Change of Control Provision

In the event that an agreement does not contain an anti-assignment provision, a contract is generally assignable without the consent of the non-assigning party. See  Peterson v. District of Columbia Lottery and Charitable Games Control Board , 673 A.2d 664 (D.C. 1996) (“The right to assign is presumed, based upon principles of unhampered transferability of property rights and of business convenience.”) Exceptions include where the assignment affects the duties of the other party to the contract, where the contract is considered to be a personal contract and when the assignment violates public policy (i.e. tort liability).

On the other hand, many contracts contain provisions that not only prevent the assignment of the contract, but also state that a change of control of the target is deemed an assignment or the contract contains a separate clause requiring consent in the event of a change of control. This type of provision will often be triggered in transactions in which a buyer is acquiring the target company. A careful review of change of control clauses is thus especially imperative and often very fact specific to the deal at hand.

Deal Structures

One of the commonly used anti-assignment provisions reads as follows: “No party may assign any of its rights under this Agreement, by operation of law or otherwise, to a third party without the prior written consent of the non-assigning party.” In the situation where the target has entered into agreements that contain this clause, whether or not an assignment is considered to have taken place in the event of the acquisition of the target will largely depend on the specific deal structure of the transaction.

The commonly used deal structures are an asset acquisition, a stock acquisition and a merger.

• Asset Acquisition : In an asset acquisition the buyer only acquires those assets and liabilities of a target that are specifically listed in the Asset Purchase Agreement. Any agreement that has an anti-assignment clause will be triggered in the event of an asset acquisition. Indeed, one of the disadvantages of structuring a corporate acquisition as an asset acquisition is that contracts that will be transferred must be assigned
• Stock Acquisition : In a stock acquisition, a buyer acquires a target’s stock directly from the selling shareholders. After the closing of the Stock Purchase Agreement, the target will continue as it existed prior to the acquisition with respect to its ownership of asset and liabilities. Thus, in essence, the anti-assignment clause was never triggered in the first place. See  Baxter Pharm. v. ESI Lederle , 1999 WL 160148 (Del. Ch. 1999).
• A direct merger occurs when the target merges with and into the buyer, and the buyer continues as the surviving entity. In a similar fashion to an asset acquisition, this type of merger will trigger the anti-assignment clause
• A forward triangular merger occurs when the target merges with and into the buyer’s merger subsidiary, with the merger subsidiary surviving the merger. This type of merger will trigger the anti-assignment clause. See  Tenneco Automotive Inc. v. El Paso Corporation , 2002 WL 45930 (Del. Ch. 2002) and  Star Cellular Telephone Company, Inc. v. Baton Rouge CGSA, Inc., 19 Del.  J.  Corp. L. 875  (Del. Ch. 1993).
• A reverse triangular merger occurs when the buyer’s subsidiary merges with and into the target, with the target surviving as a wholly owned subsidiary of the buyer. In effect, the target continues to exist after the closing. The Delaware Chancery Court in  Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH,  2013 WL 655021 (Del. Ch. Feb. 22, 2013) held that the acquisition of a target in a reverse triangular merger did not violate an existing agreement of the target that prohibited assignments by operation of law. The court noted that generally, mergers do not result in an assignment by operation of law of assets that began as property of the surviving entity and continued to be such after the merger. Thus there is a significant difference between a reverse triangular merger and both a direct merger and forward triangular merger, as in those cases the target was not the surviving company of the merger. Note, however, that the matter is not uniformly resolved. In  SQL Solutions, Inc. v. Oracle Corp.  (N.D. Cal. 1991), a United States District Court in the Northern District of California applied California law and federal IP principles to hold that a reverse triangular merger constitutes an assignment by operation of law.

Additional Considerations

Damages and Termination : Some courts have held that a contractual provision prohibiting assignment operates only to limit the parties’ right to assign the contract (for which the remedy would be damages for breach of a covenant not to assign) but the provision does not limit the power to actually assign the contract (which would invalidate the assignment), unless the contract explicitly states that a non-conforming assignment shall be “void” or “invalid.” See, e.g.,  Bel-Ray Co v. Chemrite (Pty.) Ltd ., 181 F. 3d 435 (3d Cir. 1999).  It is also imperative to review the termination section of an agreement, as certain agreements contain a provision by which the non-assigning party has the right to terminate the agreement in the event of an assignment.

As described above, any review of U.S. commercial agreements is highly dependent on the structure of the deal and at times, the specific jurisdiction governing the agreement. With offices across the United States, and specifically in Delaware, New York, and California, all states with highly sophisticated and oft-invoked commercial laws, Greenberg Traurig is uniquely situated in a position to offer high value legal services to Israeli clients.

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Assignments: why you need to serve a notice of assignment

It's the day of completion; security is taken, assignments are completed and funds move. Everyone breathes a sigh of relief. At this point, no-one wants to create unnecessary paperwork - not even the lawyers! Notices of assignment are, in some circumstances, optional. However, in other transactions they could be crucial to a lender's enforcement strategy. In the article below, we have given you the facts you need to consider when deciding whether or not you need to serve notice of assignment.

What issues are there with serving notice of assignment?

Assignments are useful tools for adding flexibility to banking transactions. They enable the transfer of one party's rights under a contract to a new party (for example, the right to receive an income stream or a debt) and allow security to be taken over intangible assets which might be unsuitable targets for a fixed charge. A lender's security net will often include assignments over contracts (such as insurance or material contracts), intellectual property rights, investments or receivables.

An assignment can be a legal assignment or an equitable assignment. If a legal assignment is required, the assignment must comply with a set of formalities set out in s136 of the Law of Property Act 1925, which include the requirement to give notice to the contract counterparty.

The main difference between legal and equitable assignments (other than the formalities required to create them) is that with a legal assignment, the assignee can usually bring an action against the contract counterparty in its own name following assignment. However, with an equitable assignment, the assignee will usually be required to join in proceedings with the assignor (unless the assignee has been granted specific powers to circumvent that). That may be problematic if the assignor is no longer available or interested in participating.

Why should we serve a notice of assignment?

The legal status of the assignment may affect the credit scoring that can be given to a particular class of assets. It may also affect a lender's ability to effect part of its exit strategy if that strategy requires the lender to be able to deal directly with the contract counterparty.

The case of General Nutrition Investment Company (GNIC) v Holland and Barrett International Ltd and another (H&B) provides an example of an equitable assignee being unable to deal directly with a contract counterparty as a result of a failure to provide a notice of assignment.

The case concerned the assignment of a trade mark licence to GNIC . The other party to the licence agreement was H&B. H&B had not received notice of the assignment. GNIC tried to terminate the licence agreement for breach by serving a notice of termination. H&B disputed the termination. By this point in time the original licensor had been dissolved and so was unable to assist.

At a hearing of preliminary issues, the High Court held that the notices of termination served by GNIC , as an equitable assignee, were invalid, because no notice of the assignment had been given to the licensee. Although only a High Court decision, this follows a Court of Appeal decision in the Warner Bros Records Inc v Rollgreen Ltd case, which was decided in the context of the attempt to exercise an option.

In both cases, an equitable assignee attempted to exercise a contractual right that would change the contractual relationship between the parties (i.e. by terminating the contractual relationship or exercising an option to extend the term of a licence). The judge in GNIC felt that "in each case, the counterparty (the recipient of the relevant notice) is entitled to see that the potential change in his contractual position is brought about by a person who is entitled, and whom he can see to be entitled, to bring about that change".

In a security context, this could hamper the ability of a lender to maximise the value of the secured assets but yet is a constraint that, in most transactions, could be easily avoided.

Why not serve notice?

Sometimes it's just not necessary or desirable. For example:

• If security is being taken over a large number of low value receivables or contracts, the time and cost involved in giving notice may be disproportionate to the additional value gained by obtaining a legal rather than an equitable assignment.
• If enforcement action were required, the equitable assignee typically has the option to join in the assignor to any proceedings (if it could not be waived by the court) and provision could be made in the assignment deed for the assignor to assist in such situations. Powers of attorney are also typically granted so that a lender can bring an action in the assignor's name.
• Enforcement is often not considered to be a significant issue given that the vast majority of assignees will never need to bring claims against the contract counterparty.

Care should however, be taken in all circumstances where the underlying contract contains a ban on assignment, as the contract counterparty would not have to recognise an assignment that is made in contravention of that ban. Furthermore, that contravention in itself may trigger termination and/or other rights in the assigned contract, that could affect the value of any underlying security.

What about acknowledgements of notices?

A simple acknowledgement of service of notice is simply evidence of the notice having been received. However, these documents often contain commitments or assurances by the contract counterparty which increase their value to the assignee.

Best practice for serving notice of assignment

Each transaction is different and the weighting given to each element of the security package will depend upon the nature of the debt and the borrower's business. The service of a notice of assignment may be a necessity or an optional extra. In each case, the question of whether to serve notice is best considered with your advisers at the start of a transaction to allow time for the lender's priorities to be highlighted to the borrowers and captured within the documents.

For further advice on serving notice of assignment please contact Kirsty Barnes or Catherine Phillips  from our Banking & Finance team.

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Secured Transactions Law Reform Project

Considering the need and shape of future reform, ban on assignment clauses.

Receivables financing is a very important source of finance for small businesses.  Anything which limits the availability of this type of financing, or which increases its costs, requires examination.   Receivables financiers take an assignment or a charge over the receivables they finance.

Some contracts for the supply of goods or services by small businesses include a clause banning assignment of the receivables arising under the contracts: we call these ‘ban on assignment clauses’.   If receivables arising from such a contract are the subject of an assignment to a receivables financier, it may be difficult  for an assignee to enforce collection of those receivables if the assignor experiences financial difficulties, and the debtor can refuse to pay the financier directly.   The concern which arises is whether these difficulties  mean that finance of such receivables is refused, or that steps have to be taken which increase the cost of financing.

Statutory controls on the effect of ban on assignment clauses have been introduced in a number of jurisdictions as well as in the 1988 UNIDROIT Convention on International Factoring, the 2001 UN Convention on the Assignment of Receivables in International Trade, the 2007 UNCITRAL Legislative Guide on Secured Transactions and, more recently, have been included in the UNCITRAL draft Model Law on Secured Transactions. The draft regulations in the Law Commission Consultation Paper 176 and Report 296 also included a limited override of such clauses.    The project is considering whether a limited override should be introduced into English law, and, if so, what the limits should be.

Detailed arguments for and against a limited override are set out in presentations delivered at a recent seminar for receivables financiers . 

It is reasonably clear that outside the context of trade receivables financing, ban on assignment clauses perform a useful and important function, and should not be overridden.   The important debate focuses on whether a limited override would improve access to financing for small businesses.

In order to inform this debate, we are very keen to find out the views of anyone who is interested in this area.    We have drafted a short survey for those financing against receivables, looking at whether ban on assignment clauses cause problems and increase costs, methods used to overcome difficulties in enforcement and frequency of the use of such clauses.

If you are involved in the receivables financing industry, please take a few moments to fill in the  survey and send a scanned copy to [email protected]

Nullification of a ban on invoice assignment clauses was proposed in the form of a power of a Secretary of State to make Regulations in clause 1 of the Small Business, Enterprise and Employment Bill (SMEE Bill). At the beginning of the year BIS conducted consultation on the Bill, which closed in February 2015. The summary of responses along with draft regulations are available here . On 26th March the SMEE Bill ill received royal assent.

The text of the Small Business, Enterprise and Employment Act 2015 can be found  here .

On 9 August 2015, the Government responded to its consultation and announced that a ban on anti-assignment clauses would be brought in under the Act early next year . The Asset Based Finance Association and the National Federation for Small Businesses have spoken in support of the move.

As of the 31st December 2018, the Business Contract Terms (Assignment of Receivables) Regulations 2018  will nullify the effect of terms in contracts that impose conditions or restrictions on the assignment of receivables in contracts with SMEs.

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Ban on Assignment

A clause within the Debtors terms of sale, which specifically bans the assignment of the benefits or proceeds of the sale, thereby refusing to accept the assignment of the invoice.

The 'contract' is in place before the debt arises and therefore will take precedent over the Client's legal right to assign the debt to us, negating our right to the proceeds of the Debt.

Identification

Review customer terms of sale, obtaining copies for the client file.

Where an effective ban on assignment exists, all of the debt due from that customer should be reserved unless a suitable waiver is obtained from the debtor. This limitation applies to both Disclosed and Confidential facilities.

N.B. Where concentration is low there may be occasions where a waiver is not required and credit will take a commercial view. However this aspect would have to be continually monitored throughout the relationship.

Care must be taken in a 'Gone Concern' situation, or where the client may potentially cease to trade, as it may be necessary to rely on the appointment of a Book Debt receiver to recover the proceeds of the debt. Such appointment will result in additional costs of recovery for us, which should be taken into account in any funding decision. It is not however guaranteed that any Receiver, despite the ban, will look favourably on the debt being assigned to us and may retain the funds for other creditors.

Examples of Ban on Assignment Terms & Conditions

"The Seller shall not assign or sub-contract the Purchase Order or any part thereof or any money to become due hereunder without the prior written consent of the Purchaser. Any such permitted assignment or sub-contracting shall not relieve the Seller of any of its obligations under the Purchase Order."

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Effective Abolition of Bans on Assignment

• Paula Laird

Bans on assignment, contractually imposed by powerful purchasers, have long reduced the availability of invoice finance to SMEs when acting as suppliers of goods and services. With such bans in place the resulting invoiced debts cannot be used as collateral for funding under factoring or invoice discounting agreements, unless costly and time consuming waivers from such debtors are obtained or work arounds, such as trust accounts, are set up. Waivers are rarely forthcoming. Without such arrangements a disclosed financier cannot collect debts directly from the debtor.

The Government has now introduced proposed legislation to wipe out the widespread use of bans on assignment. The Small Business, Enterprise and Employment Bill 2015 is currently before Parliament. When passed, it will enable the Department of Business Innovation and Skills (BIS) to pass regulations as to how such bans are to be made ineffective and how widespread such nullification will be.

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• practice notes (4)

Ban on assignment definition

What does ban on assignment mean.

Clause in a contract of sale which prohibits a client from assigning the performance of the contract or just the right to receive payment.

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Ban on Assignment

Ban on Assignment . It is a clause in a contract between  a vendor and a buyer which prevents the vendor from assigning the related receivables. It can make ineffective any assignment of the receivables arising out of the contract. In some legal environments, the factoring agreement may overrule the ban on assignment.

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Ban on Assignment when using Invoice Finance

Regulations have been passed that mean that ban on assignment clauses that are within contracts signed after 31 December 2018 cannot, in most instances, prevent debts being assigned to a lender.

Table of Contents

What is a ban on assignment?

The ban on assignment is known as Assignment of Receivables Regulations 2018 (the “Regulations“) this is now are in force. The Regulations are intended to make it easier for small businesses to access receivables -based finance by making ineffective any prohibitions, conditions and restrictions on the assignment of receivables arising under contracts for the supply of goods, services or intangible assets

Draft legislation finally appeared in 2017, but was withdrawn following criticism by the Loan Market Association and others. The final form of the Regulations addresses some of the criticisms, but adds complexity in what is already a complex area of the law.

Some contracts for the supply of goods or services by small businesses include a clause banning assignment of the receivables arising under the contracts: we call these ‘ban on assignment clauses’. If receivables arising from such a contract are the subject of an assignment to a receivables financier, it may be difficult for an assignee to enforce collection of those receivables if the assignor experiences financial difficulties, and the debtor can refuse to pay the financier directly.

The concern which arises is whether these difficulties mean that finance of such receivables is refused, or that steps have to be taken which increase the cost of financing.

What will change?

The Regulations apply to specific contracts entered on or after 31 December 2018 and apply to clauses contained within such contracts that seek to prohibit or restrict the assignment of a receivable under the contract, which is a right to be paid for goods, services or other intangible assets.

The Regulations are limited and only apply to contracts, where the supplier or seller, is a small or medium sized enterprise (SMEs), as defined by legislation.

The key provision to the Regulation is that any clause that bans the transfer of a right to another party is now unenforceable. This extends to other terms that impose conditions on the ability of one party to determine the validity or value of the receivable i.e. the goods, services, the debt, or their ability to enforce payment. Indeed, there are now 13 categories, which contracts cannot now restrict

Exemption from the Regulations

• Contracts for the provision of financial services.
• Contracts for energy, land and certain other commodities
• Contracts to acquire a business or an interest in a firm
• Contract for differences or other derivative contracts
• Any contracts where the business the subject of the contract is not being carried out in the UK

Types of contracts do the Regulations apply to?

The Regulations apply to contracts for the supply of goods, services or intangible assets under which the supplier is entitled to be paid money. But there are a number of important exclusions from their application, including the following:

• They only apply to contracts entered into on or after 31 December 2018.
• They only apply where the person who supplies the goods, services or intangible assets concerned, and is therefore entitled to the receivable, is a small or medium-sized enterprise which is not a special purpose vehicle . Whether or not an entity qualifies in any particular case requires a detailed examination of the precise wording of the
• Regulations. Counter-intuitively, the test is not applied at the time the contract is entered into, but at the time the assignment takes place.
• There is a specific exemption for contracts “for, or entered into in connection with, prescribed financial services”: These are widely defined to include “any service of a financial nature”.
• There are specific exclusions for particular types of contract, including certain commodities, project finance, energy, land, share purchase and business purchase contracts and operating leases.
• As a general rule, it would seem that the Regulations only apply to contracts governed by English law or the law of Northern Ireland, but they prevent the parties from choosing a foreign law if it can be established that the purpose of doing so was to evade the Regulations.
• The Regulations do not apply if none of the parties to the contract has entered into it in the course of carrying on a business in the United Kingdom.

Frequently asked questions

A ban on assignment is a term which prohibits or imposes a condition, or other restriction, on the assignment by a party to the contract of the right to be paid any amount under the contract or any other contract between the parties.

A Ban on Assignment is a legal provision that prevents businesses from assigning or transferring their invoices to a third party. This means that if a business wants to use invoice finance, they may not be able to sell their outstanding invoices to a finance provider. This can create a challenge for businesses that rely on invoice finance to manage their cash flow because they cannot leverage their outstanding invoices as collateral to obtain financing.

However, some invoice finance providers offer a workaround by providing a type of invoice finance known as “disclosed invoice finance,” where the debtor is informed that the invoice has been assigned to a finance provider. While a Ban on Assignment may limit the options available for businesses using invoice finance, there are still alternatives available to help them manage their cash flow needs.

Seasoned professional with a strong passion for the world of business finance. With over twenty years of dedicated experience in the field, my journey into the world of business finance began with a relentless curiosity for understanding the intricate workings of financial systems.

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What is an Anti-Assignment Clause?

When business owners are negotiating contracts to gear up for the sale of their business, they are rightly concerned with key questions such as the sale price for the business including assets such as how much the sale will cost them and what happens if something goes wrong.  At the end of the contracts, there are usually several pages of type that usually look like boilerplate. Inside those clauses is usually something called an assignment clause, or more accurately, an anti-assignment clause.

It’s one of those clauses that everyone glosses over – after all, it’s just standard legal text, right?

For a business owner hoping to sell their business, an anti-assignment clause can dissuade potential buyers and play a crucial role in the selling price of a business.  If this sounds familiar and you’re in the process of negotiating the merger or acquisition of your business, read on – we’ve put together a practical guide to anti-assignment clauses and what to look out for.

Looking for legal help? feel free to get in touch with our  commercial lawyers  for matters related to contracts.

What is an assignment clause?

The anti-assignment clause states that neither party can transfer or assign the agreement without the consent of the other party. On a basic level, that makes sense – after all, if you sign a contract with a specific party, you don’t expect to be entering into an agreement with a third party you didn’t intend to be.

However, when you sell your business, you will want to transfer ownership of those contracts to the buyer. If your contracts all contain an anti-assignment clause, they effectively restrict you from transferring ownership to the interested party. Now, you’re presented with a new challenge altogether – before you can focus on the sale of your business, you must first renegotiate the terms of your contracts with each party.

Language to look out for in anti-assignment clauses

If you’re thinking about selling your business or even have potential buyers interested, it’s better to know in advance if you’ve got anti-assignment clauses in your contracts. There are generally two types of anti-assignment clause to look out for. The first relates to the complete bar on assignment of rights and responsibilities and is typically worded in this way, or similar:

“Neither Party may assign, delegate, or transfer this agreement or any of its rights or obligations under this agreement.”

The second type prevents the transfer of rights or duties without prior written consent of the other party. This will read along the lines of:

 “Neither this agreement nor any right, interest, or obligation herein may be assigned, transferred, or delegated to a third party without the prior written consent of the other party, and whose consent may be withheld for any reason.”

So, where the first prohibits assignment altogether, the second prohibits assignment unless permission is sought in advance. Some clauses may even explicitly state that a change of control such as a merger or acquisition is an assignment. The last thing you want is to cause a dispute by breaching the contract, but if you’ve already agreed to these terms, you’ll have to open a fresh set of negotiations with the contracting party before you sell the company.

Assignment clauses in M&A: what’s the problem?

Due diligence is the bread and butter of any merger or acquisition. Rather than a leap of faith, due diligence ensures the purchase of a business is a calculated decision with minimal risk to the buyer. Typically carried out by specialist lawyers, the process is designed to lift the hood on the target business to determine the valuation of assets and liabilities and identify any glaring issues that could leave the buyer open to risk.

During the due diligence process, the buyer will look through all of the major contracts the business has open, and specifically keep a close eye out for assignment clauses.

Despite the virtual environment that many businesses have been forced to operate in in 2020, most companies will have commercial leases for the premises from which they typically work. Almost all leases have an anti-assignment clause, and this is a perfect example of an instance that is often overlooked by commercial tenants when selling a business which includes a leasehold property.  This transfer of ownership may well be prohibited under an anti-assignment clause so that prior to the sale of the business, you would be required to ask permission from your landlord. The issue here is that the landlord may well see this as the perfect opportunity to renegotiate and secure a better deal for themselves. What’s worse, if they don’t sign off on the transfer, you’ll have an obstruction on your hands that will stand in the way of the sale.

In any case, an unexpected anti-assignment clause usually winds up being a last-minute hitch in the sale, and it never comes at a good time. Whether it delays the sale or obstructs it altogether, overlooking an anti-assignment clause can cost you considerably in an M&A transaction.

What makes anti-assignment clauses enforceable?

Generally speaking, an anti-assignment clause will be enforced by the courts if it was agreed upon by both parties to the contract. Many contracts exclude or qualify the right to assignment – according to the courts, a clause that states that a party to a contract may not assign the benefit of that contract without the consent of the other party is legally effective and will extend to all rights and benefits arising under the contract.

Courts won’t always enforce assignments to which the counterparty did not give permission, even where there is no anti-assignment clause that specifies this provision.

How to negotiate anti-assignment clauses

The best practice for business owners is to be vigilant when negotiating new contracts and ensure that any anti-assignment clauses still allow for the transfer of ownership when they decide to sell the business.

Remember, even though the buyer is purchasing the assets of the business, this usually means that all of the contracts of the business go with it because the business remains intact. Therefore, the best way forward is to negotiate these clauses upfront from the outset of the relationship, so that when you do decide to sell your business, you automatically have permission to transfer the ownership without having to delay the sale by entering into fresh negotiations.

If your agreement does not permit assignments, it’s worth seeking the advice and support of a specialist lawyer who can help protect your interests through negotiation with your counterparty on this point. You may be able to include a provision that allows for assignment of your rights and obligations upon the prior written consent of the other party. Your lawyer will likely advise you to carve out a specific provision to prohibit the counterparty from unreasonably withholding or delaying consent or making it subject to unreasonable conditions – an issue which, if not provided for within the contract, can cause serious delay and disruption to the sale of your business. Further, it may be beneficial to add an extra element to the contract that makes exceptions to the clause for assignments between affiliates.  If you’re planning to sell your business, this would be the right place to carve out an exception within the clause to the change of control via a merger or acquisition.

It’s important to bear in mind that anti-assignment clauses tend to be viewed narrowly by courts, and that there have been several instances whereby anti-assignment clauses have not been enforced since the clause itself did not explicitly state that the assignment of rights, duties or payment would render the contract void or invalid. So, if you’re in the process of negotiating an agreement and wish to protect your interests through the addition of an anti-assignment clause, it’s critical that you include the consequences of assignment within the clause itself and state that assignments would invalidate or be in breach of the contract.

If you do not wish for the counterparty to be able to transfer the legal obligation to perform their duties as stated in the contract to a third party, this must be explicitly stated in one of three ways:

• Specify the need for consent

There’s no need to be unreasonable – you can protect your interests while still giving the counterparty the space to re-negotiate should they wish to assign rights by including a clause that asks for consent.

• Provide an exemption to consent for affiliates, successors or new owners

Ask your lawyer to draft an exception into the clause that permits assignment to affiliates or successors to the counterparty, such as:

“Neither party may assign or delegate this agreement or its rights or obligations under this agreement without the prior written consent of the other party, except that no consent is required (a) for assignment to an entity in which the transferring party will own greater than 50 per cent of the shares or other interests; or (b) in connection with any sale, transfer, or disposition of all or substantially all of its business or assets; provided that no such assignment will relieve an assigning party of its obligations under this agreement. Any assignment or delegation that violates this provision shall be void.”

• Require reasonable consent

Just as you would not wish for consent to be held back from you unreasonably in the renegotiation of contract terms prior to a sale, your assignment clause should make clear that you will not unreasonably withhold or delay consent should the third party request permission to assign their legal obligations. This may read something like this:

 “Neither party may assign or delegate this agreement or its rights or obligations under this agreement without the prior written consent of the other party, whose consent shall not be unreasonably withheld or delayed. Any assignment or delegation that violates this provision shall be void.”

Whatever the circumstances, we strongly recommend calling upon a contract law specialist, whether you’re undergoing due diligence in the run up to an M&A transaction, are considering selling your business or are negotiating new contracts with customers and suppliers. Our lawyers bring in-depth expertise in the area of anti-assignment clauses and will work closely with you to protect your interests and ensure no clauses in your contracts negatively impact the sale of your company.

For a free consultation, get in touch with our team through the contact form below or using our online chat service.

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Bans on Assignment Clauses Abolished, What Does This Mean for Financing?

A recent decision was taken by the uk government to make bans on assignment clauses null and void. these clauses made it very difficult for many uk businesses to gain access to the finance they need to grow and meet objectives..

Below Steve Noble, COO at Ultimate Finance , offers insight into the potential changes ahead and the way these will impact business and financing.

Ongoing Brexit discussions may mean it seems much longer ago, but in November both Houses of Parliament passed legislation to end Bans of Assignment contractual clauses. This is great news that lenders and SMEs will have been celebrating since the announcement was made.

What’s the problem with Bans on Assignment clauses?

Bans on Assignment often blocks the provision of vital funding to SMEs as some financiers are hesitant to supply this where clients and their customers have agreed a contract containing this type of clause. If the financier IS prepared to provide funding, they will either have to find a workaround – such as requesting that the business approaches their customer for consent –or request additional security from the client. Each of these options proves time consuming, incurs unnecessary costs and makes it difficult for clients to obtain invoice finance. Unsurprisingly, this can cause SMEs to either struggle on without the support they need or rely on alternative finance options that aren’t right for their business.

What does the change mean?

This means that from 2019 SMEs will be able to access the funding they need more easily. It’s why I’m welcoming the news that after two previously unsuccessful attempts, Bans on Assignment clauses are now null and void in England, Wales and Northern Ireland. SMEs will therefore be able to assign receivables to invoice finance providers without having to spend time and money seeking consent from customers or trying to find workarounds to these clauses which can make things unnecessarily complex.

The legislation also makes clauses prohibiting a party from determining the value of a receivable and being able to enforce it ineffective. Again, this will increase the appeal of invoice finance for so many SMEs across the country.

Does the regulation impact your business?

Clearly, this is great news for SMEs and funding partners across the country. However, there are still caveats in place which will inevitably frustrate some.

• The regulations apply to contracts entered into on or after 31 December 2018
• They do not apply to receivables due to be paid to large enterprises – traditionally defined as businesses with more than 250 employees – or special purpose vehicles
• They exclude certain contracts from the scope of the regulations, for example those relating to land and for the provision of financial services
• They only apply to contracts governed by the laws of England, Wales and Northern Ireland

The final point will likely prove the most frustrating, as the current legislation doesn’t change anything for more than 345,900 SMEs in Scotland, leaving them to potentially continue struggling to gain access to vital funding next year.

Hopefully this won’t be a permanent issue however as the Scottish Government may follow in the Central Government’s footsteps and announce similar legislation to ensure SMEs north of the border aren’t at a disadvantage compared to the rest of the UK.

Onwards and upwards

Despite the caveats, the news that Bans on Assignment clauses will soon be a thing of the past is great news for SMEs and lenders alike. This should result in a simplified invoice finance process and therefore more small businesses gaining access to the funding they need to continuing thriving in 2019. If that’s not good news, I don’t know what is.

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Banning “Ban on Assignment” clauses

Recruitment Business directors, you find me on the verge of getting professionally excited again

Newsdesk Legal News , Friday 07 June 2019 Jump to Comments (1) 559 Views

Yes, this draft bill proposes that ban on assignment clauses become ineffective. This can only be good news to agency recruiters, RPOs, clients, solicitors, and Invoice Discounters.

For anyone out there who hasn’t had the delight of reviewing one of these clauses in a client contract for agency recruitment, it currently means that if the Recruitment Business uses an Invoice Discounting (“ID”) facility, any invoice raised as a consequence of a contract with a ban on assignment clause in it won’t be assigned to their ID facility provider.

The big RPOs are the worst culprits for using ban on assignment clauses. Most of the time the requirement for these clauses is passed down from the client, which can determine how negotiable they are. If the RPO and/or the end client won’t remove the clause, it can mean the Recruitment Business can’t raise finance against any invoices raised under that contract.

Obviously this will impact on cash flow if the Recruitment Business has to pay the contractor before the client has paid the RPO who has paid the Recruitment Business. Add a “pay when paid” clause into that mix and you’re in for a whole lot more fun, but that’s the subject of another blog on another day.

Recently I’ve reviewed some pretty reasonable clauses that do ban assignment but not to the extent that assignment of the invoices is to an ID provider. I thought that was pretty progressive, but this bit of proposed legislation is going to make life so much easier. It will be one less thing for Recruitment Businesses to push back on in what is, let’s face it, a very typical way of funding agency contracting.

So watch this space, & I’ll let you know as soon as ban on assignment clauses are banned.

By Lucy Tarrant

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How Long Can I Keep an Employee in a “Temporary” Role!

Sara bennett.

• June 15, 2024

Myths.  Truths.  Misconceptions About “Length of Assignment”

Conversations about how long a temporary assignment can last have been around for a long time.  In December 2000, the now infamous Microsoft 97 million $ settlement  awarded 97 million dollars to temporary workers who were re-classified as core (common law) employees instead of as temporary employees as intended by Microsoft.  This re-classification requirement resulted in 8-12,000 “temps” working at Microsoft becoming “benefit eligible” and resulted in a pretty hefty financial obligation even for a company like Microsoft.

Unfortunately  this settlement catapulted the issue of assignment length into a confusing period for companies who were large users of temporary employees.   Based on some common misunderstandings of what created the MS settlement,  many employers created internal policies that limited the length of time an employee could be a “temp” believing that by doing so they were minimizing their exposure to “re-classification” issues.

Even the American Staffing Association (ASA) weighed  in on the issue by taking up the concerns of both the employer and their interim employees who were often negatively impacted by an arbitrary assignment ending.  In a series of white papers, ASA challenged  the employer community regarding their assignment limit policies claiming  that “the length of a temporary assignment” is only one, of multiple factors, important to establishing the employee- employer status and does not in and of itself mitigate the risk of misclassification.  They wisely noted that other components of the employee/employer relationship were, in fact, equally if not more important.     

What is the status of the length of assignment issue today?

As the dust settled in the early 2000s it became clear that the truth surrounding the MS settlement was far different from the initial headlines.    But the damage had been done.  Even though the arguments of the ASA prevailed, temporary employees are still asking how long an employer can keep them on in a temporary role without breaking the law.

What can employers do to protect themselves from unexpected liabilities related to how they use and manage temps?

 #1.  The easiest and most bullet proof decision is to use third party staffing agencies to employee all non-core, interim, contract or temporary employees rather than hiring them directly.

Many analysts believe that had MS obtained all of their temporary workers at the time of the lawsuit thru a third party employer, instead of hiring many of their temporary workers directly classified as 1099s, it is possible that some of the mis-classification claims could have been avoided.

Most companies have policies that forbid hiring managers from hiring a worker classified as a 1099…..requiring them to use a staffing agency to on board and pay them as interim workers even when those workers were sourced internally, not by the staffing agency per se. They do this to avoid the scenario where an employer classifies  a worker as a 1099 – “self employed”- and the IRS later refutes that claim, subjecting the employer to back taxes, fines, and penalties.   Employers want the peace of mind that comes from  knowing that the  applicable wages, payroll taxes and benefits costs are being calculated and paid by an employer other than themselves.

Many local staffing companies, PACE included, have created low cost “payroll service” packages for employers who have a need for third party employer services for interim workers they have recruited directly.  (See PACE’s Employer of Record service option) 

#2.  Write your key benefit plans to specifically exclude third party (i.e. staffing firm) employees. 

In 1999, Microsoft didn’t have any carve outs in their benefit contracts, and had to learn the hard way that easiest way to protect themselves from unanticipated benefit costs is to specifically exclude workers who are the employees of third party employers.

#3.   Include information about how to manage workers from third party employers as part of supervisory training.   

The IRS is still using specific tests to determine the employer relationship.  To make sure that the employer responsibility stays with the staffing agency and doesn’t  default back to the employer under audit, many employers are training their supervisors on temp management 101…

• To limit their communications with temporary employees on any issue related to pay, length of assignment, benefit eligibility, employment status or work schedules, etc.
• To allow,  and in some cases require,  representatives from their staffing vendors to be on site, communicating directly with their employees,  as needed.
• To provide feedback on performance thru the employee’s staffing vendors, not directly.

If you are an employer and would like some training for your supervisors on how to legally and operationally optimize the employer services of a third party staffing agency, give us a call at 425-637-3312!

#4.  Make sure your staffing agency provides you with a contract or written agreement that spells out their duties as “employer”.  These agreements typically include the staffing agencies responsibility to….

• Recruit, screen and evaluate employees to be placed on assignment
• Determine employee pay rates, benefits and expense reimbursements
• Hire, fire, and assign employees
• Handle employee complaints and concerns
• Pay worker, calculate and pay taxes, and distribute pay check

Getting these types of agreements or contracts in writing, makes it clear who is responsible to act as the “employer of record”.  It also can protects employers from unexpected liabilities resulting from workplace accidents or claims of discrimination.

While most of the legal concerns regarding how long a temp can remain on assignment have dissipated, there are still situations where internal “length of assignment” policies might be needed. 

For example….  .

You may want to limit length of assignment in order to protect your Intellectual Property…   

In 2016, Microsoft established a new set of “assignment limit” rules, based not on the risk of mis- classification or co-employment, but on their concerns about the integrity and security of their intellectual property.  Because they were uncomfortable allowing a temporary or contract worker to have long-term access to their proprietary information and systems,  they decided to place limits on the number of months an employee could access their systems without a break in service.  They decided  that after 18 months a temporary or contract worker needed to be removed from their assignment, forcing an arbitrary lay off of any contractors reaching that benchmark.

We are yet to see if MS can effectively enforce this policy without exception as we know first hand the negative impact of losing a valued worker – even if the are not an employee hired directly.

You may want to limit length of assignment in order to optimize the productivity and morale of your temporary employees… 

While higher wage temporary or contract workers  tend to prefer “longer term assignments”, many lower wage temporary workers consider themselves negatively impacted when asked to remain as temporary employees for long periods of time without being converted to a regular hire.   The impact to productivity and morale  is often highly visible when temporary workers are asked to work side by side core employees doing the same or similar work.

For similar reasons, in those situations where an employer regularly hires members of its temporary workforce, there is risk attached to keeping the temporary employee in the workforce once they know they will not be hired.

Many of our clients who regularly hire our temporary employees have rules whereby an employee will either be hired or removed from their assignment after a defined period.

Structured policies about how long an employee can work in your environment as a “temp” minimize the risk of discrimination….

The longer a “temp” is in your workforce, and the fewer policies you have to guide decisions your managers use to either end or extend assignments, the more opportunity there is for claims of “disparate treatment”.

Making “length of assignment” a matter of company policy rather than a decision left up to the discretion of an individual manager or supervisor,  mitigates the risk of an uninvited claim of disparate treatment.   At the same time, an across the board “length of assignment” policy, can reduce the resources manager’s have available to them to achieve important business goals.   

In Summary….

PACE  regularly provides employees for assignments intended to last as little as two days to multiple years and does so seamlessly, based on the employer’s internal policies and our assessment of our employee’s motivations for working.  While we will provide information on the operational risks an employer might face by either limiting or extending assignment lengths, in the end, it is a decision that is made by both the employer and the employee.  In reality, once the original agreement re: “length of assignment” has been satisfied, an employer can still provide an employee with the opportunity to extend their assignment and the employee can then decide if they want to accept the employer’s offer.  The law plays no role in those decisions for either party,  although a company’s internal policies might.   

———————————

If you’d like help with your next temporary staffing project or to learn more about how optimize your use of temporary employees,  give our Partner Services and Solutions a call at 425-637-3312 or e mail us at [email protected]

PACE Staffing Network is one of the Puget Sound’s premier staffing /recruiting agencies and has been helping Northwest employers find and hire employees based on the “right fit” for over 45 years.

A  5 time winner of the coveted “Best in Staffing” designation , PACE is ranked in the top 2% of staffing agencies nationwide based on annual surveys of customer satisfaction.

PACE services include temporary and contract staffing, temp to hire auditions , direct hire professional recruiting services , Employer of Record (payroll) services , and a large menu of candidate assessment services our clients can purchase a la carte.

To learn more about how partnering with PACE will make a difference to how you find and hire employees,  contact our Partner Services and Solutions team at 425-637-3312, e mail us at [email protected] or visit our website at www. pacestaffing.com/employers.

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Once signed up, you’ll receive a featured blog each week written by a member of the PACE team and other local experts who work in some area of staffing, hiring, recruiting, retention, team building, organizational strategy etc. Our Thought Leader Network is a great way for small to mid-sized stakeholders to stay informed about what’s happening locally in any area of staffing – from tactical how to’s to bigger picture strategy options.

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Why an antiabortion group is backing Trump without endorsing him

with research by Alec Dent

Good morning, Early Birds. The ABC News correspondent Bill Stewart was murdered by a government soldier while on assignment in Nicaragua 45 years ago today. Send tips to [email protected] . Thanks for waking up with us.

In today’s edition … Democrats urge Biden to take more Gaza refugees … Democrats work to end ban on mailing abortion materials … but first …

Inside a leading antiabortion group’s election playbook

When former president Donald Trump announced in April that he believed the decision to ban abortion should be left to the states , Marjorie Dannenfelser , the president of the antiabortion group SBA Pro-Life America , said she was “deeply disappointed” in his decision.

But Dannenfelser’s disappointment has not stopped SBA from building a robust effort to help Trump defeat President Biden and help Republicans retake the Senate.

SBA plans to spend at least $92 million to reach 10 million voters in eight states this cycle, Dannenfelser said. Its canvassers have already knocked on more than 1.4 million doors. They’ll also reach voters by phone, text, mail and online.

In an interview, Dannenfelser said she hadn’t tried to change Trump’s mind about leaving abortion laws to the states to decide, even though she disagrees with him.

“I know him better than that,” Dannenfelser said. “Nobody is better than he in seeing how this works in reality, politically, and I think that will be the only thing that moves him, if anything.”

Instead, SBA has shifted its strategy.

Dannenfelser pledged last year that SBA would not endorse any candidate who refused to embrace a national 15-week limit on abortion, which has led the group to endorse fewer candidates.

SBA has not endorsed Trump, and it has endorsed only two Senate candidates in battleground states, Bernie Moreno in Ohio and Tim Sheehy in Montana. (The group has endorsed three Senate candidates in total this year, down from seven in early June 2022 .)

But SBA is working to elect Trump and Republican Senate candidates it has not endorsed in four battleground states: Arizona, Pennsylvania, Michigan and Wisconsin.

The group is also campaigning for Trump in Georgia and North Carolina, which do not have Senate races this year. Its canvassers have hit more than 230,000 doors in North Carolina alone, according to Dannenfelser. (They’re also knocking doors for Moreno in Ohio and Sheehy in Montana.)

SBA has decided that it’s more important to prevent Democrats from winning and restoring abortion protections than to support only Republicans who embrace a 15-week limit.

“We can’t abide their opponents,” Dannenfelser said. “I think in the end that’s really what it comes down to.”

An unpopular stance

Biden and other Democrats are running on abortion rights , which polls consistently find is one of Biden’s strongest issues. Democrats have been highlighting their support for abortion rights ahead of the second anniversary of the Supreme Court’s overturning of Roe v. Wade on Monday.

Senate Majority Leader Charles E. Schumer (D-N.Y.) has teed up a vote to codify Roe — the third vote on reproductive rights related legislation in the past few weeks — after the Fourth of July recess, even though he knows the bill has no chance of passage.

Women are especially skeptical of abortion restrictions. Just 35 percent of women voters in Arizona and 34 percent in Michigan support a national ban on abortion after 15 weeks, according to a new KFF poll of women voters .

Trump’s position of leaving the issue up to the states is only slightly more popular: 38 percent of women voters support it in Arizona and 40 percent in Michigan, according to the poll.

Message at the doors

The Democratic polling advantage on the issue has led Republicans to rely on what Dannenfelser calls “the ostrich strategy”: burying their heads in the sand.

SBA is betting that tackling the issue head on with persuadable voters who are sympathetic to its arguments — including those who don’t regularly vote — is a more effective strategy.

The group’s canvassers are warning voters — accurately — that Biden has pledged to restore Roe if he is reelected and Democrats hold on to the Senate and retake the House

Democrats “will suspend the filibuster and they will pass the Women’s Health Protection Act, whose name we object to strenuously,” Dannenfelser said, referring to a bill to restore abortion rights nationwide. “We will talk about that, contrasted with the pro-life candidate, and that moves voters.”

Helpful or harmful?

The $92 million SBA is planning to spend this year represents a substantial investment. For comparison, three outside groups aligned with Senate Minority Leader Mitch McConnell (R-Ky.) — Senate Leadership Fund , American Crossroads and One Nation — together spent almost $400 million in Senate races last cycle.

Sen. Steve Daines (R-Mont.), the chairman of the National Republican Senatorial Committee , said he was grateful for SBA’s efforts.

“They were very helpful to me in 2020 when I beat Steve Bullock by 10 points in Montana,” Daines said, referring to the popular Democratic governor who ran against him. “They were on the ground, going door to door, making sure that pro-life voters got out and voted.”

But SBA’s message that Democrats will revive Roe if they win complete control of Washington in November is strikingly similar to what Democrats are telling voters — and Democrats say it could end up helping them instead. Sarafina Chitika , a Biden campaign spokesman, said the campaign would “welcome” SBA spreading the word.

• “We’re thrilled to hear that SBA intends to spend its resources telling voters that Democrats will restore the federal right to abortion after they win this November,” Mini Timmaraju , the president and chief executive of Reproductive Freedom for All , an abortion rights advocacy group, told us in a statement. “All that they’re doing is turning away more voters from the GOP and shoring up support for our movement.”
• “This investment is a major liability for GOP Senate candidates who have all spent months scrambling to hide their support for a national abortion ban and who will now have to answer for SBA’s support,” Sarah Guggenheimer , a spokeswoman for Senate Majority PAC , the flagship super PAC backing Democratic Senate candidates, told us in a statement.

Dannenfelser says Democrats are thinking about the issue all wrong — at least with a specific subset of voters. SBA’s canvassers emphasize that Republicans believe in limits on abortion, while Democrats would scrap the restrictions put in place since Roe fell.

“It sets up a contrast that is just a gift to Republican candidates,” she said.

On the Hill

Democrats urge biden to take more gaza refugees.

First in the Early: Nearly 70 Democratic senators and representatives are urging the Biden administration to make it easier for some Palestinians to come to the United States as refugees.

• “We urge you to consider opening pathways to Palestinian refugees, particularly those with family members in the United States, to seek relief in the United States,” the lawmakers write in a letter today to Secretary of State Antony Blinken and Homeland Security Secretary Alejandro Mayorkas .

The letter comes after 35 Republican senators wrote to Biden last month expressing alarm after CBS News reported that the administration was considering steps to make it easier for the U.S. to accept some Gazan refugees . The Republicans said they feared the administration could not “adequately vet this high-risk population for terrorist ties,” among other concerns.

The Democratic letter urges the administration to grant Priority-2 designation to certain Palestinians. Rep. Greg Casar (D-Tex.), who led the letter with Sen. Dick Durbin (D-Ill.) and Reps. Pramila Jayapal (D-Wash.) and Debbie Dingell (D-Mich.), told us he had heard from constituents desperate to get family members out of Gaza.

“In some of those cases, we have been able to help,” he said. “But in other cases, we haven’t been able to get people’s family members — U.S. citizens’ immediate family members — to safety because they’re a sibling or a grandparent rather than an immediate parent or a child of a U.S. citizen.”

Many lawmakers who signed the letter are members of the Congressional Progressive Caucus, including Casar, Jayapal and Sen. Bernie Sanders (I-Vt.). But several more moderate Democrats signed on, too, including Sen. Mark Kelly (Ariz.) and Rep. Scott Peters (Calif.).

What we’re watching

In the courts.

The Supreme Court is expected to hand down more decisions today as it nears the end of its term.

Some major cases remain, including gun prohibitions for people suspected of domestic violence; whether emergency room doctors can perform abortions in life-threatening situations in states with strict abortion restrictions; the allowance of homeless encampments in public spaces; and, of course, two cases related to Trump and the Jan. 6, 2021, attack on the U.S. Capitol, including whether Trump is immune from prosecution.

Check out The Post’s Supreme Court tracker for all the cases already decided and those that remain.

On the campaign trail

We’re keeping an eye on any developments in the race between Rep. Bob Good (R-Va.), the chairman of the House Freedom Caucus, and his primary challenger, state Sen. John McGuire .

The race remains uncalled two days after the primary, with McGuire leading by 321 votes.

We’ll also learn more today about how much the Biden and Trump campaigns raised and spent last month when they file their latest campaign finance reports, which are due by midnight.

The Trump campaign and the Republican National Committee said they raised $141 million last month in the wake of Trump’s conviction for illegally concealing hush money payments to an adult-film actress ahead of the 2016 election.

Democrats work to end ban on mailing abortion materials

Sen. Tina Smith (D-Minn.) plans to introduce legislation to end a provision of the Comstock Act that bans sending abortion-related materials through the mail that’s been on the books since 1873.

• “There is a very clear, well-organized plan afoot by the MAGA Republicans to use Comstock as a tool to ban medication abortion, and potentially all abortions,” Smith told our colleagues Dan Diamond and Caroline Kitchener . “My job is to take that tool away.”

Smith’s office says the bill has already earned the support of Democrats in the Senate, including Sens. Elizabeth Warren (D-Mass.) and Catherine Cortez Masto (D-Nev.). A companion bill will be introduced to the House by Rep. Becca Balint (D-Vt.), who said House Democratic leaders are likely to support it.

The Comstock Act is the subject of legal ambiguity in the post- Roe era, where the status of abortion differs among states. Antiabortion advocates have suggested that even in states where abortion is legal, the Comstock Act prevents abortion materials from being sent in the mail.

• “According to Trump advisors’ radical legal theory, they can use Comstock to prosecute anyone who uses the internet or U.S. mail to facilitate an abortion — and they can even prosecute women and health care providers,” said Morgan Mohr , the Biden campaign’s senior adviser for reproductive rights, in a press memo.

(Trump has not indicated his stance on the Comstock Act.)

Greer Donley , a University of Pittsburgh law professor, said that if Trump wins, he could choose to enforce the Comstock Act differently than the Biden administration.

It could even theoretically be possible to use the Comstock Act to prevent supplies for in-clinic abortion procedures from being mailed, forcing abortion providers to purchase their equipment and medicines only in person, effectively restricting abortion even in states where it remains legal.

From The Post:

• Bayer lobbies Congress to help fight lawsuits tying Roundup to cancer . By Tony Romm .
• A tale of two states: Arizona and Florida diverge on expanding kids’ health insurance . By Daniel Chang .
• Gavin Newsom wants to restrict smartphone use in schools . By David Ovalle .
• Louisiana requires Ten Commandments to be displayed in public classrooms . By Anumita Kaur .

From across the web:

• RFK Jr. keeps burning through cash . By Politico’s Jessica Piper .
• Fox News Poll: Three-point shift in Biden-Trump matchup since May . By Fox News’s Dana Blanton.

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Book News & Features

What’s a book ban anyway depends on who you ask.

Elizabeth Blair

Librarian Sabrina Jesram arranges a display of books during Banned Books Week at a public library branch in New York City on Sept. 23, 2022. Ted Shaffrey/AP hide caption

"Book ban" is one of those headline-ready terms often used by the news media, including NPR, for stories about the surge in book challenges across the U.S.

The American Library Association launched its annual Banned Books Week in 1982. There are banned book clubs . States have introduced or passed laws that’ve been called bans on book bans . Meanwhile, many people fighting to get books removed from school libraries are not fans of the term book ban.

The practice of censoring books has been around for centuries . But what does it actually mean to ban a book today? The answer depends on who you ask. Here are a handful of definitions from people entrenched in the issue:

Kasey Meehan , program director of PEN America’s Freedom to Read (speaking at a video press conference in April) : “We define a book ban as any action taken against a book based on its content that leads to a previously accessible book being completely removed from availability for students or where access to a book is restricted or diminished. PEN is perhaps a bit unique, and that's in contrast to ALA [American Library Association] and some others, in that we do include books that have been removed while awaiting review as a ban. We include that because we know books are undergoing review. As long as they are removed from access for students, those books can be removed for weeks, months, upwards of a year as we've seen in some cases.”

NOTE: The American Enterprise Institute took exception to PEN America’s definition. A study AEI conducted for the Educational Freedom Institute looked at PEN America’s 2021-2022 “index of banned books” and found that “74 percent of the books” listed as banned “are listed as available in the same districts from which PEN America says those books were banned.”

Emily Drabinski, president of the American Library Association: “A ‘book ban’ is the removal of a title from a library because someone considers it harmful or dangerous. A ‘challenge’ is when someone raises an objection to a library material or a program or a service. ‘Reconsideration’ is the formal process libraries go through to determine whether a book meets the library's selection criteria. We reserve ‘book ban’ for… a book that meets that criteria when it has been removed from a collection entirely. … You often do find that books, they are challenged and then they undergo a review process and sometimes they end up being pulled and banned and other times they end up back on the shelves. I think sometimes our policymakers and many of the people who are active in the pro-censorship movement, they don't fully appreciate or understand the fact that many Americans, lots of them, don't have access to books in any other way except through their library, through their school or public or academic library. ”

Joe Tier, a self-described “concerned grandparent and parent living in Eldersburg, Maryland”: “I think [the term book ban is] designed to be inflammatory and to obfuscate the constructive dialogue that should occur about age appropriate content. It can be a dog whistle that's used to incite anger against those who are opposed to limiting sexually explicit content in public school libraries. … You really cannot ban anything, you know, material-wise these days because you have the Internet and you have PDFs. And so the term book ban is almost obsolete.”

Mustafa Akyol, senior fellow at the Cato Institute and author of Islam Without Extremes (banned in Malaysia in 2017): "When [a book] is banned, it's not available, so it's not legal to sell it. That's what a book ban means. … I was arrested at the Kuala Lumpur International Airport… After 18 hours of detainment by the Malaysian religion police, I was let go… Bookstores couldn't sell [ Islam Without Extremes ] in Malaysia. My book was not available… There might be some regimes who are even going after people for possessing a copy of the book… I don't think there are literal book bans in the United States. When a book is banned, literally the authority says this book is not legal.  …  Sometimes people use hyperbolic language to express their thoughts about a particular problem, and that might be a problem. And that divisive rhetoric then makes everything worse. So you cannot reasonably agree on some reasonable common ground and everybody becomes more and more strident and angry against each other. That in itself becomes a major problem for a democracy rather than just different opinion that people have on certain things.”

Mona Kerby, Master’s degree in School Librarianship coordinator at McDaniel College in Westminster, Maryland: “To me, ‘banned’ is the book's not on the shelf. But I could certainly see the different flavors of that word, and that’s why a discussion about ideas is always so enriching. …The few times I had some question about materials, those moments turned into wonderful opportunities between me and the parent just to discuss. And we both learned. So respecting one another's opinion and listening to another's opinion is not a bad skill to have.”

This story was edited for radio and digital by  Meghan Collins Sullivan .

The Government restricts bans on assignment

United Kingdom |  Publication |  November 2018

Legislation now in force preventing parties from prohibiting the assignment of receivables under certain contracts.

At the moment, a contract can prohibit or restrict the parties’ ability to assign or transfer rights created under the contract. The extent of the restriction is a matter of interpretation of the clause concerned. If one of the parties to the contract attempts to assign the benefit of the contract in breach of the restriction, the purported assignment is ineffective.

One of the key assets of any business is its receivables, and restrictions on assignment can prevent the parties from factoring receivables or otherwise raising finance on them. The Government has decided that it should be easier for businesses to raise finance on their receivables. Accordingly the Small Business, Enterprise and Employment Act 2015 allows regulations to be made to invalidate restrictions on the assignment of receivables in particular types of contract. The regulations have now been made. They are contained in The Business Contract Terms (Assignment of Receivables) Regulations 2018. Draft regulations published in July, have been approved by both Houses of Parliament and are now in force.

What types of contracts do the Regulations apply to?

The Regulations apply to contracts for the supply of goods, services or intangible assets under which the supplier is entitled to be paid money. But there are a number of important exclusions from their application, including the following:

• They only apply to contracts entered into on or after 31 December 2018.
• They only apply where the person who supplies the goods, services or intangible assets concerned, and is therefore entitled to the receivable, is a small or medium-sized enterprise which is not a special purpose vehicle. Whether or not an entity qualifies in any particular case requires a detailed examination of the precise wording of the
• Regulations. Counter-intuitively, the test is not applied at the time the contract is entered into, but at the time the assignment takes place.
• There is a specific exemption for contracts “for, or entered into in connection with, prescribed financial services”: These are widely defined to include “any service of a financial nature”.
• There are specific exclusions for particular types of contract, including certain commodities, project finance, energy, land, share purchase and business purchase contracts and operating leases.
• As a general rule, it would seem that the Regulations only apply to contracts governed by English law or the law of Northern Ireland, but they prevent the parties from choosing a foreign law if it can be established that the purpose of doing so was to evade the Regulations.
• The Regulations do not apply if none of the parties to the contract has entered into it in the course of carrying on a business in the United Kingdom.

What is the effect of the Regulations?

The Regulations provide that “a term in a contract has no effect to the extent that it prohibits or imposes a condition, or other restriction , on the assignment of a receivable arising under that contract or any other contract between the same parties.”

A receivable is the right to be paid any amount under a contract for the supply of goods, services, or intangible assets. The Regulations do not prevent the parties from restricting the assignment of other contract rights.

More difficult is to establish what is meant by assignment. Receivables are transferred in various ways in practice. Sometimes the transfer is outright (for instance by way of sale); and sometimes it is by way of security (for instance to secure a loan). The transfer may be effected by a statutory assignment, an equitable assignment, a charge or a trust. “Assignment” is not defined in the Regulations, and so there is some doubt as to which of these transactions are covered.

Although charges are not expressly referred to, they might be covered by the expression “assignment” if it is given a broad interpretation. But because of the uncertainty, the best course is to take an assignment by way of security over a receivable where there is, or might be, a restriction. That way, it is clear that the Regulations do apply.

Non-assignment clauses come in a variety of forms. They will be covered by the Regulations if they prohibit or impose a condition , or other restriction on the assignment of a receivable. The Regulations expressly invalidate terms which prevent the assignee from determining the validity or value of the receivable or their ability to enforce it. Whether or not the Regulations apply in any particular case will require an analysis of the precise terms of the restriction.

The Regulations will be of particular importance to businesses involved in the financing of receivables. And they will also be of concern to buyers because they will override their contractual protections.

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NY governor’s subway mask ban proposal sparks debate over right to anonymous protest

New York’s governor is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Video: Ted Shaffrey)

FILE - A Pro-Palestinian protester tries to grab an American flag from Pro-Israel supporters as a police officer tries to interfere during a demonstration calling for economic blockade demanding a cease-fire on the Israel Palestinian conflict outside The New York Stock Exchange, on Monday, April 15, 2024, in New York. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Andres Kudacki, File)

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Commuters wearing masks ride the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

Commuters, some wearing masks, wait for the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

A commuter wearing a mask waits for the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

FILE - Police officers patrol a subway station in New York, Tuesday, April 12, 2022. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig, File)

FILE - Acting MTA Chairman and CEO Janno Lieber, left, gives New York Gov. Kathy Hochul, second from left, tour of subway tunnels built in the 70’s that will be part of phase 2 of the Second Ave Subway expansion project, Tuesday, Nov. 23, 2021, in New York.New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Mary Altaffer, File)

FILE - In this Tuesday, Nov. 17, 2020, file photo, Patrick Foye, Chairman and CEO of the Metropolitan Transportation Authority, hands out face masks on a New York City subway. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Mark Lennihan, File)

Commuters, one wearing a mask, ride the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

Commuters, one wearing a mask, wait for the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

A woman wearing a mask waits for the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

Commuters, one wearing a mask, wait to board the subway in New York, Friday, June 14, 2024. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Seth Wenig)

FILE - Commuters wear face masks and social distance while riding an M Train, Tuesday, March 9, 2021, in New York’s subway system. New York Gov. Kathy Hochul says she is considering a ban on face masks in the New York City subway system, following what she described as concerns over people shielding their identities while committing antisemitic acts. (AP Photo/Mary Altaffer, File)

NEW YORK (AP) — A new proposal by Gov. Kathy Hochul to ban masks on the New York subway is drawing backlash from civil liberties groups and disability advocates, reviving a long-standing debate about the right to anonymous protest that has only grown more complex since the pandemic.

Hochul, a Democrat, backed the idea this week following a spate of confrontations involving masked pro-Palestinian activists that the governor and others have characterized as antisemitic. She said the legislation — which has not yet been crafted — would include “common-sense exemptions” for those who cover their faces for medical or religious reasons.

If the ban does go into effect, New York would join a growing number of states that have embraced laws against public masking to clamp down on activists who conceal their faces at protests.

But the new restrictions raise constitutional questions, according to Jay Stanley, a policy director at the American Civil Liberties Union, since they appear aimed at stopping a specific group from an activity that is widely practiced by members of the public.

“Because mask wearing is such a broad activity, done by so many people for so many reasons, it creates a real danger of selective prosecution against disfavored groups,” he said, adding that “COVID completely scrambled the contours of the debate over arcane mask laws.”

New York previously banned public mask-wearing by groups of three people or more under a law dating back to the 19th century, when upstate tenant farmers dressed as Native Americans and rose up violently against landlords. The law was lifted when COVID-19 struck.

Until two years ago, riders were required to wear masks on public transit.

The effort to reinstate the ban has also rankled the many people who still mask on the subway to protect themselves from the virus, spurring a campaign among disability advocates to pressure Hochul’s office against the idea.

Jason Roth, a Brooklyn resident who suffers from an autoimmune disease, said the measure would only “further stigmatize people who continue to mask,” even if it did include exemptions.

“We don’t feel welcome on public transit already,” he said. “Why should I now have to prove to anyone else that I wear a mask because of a medical condition?”

As protests have grown against Israel’s war in Gaza , a younger generation of activists are increasingly obscuring their faces for reasons unrelated to the virus, citing the threat of harassment and retaliation from universities, employers and other sources, as well as the growing use of facial recognition by police.

But officials argue the tactic emboldens bad actors. Earlier this week, a group of protesters — some wearing traditional Palestinian scarves, known as keffiyehs, over their faces — were seen on video asking whether any passengers aboard a crowded subway were Zionists, telling them: “This is your chance to get out.”

In an interview Thursday on CNN, Hochul said the “unacceptable” incident had pushed her to look at restoring the ban on masks.

“You’re sitting on a subway and someone puts on a mask like this and comes in, you don’t know if they’re going to be committing a crime, they’re going to have a gun, or whether they’re just going to be threatening or intimidating you because you are Jewish, which is exactly what happened the other day,” she said.

Still, it’s unclear whether specific passengers on the car were targeted for their religious or political identities.

Long before the pandemic, the statute against mask-wearing had drawn allegations of selective enforcement, sparking a series of legal challenges that argued the law violated the right to anonymous speech.

One of the highest-profile challenges came in 1999, when the Ku Klux Klan sued the city in order to stage a Manhattan rally in their traditional hoods and robes. After a federal judge sided with the Klan, an appeals court reversed the ruling, noting the state’s right to “regulate conduct that it legitimately considers potentially dangerous.”

More recently, supporters of the Russian feminist band Pussy Riot sought to overturn the law after they were arrested for protesting in New York while wearing balaclavas. The city ultimately dropped charges against the protesters, nullifying the lawsuit.

Norman Siegel, a civil rights attorney who represented both the Klan and the Pussy Riot supporters, said Hochul’s attempts to ban masks on public transit could open up another avenue to challenge the law.

“I understand what they’re trying to do, but we have a long history of peaceful protest and anonymous speech,” Siegel said. “There are major First Amendment implications at stake here.”

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How Has a Ban on Smartphones in Schools Affected You?

We want to hear from you — students, parents and teachers — about a growing push to limit smartphone usage in schools.

By Emily Cochrane

Gov. Gavin Newsom of California on Tuesday became the latest state leader to back a ban on smartphones in schools, joining a growing, bipartisan call to limit them in the classroom.

Similar restrictions are already in place statewide in places like Florida and Indiana . Elsewhere, individual school districts or schools have instituted policies on their own. And more could follow: Gov. Kathy Hochul of New York has said she plans to pursue a similar ban next year.

We want a better understanding of what this policy means for students, parents and teachers. How has the ban been implemented in the classroom, and what does enforcement look like? Has it changed things in the classroom?

We’re especially interested in hearing from people in areas where such a ban is already in place.

We won’t publish any part of your response without following up and hearing back from you to learn more. Your contact information won’t be shared outside of the Times newsroom, or used for anything other than to get in touch with you.

If you’re a student, please fill out this form only if you are 14 or older. If you are between the ages of 14 and 17, a reporter will ask to get in touch with your parent or guardian before talking with you further.

How Has a Ban on Smartphones in Schools Affected Your Classroom?

Emily Cochrane is a national reporter for The Times covering the American South, based in Nashville. More about Emily Cochrane

School Cellphone Bans Gain Steam as Los Angeles Unified Signs On

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The nation’s second largest school district has had enough of cellphones. The Los Angeles Unified School District board of education voted on Tuesday to ban students from using smartphones—a move that will take the devices out of the hands of tens of thousands of students during the school day.

The news comes as California’s governor signals support for statewide restrictions on smartphones in schools , and the U.S. surgeon general has called on Congress to require a warning label on social media , similar to what appears on tobacco and alcohol products.

While the movement to restrict cellphones in classrooms has been gaining steam in both districts and statehouses , Los Angeles Unified, with 429,000 students who comprise one of most ethnically, racially, and linguistically diverse school systems, becomes the largest district to adopt a full-fledged ban on phones during the school day in an effort to improve students’ learning and well-being.

“When coupled with social media, phones are a harmful vehicle that negatively impacts young people,” said Alberto Carvalho, the superintendent of LAUSD, in a statement.

The resolution passed by the school board requires the district to implement the policy by January 2025. The exact details of the ban are yet to be determined by the district.

The ban will cover the entire school day. District leaders see the devices as having a corrosive effect on more than just students’ learning.

“When I visit campuses during lunchtime, my heart breaks to see students sitting alone, isolated on their phones instead of engaging and learning with their peers,” said board member Tanya Ortiz Franklin in a statement. The resolution, she said, “marks a significant step towards fostering a culture of face-to-face interactions and building a stronger, more connected, and positive school community.”

Cellphones have emerged as among the most animating issues in K-12 education as schools struggle to find their footing as personal devices have proliferated.

About half of U.S. children get their first cellphone by age 11, and around 9-in-10 teenagers have their own cellphone, according to a 2023 report from Common Sense Media , a nonprofit that focuses on the impacts of technology on young people.

Many educators believe that cellphones, and the near constant access they provide to social media and messaging services, are a major—if not the driving—force behind students’ academic, behavioral, and mental health problems. However, research on the issue is still emerging and decidedly mixed.

A nationally representative survey of educators last fall by the EdWeek Research Center found that teachers were more likely to support cellphone bans than principals and district leaders . Twenty-four percent of teachers said that cellphones should be banned on campus compared with 21 percent of principals and 14 percent of district leaders.

Nine percent of teachers, principals, and district leaders said that cellphones were banned on high school campuses.

California is among several states considering school cellphone restrictions

There are a lot of nuances education leaders should be aware of when crafting cellphone policies, said Merve Lapus, the vice president of education outreach and engagement at Common Sense Media.

For example, students in schools with aging devices may be relying on their personal cellphones to access important educational tools, Lapus said, and all-out bans can raise tricky issues around equity.

“I think it’s being able to recognize what are the needs of your community and what are you really able to really provide, those are fundamental questions that should be asked before just throwing the ban down,” he said. “I think it’s coming from a good place, we want our kids to focus and really be fully present in the learning experience, not just for the academic needs but for the social importance. But there are some things that need to be considered.”

While cellphone bans will eliminate distractions while students are in school—research by Common Sense Media has found that teens receive a median of 273 notifications on their phones a day —it’s not going to solve all problems, Lapus said.

“Just cutting off the phones doesn’t really change what kids are going to go through when they are back at home—it just delays it for a bit,” he said. “If we want to really make changes, we need to look at legislation that holds these platforms more accountable.”

Schools also need to continue to teach students healthy tech habits to help them manage their cellphone and social media use, even if they no longer have access to their devices during school hours, Lapus said.

If California were to pass some statewide restrictions on cellphones in schools, which Gov. Gavin Newsom has called for, it would join a small but growing number of states to do so.

Florida became the first state to ban cellphones last year in classrooms, and Indiana followed suit in April. Ohio passed a law in May that doesn’t outright ban cellphones but does require districts in the state to create cellphone policies that will minimize students’ use of the devices. As many as eight other state legislatures have considered bills this past spring that would have prohibited students from using cellphones in class.

Utah’s governor has also expressed support for a school cellphone ban in his state.

Even though cellphones have become a major headache for educators, there are still educators who are hesitant to embrace outright bans, especially at the state level.

One prominent argument is that students must learn to manage their devices and the distractions they cause so they’re prepared for college and work . Others—in particular district leaders—would prefer the decision to ban cellphones be left to schools.

In a statement to the Associated Press, the California School Boards Association said that these decisions should be made at the local level, reflecting individual community concerns.

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Watch CBS News

Supreme Court strikes down Trump-era ban on bump stocks for firearms

By Melissa Quinn

Updated on: June 14, 2024 / 7:37 PM EDT / CBS News

Washington —  The Supreme Court on Friday invalidated a federal rule enacted during the Trump administration that  outlawed bump stocks , devices that greatly increase the rate of fire of semi-automatic weapons.

The  6-3 ruling  found that the Bureau of Alcohol, Tobacco, Firearms and Explosives exceeded its authority when it issued the ban in 2018, following the  2017 mass shooting  at a music festival in Las Vegas, the deadliest in U.S. history. Justice Clarence Thomas delivered the opinion of the court, which split along ideological lines. Justice Sonia Sotomayor read her dissenting opinion from the bench.

"This case asks whether a bump stock — an accessory for a semiautomatic rifle that allows the shooter to rapidly reengage the trigger (and therefore achieve a high rate of fire) — converts the rifle into a 'machine gun.' We hold that it does not," Thomas wrote for the conservative majority.

The court's ruling unwinds one of the few actions the federal government has taken in recent years to combat gun violence, since Republicans in Congress have opposed comprehensive firearms restrictions. The case did not involve the Second Amendment, but was one of several before the justices this term involving federal regulatory power.

The opinions

Thomas' majority opinion was highly technical, delving into the mechanics and components of a semi-automatic weapon. It included several graphics showing how the firearms operate. 

The court ultimately concluded that for a semi-automatic rifle outfitted with a bump stock, the trigger must be released and reengaged to fire each additional shot, actions that differentiate it from a machine gun, in which a shooter can fire continuously by engaging the trigger once. Machine guns are banned under federal law.

"A bump stock merely reduces the amount of time that elapses between separate 'functions' of the trigger," Thomas wrote for the majority. "The bump stock makes it easier for the shooter to move the firearm back toward his shoulder and thereby release pressure from the trigger and reset it. And, it helps the shooter press the trigger against his finger very quickly thereafter. A bump stock does not convert a semiautomatic rifle into a machine gun any more than a shooter with a lightning-fast trigger finger does."

In a dissenting opinion joined by Justices Elena Kagan and Ketanji Brown Jackson, Sotomayor stressed that a rifle equipped with a bump stock can fire at a rate of 400 to 800 rounds per minute and wrote that the textual evidence presented shows that a bump-stock-outfitted weapon is a machine gun.

"The majority's reading flies in the face of this court's standard tools of statutory interpretation," Sotomayor wrote. "By casting aside the statute's ordinary meaning both at the time of its enactment and today, the majority eviscerates Congress's regulation of machine guns and enables gun users and manufacturers to circumvent federal law."

She warned that the ruling will have "deadly consequences" by hamstringing the government's efforts to "keep machine guns from gunmen like the Las Vegas shooter."

In response to the decision, President Biden urged Congress to pass legislation that would ban bump stocks and assault weapons, which he vowed to sign.

"Today's decision strikes down an important gun safety regulation," Mr. Biden said in a statement. "Americans should not have to live in fear of this mass devastation."

Steven Dettelbach, ATF director, said the agency is ready to work with Congress to ensure bump stocks "no longer pose a threat to American law enforcement and the people they protect."

Mark Chenoweth, president of the New Civil Liberties Alliance, which represented the Texas man who challenged the ban, cheered the decision and said it reaffirmed their position that ATF didn't have the power to rewrite laws.

"The statute Congress passed did not ban bump stocks, and ATF does not have the power to do so on its own," he said in a statement. "This result is completely consistent with the Constitution's assignment of all legislative power to Congress. Bump-stock opponents should direct any views at Congress, not the court, which faithfully applied the statute in front of it."

The bump stock ban

Bump stocks are attachments that increase the rate of fire of semi-automatic rifles to hundreds of rounds per minute. The case, known as Garland v. Cargill, focused on whether the ATF went too far when it banned the devices in 2018 after determining that the definition of a "machine gun" in a 1934 law encompassed bump stocks. 

ATF had on numerous occasions between 2008 and 2017 determined that bump stocks didn't qualify as machine guns and weren't regulated under the relevant law. But the bureau changed its position following the 2017 mass shooting at the Route 91 Harvest Musical Festival, where a gunman killed 58 people and another 500 were injured and after which Congress failed to take action to regulate the devices.

The shooter used semi-automatic weapons outfitted with bump stocks, allowing him to fire up to 1,000 rounds of ammunition in 11 minutes, according to the FBI.

Issued in December 2018, the new rule stated that a rifle equipped with a bump stock qualifies as a machine gun in part because when a shooter pulls the trigger, it initiates a firing sequence that produces more than one shot. That firing sequence is "automatic" because "the device harnesses the firearm's recoil energy as part of a continuous back-and-forth cycle that allows the shooter to attain continuous firing after a single pull of the trigger."

Bump stocks replace the standard stock of a semi-automatic rifle and allow the rest of the gun to move back and forth while the stock stays in place. When the gun is fired and the shooter applies forward pressure on the barrel, the rifle recoils back into the stock and bounces forward again, "bumping" the trigger into the shooter's finger and firing another round. 

The rule from the Trump administration took effect in March 2019. Those who already owned bump stocks were required to destroy or surender the devices to the ATF or face criminal penalties.

During the agency rulemaking process, Michael Cargill bought two bump stocks. After the ban was enacted, he surrendered the devices to ATF and brought a lawsuit against the government in federal court in Texas.

A U.S. district court and three-judge appeals court panel ruled for the ATF, but the full slate of judges on the U.S. Court of Appeals for the 5th Circuit invalidated the bump stock ban. 

Cargill's case was not the only challenge to the regulation. Another bump stock owner prevailed before the U.S. Court of Appeals for the 6th Circuit, but a three-judge appeals court panel in Washington, D.C., upheld the ban after determining that a bump stock is a machine gun under federal law.

The Biden administration backed the bump stock ban and urged the Supreme Court to leave the policy in place. Rifles equipped with the devices are "dangerous and unusual weapons," Justice Department lawyers argued, saying that bump stocks allow the ban on machine guns implemented in 1986 to be circumvented.

The Supreme Court's majority pushed back on the dissenters' notion that its decision allows the federal ban on machine guns to be circumvented, arguing that the statute still regulates traditional machine guns.

"The fact that it does not capture other weapons capable of a high rate of fire plainly does not render the law useless," Thomas wrote. "Moreover, it is difficult to understand how ATF can plausibly argue otherwise, given that its consistent position for almost a decade in numerous separate decisions was that [the law] does not capture semiautomatic rifles equipped with bump stocks."

The majority also noted that Congress could have linked the definition of "machine gun" to a weapon's rate of fire, but instead enacted a federal law that turns on whether a firearm can fire more than one shot "automatically" through a single function of the trigger.

In a concurring opinion, Justice Samuel Alito also put the onus on Congress and said the tragedy in Las Vegas bolstered the case for amending the 1934 law, the National Firearms Act, that ATF relied on to outlaw bump stocks. 

 "There is a simple remedy for the disparate treatment of bump stocks and machine guns," Alito wrote. "Congress can amend the law — and perhaps would have done so already if ATF had stuck with its earlier interpretation. Now that the situation is clear, Congress can act."

But the decision sparked backlash from gun violence prevention groups, which said it puts people at risk. 

"Guns outfitted with bump stocks fire like machine guns, they kill like machine guns, and they should be banned like machine guns — but the Supreme Court just decided to put these deadly devices back on the market," John Feinblatt, president of Everytown for Gun Safety, said in a statement. "We urge Congress to right this wrong and pass bipartisan legislation banning bump stocks, which are accessories of war that have no place in our communities."

• Supreme Court of the United States
• Bump Stocks

Melissa Quinn is a politics reporter for CBSNews.com. She has written for outlets including the Washington Examiner, Daily Signal and Alexandria Times. Melissa covers U.S. politics, with a focus on the Supreme Court and federal courts.

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