Posted in Employment Litigation International Employment Law

Pitfalls of For-Cause Terminations Outside of the US

Do you remember the “Friends” episode where Monica, a chef, brings home dinner for all of her friends – five steaks and an eggplant for Phoebe – which she received from a new meat supplier at work? Her boss calls her the next day to say that the food was a kickback and terminates her immediately for violating corporate policy. (Don’t worry, I’d forgotten about the episode too until I started writing this).

Would it have taken the scriptwriters a long time to rewrite the scenario and figure out how to terminate Monica in countries outside the US? Sadly, the answer is yes. Employers face many potential pitfalls when terminating non-US employees for cause. Here are some of the top issues that employers encounter that are surprising from a US law, at-will employment perspective.

As Monica once said: “Welcome to the real world. … You’re gonna love it!

1.            Ground of Terminations

a)            In many countries having grounds for an immediate termination for cause is a very hard standard to meet.

If Monica had received some borscht as a kickback in a Moscow restaurant, for instance, the restaurant might not be able to use the for-cause termination route. In Russia termination for cause for a single act of gross misconduct is restricted to an exhaustive list of grounds including the employee coming to work intoxicated, embezzlement, or willful destruction or damage to property as determined by a court ruling (meaning that the company would have to sue the employee in court and obtain a judgment against the employee). Unless one of the enumerated causes is given, the employer can dismiss an employee only if there is repeated failure by the employee to perform his or her employment duties without good cause, but this requires prior discipline against the employee for the violation. Thus, under this prong, even after Monica got caught taking the kickback in violation of the corporate policy, her boss could not terminate her if it was her first misconduct.

In practice, employers in Russia often prefer to mutually terminate an employment relationship to avoid contentious proceedings and to minimize disruption, even where there are serious concerns with respect to an employee’s behavior (though in fairness, this does sound like California).

I know!” [with Monica’s excited tone]

b)            The termination grounds often need to be set forth in company policies properly rolled out.

If Monica was working in China and violated a global company policy that was not rolled out through a “democratic process” (basically, a process of obtaining the opinion of the employees’ and/or their representatives) the restaurant would not be able to use the “for cause” route for a termination based on violation of the company policy.

Instead, the restaurant would probably need to convince Monica to resign or accept mutual separation.

2.            Speed

In some countries there is a very strict timeline for the termination process.

What if Monica worked in a beer garden in Germany?  The German beer garden would need to serve Monica with a termination letter within two weeks after learning the relevant facts constituting the severe breach of contract. The two week period is triggered once the employer has collected sufficient facts to come to an educated decision on whether or not the relationship with the employee is irrevocably disrupted and a dismissal is the only option available. If the employer misses this deadline, the dismissal without notice for cause is void but may be construed as a regular termination with notice from 4 weeks up to 7 months (after 20 years of employment), which, though, in turn can be challenged.

3.            Investigation

We do not have enough background to know how Monica’s boss found out about her alleged misconduct (clearly they did not have an employment lawyer in the writing room). But we know for sure that Monica did not have a chance to explain herself during the investigation.

In many non-US countries employers must investigate the allegations of misconduct in accordance with specific procedures or at least follow such procedures as they want to impose discipline.

In a Bollywood script Monica should have received a charge sheet that should clearly set out the alleged misconduct, specific sections of the company policy violated by the particular misconduct, and the time within which the employee is required to provide a response to the charge sheet. In India, Monica would have three to four working days from the date of receipt of the charge sheet to assess and respond to the charges. The next step is usually to appoint an enquiry officer or constitute an enquiry committee and send a notice to the employee setting out the date and time of the enquiry/disciplinary hearing. During the hearing all evidence should be produced and the employee should be given an opportunity to provide explanations and to cross-examine the witnesses. After the hearing, the enquiry officer should submit a report with the findings to the disciplinary authority in the company (normally management). The whole process would probably not fit into one 25-minute episode (although the usual workaround in India is to shame Monica sufficiently for her to resign).

4.            Formalities

In many non-US countries employers must comply with specific formalities and jump through many hoops in order to terminate an employee for cause.

a)            In South Korea termination notice in an e-mail is not sufficient. The termination notice must be in writing wet-ink signed by duly authorized officer of the employing entity and should specify the reasons for termination. Unfortunately, receiving a letter several days later is not nearly dramatic enough for the US attention span, but that still pales in comparison to what is required in Belgium, where the termination notice would have to be delivered by registered mail, issued by the Belgium post, and of course in the “right” language based on Belgium language legislation (though sadly a bad British accent is not a requirement).

b)            In some countries companies need to comply with several follow up steps after the termination:

  • In Japan the employer should, inter alia, notify local authorities that the employee lost a qualification as insured person.
  • In Hong Kong the employer should, inter alia, notify Mandatory Provident Fund trustee and the Inland Revenue Department of Hong Kong of the employee’s termination.

And as we all know, nothing spells comedy gold like notifying the government’s revenue department, so all things considered it’s probably a good thing Friends was based in New York.

Posted in Employment Litigation

Solving The Gender Pay Gap Is Neither Simple Nor Quick

Pay equity is popular. Shareholder resolutions, often promoted by socially conscious investors, have challenged businesses to report their pay gap publicly.   Plus, 69% of Fortune 1000 companies have voluntarily launched pay equity studies in the last two years.  Push for pay transparency grows stronger.

That is laudable but the real problem is how to eradicate gender gaps that are then identified. 

Issues of discrimination are not issues of plumbing where it is sufficient to identify the leak and to spend the money to make the repair. Rather, fixes pose the risk of reverse discrimination. Ricci v. DeStefano, 557 U.S. 557 (2009) – where the Supreme Court found New Haven guilty of discrimination against whites in attempting to remedy discrimination against blacks – stands as a warning beacon.

But, is reverse discrimination a genuine risk in remediating pay equity?

Although infrequent, challenges on reverse discrimination grounds have been brought by male and nonminority employees when women only received pay adjustments. Rudebusch v. Hughes, 313 F.3d 506, 523-24 (9th Cir. 2002) (permitting Title VII claims of white, male professors challenging pay equity adjustments for female and minority professors, resulting in a jury verdict for the plaintiffs); Maitland v. Univ. of Minn., 155 F.3d 1013, 1018 (8th Cir. 1998) (same, resulting in settlement); Smith v. Virginia Commonwealth Univ., 84 F.3d 672, 677 (4th Cir. 1996) (en banc) (same, resulting in settlement).

Employers must be able to show a valid reason for any pay increase in response to a wage gap. The explanation that this is affirmative action worked once: Ende v. Board of Regents of Regency Universities, 757 F.2d 176 (7th Cir, 1985).  But, in a post-Ricci environment, it is a frail reed (as the contrary holdings even in the pre-Ricci cases cited above illustrate).  There is no safe harbor for such quick fixes.

Yet, there are alternatives to quick fixes to consider either in isolation or collectively:

  1. Price the job, not the person. Employers can research to determine the fair market value of the position, which can be moved up or down based on objective criteria that would remove any unconscious bias in setting a male’s versus a female’s salary. Why Banning Questions About Salary History May Not Improve Pay Equity.
  2. Make pay transparent to the employees. Transparency in pay may make employees feel more comfortable about where they stand compared to their similarly situated colleagues. It may also remove the need for salary negotiations, which research has shown heavily favors men over women. 5 Ways to Fix the Gender Pay Gap.
  3. Ban salary negotiation. Studies posit that salary negotiation may play a prominent role in gender-based pay-disparity. Two Solutions For The Gender Pay Gap That Can Be Implemented Today.
  4. Stop asking for salary history. Some states now have laws prohibiting asking a candidate about salary history because that practice replicates gender inequity in the pay market. Implementing that ban nationally may not only simplify hiring practices but also reduce the risk of perpetuating disparities baked into market prices. ‘What’s your salary?’ becomes a no-no in job interviews.  In addition, the Ninth Circuit has just ruled that prior salary can’t justify a gender wage gap. In Rizo v. Fresno County Office of Education, 2018 WL 1702982 (9th Cir. April 9, 2018), the Court found that an employee’s prior salary – either alone or in combination with other factors – cannot justify a pay gap between men and women. As the Court said, “Salaries speak louder than words,” and to allow salary history to be used to justify a pay gap would “perpetuate rather than eliminate the pervasive discrimination” that the Equal Pay Act was aimed to eliminate.
  5. Fix the gap in experience. Women (far more often than men) drop out of the workforce due to family responsibilities so that a 42 year old woman is competing with less work experience than her 42 year old twin brother. Some employers have found that increasing paid maternity reduced the rate at which new mothers quit by 50%. When Google increased paid maternity leave, the rate at which new mothers quit dropped 50%.
Posted in International Employment Law

AN INTERNATIONAL EMPLOYMENT LAW QUIZ FOR CHANGING TIMES

Are you up for the challenge of dissecting the latest trends and developments in international employment law? Take the quiz here (Survey Monkey Quiz), or amaze your friends and neighbors with the crib sheet below. 

I.     In the midst of Brexit uncertainties, UK employers should avoid recruiting European nationals.[1] 

  •  True
  • *False*

Employers there must still ensure that employment decisions are not discriminatory on the ground of (among other things) nationality. So, employers in the UK should not make recruitment decisions based on nationality and should maintain but communicate equality and diversity policies to ensure that decision-makers understand their responsibilities not to discriminate or harass on the basis of nationality.

Further, an agreement in principle was reached between the UK and the EU in December 2017 regarding the future rights of EU citizens currently living lawfully in the UK. These individuals will be able to stay in the UK and enjoy broadly the same rights and benefits as they do now. This agreement applies equally to UK citizens currently living in the EU. Although this is only an agreement in principle, EU citizens do not need to take any steps at this stage to establish immigration status. The key date for establishing rights will be 29 March 2019. Details of the immigration rules for EU citizens who arrive after 29 March 2019 are yet to be agreed.

II.   Which of the following provisions form part of the reforms to the French Labor Code by the Macron Law?[2]

A.  strengthening the primacy of company-level agreements over industry-wide agreements
B.  creating a single staff representative entity in all companies, regardless of their size
C.  capping unfair dismissal compensation based on a mandatory damages scale

  •   A and B
  •   A and C
  •   B and C
  • *All of the above*

Significant reforms have been made to France’s labor law to make it more employer-friendly.

Reforms include caps on damages that can be awarded for unfair dismissal as well as modifications to the calculation methodology of statutory dismissal indemnities. When an employee’s length of service is less than 12 months, the average monthly salary over the complete period preceding dismissal is now taken into account, and in assessing length of service for incomplete years, the statutory dismissal indemnity must be calculated proportionally to the number of complete months.

Other changes have tackled (i) collective bargaining pertaining namely to the adaptation of working time, pay and workplace mobility and (ii) labor relations with the creation of a merged/unified mandatory body in companies with at least 11 employees to exercise the powers currently reserved for union representatives.

III.  In an attempt to further globalize the labor market in the Kingdom of Saudi Arabia, recent reforms to its Nitaqat program have allowed companies with 10 or more employees to employ from now on as many foreign workers as needed.[3] 

  •  True
  • *False*

The Nitaqat program (a Saudi-ization scheme) was amended in September 2017 to increase the ratio of Saudi nationals versus expats working in the Kingdom of Saudi Arabia.

Previously, the Nitaqat criteria only applied to companies with ten or more employees; companies with fewer than ten employees were generally exempt from the program but had to employ at least one Saudi national. This has been expanded and now applies to companies with six or more employees.

Additionally, companies will need to hire more Saudi employees to qualify for a Block Visa: a higher tier (“high green” or “platinum” rating) is now required. To transfer an employee’s sponsorship, a company must also have at least a “green” tier rating. Those with a “lower-green” rating may now only transfer with certain restrictions. 

This will impact recruitment, as employers must now hire more Saudi nationals in order to get a higher tier status to be eligible to employ foreign workers and benefit from the ability to transfer sponsorship.

P.S.: the United Arab Emirates’ Ministry of Human Resources and Emiratisation (MOHRE) has also launched its national “Tawteen” Program at the end of 2016, aiming to increase the employment of UAE nationals in the private sector there too.

IV. Pursuant to the UK Equality Act 2010 (Gender Pay Gap Information) Regulations 2017[4], where are employers required to publish their gender pay gaps by April 2018? [5]

A.  on the employer’s own website
B.  on the Government’s specially designed website
C.  in two local newspapers
D.  in the official gazette

  • *A and B*
  •   A and C
  •   C
  •   All of the above

Gender equality has been in the spotlight internationally.

Numerous countries are striving to reduce gender pay gaps with strategies aimed at protecting workers from discrimination and increasing transparency. For example, in the UK, employers of 250 or more employees must now publish prescribed information relating to gender pay gaps on both their own websites and on the Government’s specially designated website.

Pay data is to be assessed as at 5 April 2017 and reported by 4 April 2018 latest.

P.S.: Other countries with new laws on gender pay reporting are Sweden and Germany. In Sweden, a number of changes were implemented: e.g., employers are now required to conduct salary surveys annually instead of every 3 years. In Germany, the Act on Pay Transparency now grants employees certain rights with regard to access to pay data.

V.   Reforms to Brazil’s labor law came into force on November 11th, 2017. Which of the following provisions was part of the introduced changes?[6]

A.  The limitation in labor litigation of moral damages to a multiple of social security entitlements
B.  Bonuses on a recurrent basis and advance payments (“abonos“) are no longer deemed to form part of salary
C. 
Unions no longer have to negotiate working shifts of 12 hours per work per 36 hours of rest and the company can instead negotiate with the employee or his/her union to implement these shifts
D. 
For equal pay to be claimed, the activities between the compared employees must not only be similar and performed within the same business site, but also with a difference of not more than 2 years in the same position, and not more than 4 years between lengths of service

  •   A and B
  •   B and C
  •   A, C and D
  • *All of the above*

The reforms to Brazil’s labor law came into force on November 11th, 2017. On November 14th, President Temer introduced a provisional measure proposing a few, modest changes to those reforms. The ball is now in the hands of the House of Representatives.

VI.  In Barbulescu v Romania, the European Court of Human Rights has ruled that an employer was not permitted to terminate an employee for cause for sending (prohibited) private messages on a work system.[7]

  • *True*
  •   False

The Grand Chamber of the European Court of Human Rights overturned the Lower Chamber’s judgment in Barbulescu v Romania. It held that this dismissal was in breach of the employee’s right (under Article 8 of the Convention on Human Rights ) of respect for his private life. Here, his employer violated that right because of its monitoring of his Yahoo! Messenger communications (where it discovered that he had used the internet at work for personal purposes).

Employers in EU countries need to take care if they want to restrict personal use of the internet and other communications at work. For example, a company policy must make clear what is or is not permitted and must inform employees of any monitoring which will take place in line with local laws. Restrictions and monitoring should also be proportionate as the Grand Chamber noted that an employer’s instructions cannot entirely forbid employees having a private social life in the workplace.

P.S.: It is also worth noting that the General Data Protection Regulation (“GDPR”) comes into force in May 2018 and will impact processing of data, including employee data, of EU based employees.[8]

VII. In which of the following countries in Asia was the so called “apology legislation” passed in July 2017?[9]

A.  Japan
B.  Philippines
C. 
Hong Kong
D. 
Vietnam

  •   A
  •   B
  • *C*
  •   D

The aim of the new legislation in Hong Kong is to clarify the legal consequences of making an apology as well as to encourage parties to make apologies in disputes. Under this legislation, an apology does not constitute an express or implied admission of liability in connection with the matter and should not be taken into account when determining fault or liability.

 VIII.  In which European country do employees have a statutory “right to disconnect” from IT devices?[10]

A.  France
B. 
Switzerland
C. 
Germany
D. 
Sweden

  • *A*
  •   B
  •   C
  •   D

Contrarily to opinions in the popular press, it is an overstatement to say that French employees cannot read emails after 6pm. Rather, France’s new “El Khomri” law merely includes a requirement for employers to discuss the right to disconnect from IT devices with employee representatives as part of the company’s mandatory annual negotiations on professional equality and work life balance. Employers must also review their means of ensuring reasonable use of IT devices.

IX. In which Asian country does the law require the provision of a room dedicated to child care (i.e. a “crèche”) at workplaces with 50 or more employees?[11]

A.  India
B. 
Pakistan
C. 
China
D.  B
angladesh

  • *A*
  •   B
  •   C
  •   D

The Indian Maternity Benefit (Amendment) Act of 2017 requires establishments with 50 employees or more to provide a “crèche” facility at or near the workplace. Such facilities are not only expected to provide trained caretakers for the employees’ children, but also to ensure adequate accommodation, light, ventilation, and sanitary conditions. Mothers are allowed to visit those rooms four times a day including during her interval for rest.

X.  Which Canadian province has recently amended its legislation to require employers to take steps to protect workers from workplace sexual harassment (and workplace harassment, generally)?[12]

A.  Ontario
B.
Quebec
C. 
Manitoba
D. 
Nova Scotia

  • *A*
  •   B
  •   C
  •   D

Ontario has passed important amendments to its Occupational Health and Safety Act, including (i) an expansion of the obligation to have a workplace harassment policy, (ii) a duty to ensure an investigation is conducted into complaints of any workplace harassment/ workplace, (iii) a duty to ensure that the complainant and the respondent are informed of the investigation results, (iv) an obligation to consult the Joint Health and Safety Committee on the workplace harassment policy; and (v) an expansion of the role of Occupational Health and Safety inspectors by granting inspectors the power to order investigations and corresponding reports, at the employer’s expense, into workplace harassment complaints.  


[1] http://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/uk-brexit-impact-on-european-nationals-in-your-workforce

[2] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/france-new-macron-labor-law-reform-announced

[3] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/saudi-arabia-saudization-changes-from-september-2017

[4] http://www.legislation.gov.uk/uksi/2017/172/contents/made

[5] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/uk-equal-pay-day-puts-the-spotlight-on-gender-pay-gaps

[6] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/brazil-new-labor-law-reforms

[7] Cf. PowerPoint presentation “Global Employment Trends and Development”; See also http://www.echr.coe.int/Documents/Press_Q_A_Barbulescu_ENG.PDF; See also https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/uk

[8] https://www.cooley.com/~/media/cooley/pdf/reprints/preparingforthegdpr.ashx?la=en

[9] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/hong-kong-apology-legislation-to-be-introduced-in-2017

[10] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/france-right-to-disconnect

[11] https://www.indianbarassociation.org/policy-initiatives/creche/

[12] https://knowledge.dlapiper.com/dlapiperknowledge/globalemploymentlatestdevelopments/canada-workplace-harassment-in-ontario

Posted in Employment Policies

Paid Parental Leave: Equal Time Off For Moms And Dads?

Raising kids is part joy and part guerilla warfare.  – Ed Asner

There is one issue in which women often receive more favorable treatment than men: parental leave. Women (whether because of their employers’ leave policies or individual choices) receive an average of 41 days of parental leave while men receive an average of 22 days, according to a 2016 report.

Companies may attempt to make this sex neutral by designating greater leave for ”primary caregivers” and less leave for ”secondary caregivers.” Yet, such designations are fraught with administrative quandaries: e.g., fathers who assert “primary caregiver” status or couples who claim to be “co-primary” parents.

To such practical problems, now add the emerging legal problems evident in a pair of claims.

In the first case, the ACLU filed a discrimination charge with the EEOC on behalf of a male whose employer provided fathers only 2 weeks of paid leave while mothers received 16 weeks of paid leave. There, the charge asserts that the “primary caregiver” rule is a cover-up for sex discrimination enforcing “a sex-based stereotype that women are and should be caretakers of children.”

In the second case, the EEOC sued alleging another employer discriminated more overtly. There, only women were allowed to claim “primary caregiver” status (which granted 6 weeks of paid leave) and were also granted “transition-back-to-work” benefits that were unavailable to secondary caregivers (who only received 2 weeks of paid leave).

Such claims draw their legal theories from the EEOC’s Enforcement Guidance on Pregnancy Discrimination and Related Issues (June 2015). That guideline stakes out the EEOC’s thesis that parental leave, beyond that tied to any physical limitations imposed by pregnancy or childbirth, must be offered in equal amounts to both parents:

Leave related to … medical conditions can be limited to women affected by those conditions. However, parental leave must be provided to similarly situated men and women on the same terms.  If, for example, an employer extends leave to new mothers beyond the period of recuperation from childbirth (e.g. to provide the mothers time to bond with and/or care for the baby), it cannot lawfully fail to provide an equivalent amount of leave to new fathers for the same purpose.

Does this mean that companies are required to offer an equal amount of baby-bonding leave to both parents? Perhaps a gender-neutral policy (e.g., where a company offers “primary” and “secondary” leave, and men and women are both able to claim “primary” caregiver status and thus receive the longer leave) could withstand disparate treatment legal challenge.

But, shouldn’t policies be designed to avoid litigation rather than to create interesting test questions? If so, parental leave (which is to say “bonding” leave as opposed to “medical” or “disability” leave) should – in a perfect world – be both sex neutral and role neutral.

It is, of course, the issue of cost that makes this an imperfect world.

Imagine Blackacre Ltd whose current policy utilizes the primary/secondary dichotomy and allocates six weeks paid leave for the former and two weeks for the latter. Equalizing upward adds cost (the potential of four weeks paid leave for every secondary caregiver whose family adds a child) while equalizing down adds a morale risk.

Solutions will be customized. In some cases, it may be possible to amend parental leave policies to address state statutes that are mandating partial-paid leave for baby-bonding, such as the California Paid Family Leave and New York State Paid Family Leave.  In others, it may be necessary to be creative (e.g., combinations of fully paid and partially paid leave).

It is also possible to gamble on such leave going unused. It is a documented phenomenon with vacation time, which is consistently being left on the table by employees for a variety of reasons.  See The Hidden Costs of Unused Leave (https://www.projecttimeoff.com/research/hidden-costs-unused-leave). To the extent that the 41 days for women vs 22 days for men in current practice reflects social choices, the cost of equalization may not be astronomical.

Posted in Employment Litigation Employment Policies

Social Media Ownership Considerations in the Employment Context

At home, social media dilemmas include being 62 weeks deep in a social media account, and accidentally dropping a dreaded double-tap, “liking” a photo and releasing a notification that reveals your not-so-secret surveillance. It gets worse. What if you were perusing the account of an ex’s new flame?

At work, social media can present even graver issues. As employers adjust to using social media, courts struggle to determine who owns work-related social media accounts: the employer or the former employee?

Employers now need to address ownership to avoid losing valuable social media assets.

To Own or Not To Own, That is the Question   

Employers rightly ask whether ’tis nobler in the mind to suffer the slings and arrows of marketing losses by not utilizing social media, or to take arms against a sea of potential risks. More and more employers are taking to social media as part of their marketing plan.

In doing so, employers should first weigh the inherent risks of having an employee use a personal social media account for business purposes. Typically, that is sub-optimal.  There are often state laws prohibiting employers from requesting or requiring: (1) employees’ social media usernames and passwords; (2) that employees access personal social media in front of the employer; or (3) that employees divulge personal social media information.

These laws are ample incentives to make sure that any social media accounts are clearly designated as corporate, as opposed to personal. While the line is often fuzzy, employers can avoid some social media pitfalls by staking out ownership and crafting social media policies that reinforce that claim.

Ownership Of ….

There are several components to social media ownership:

  • Account name
  • Account relationships (the “goodwill” that accounts build with other accounts, with brands, with advertisers, with influencers, and with their followers — often monetizable)
  • Account followers/connections
  • Account password
  • Account metrics
  • Right to access and control account content (each post is a fine balance of aesthetics and atmospherics centering around content, timing, and overall strategy with the upload and delete decision being key)

Each ownership component is potentially distinct, particularly when employees are asked to use social media to market and promote a business’s products or services. While employers may wonder whether a Twitter handle by any other name might still smell as sweet, seasoned social media users appreciate that every component is uniquely valuable.

For example, Eagle v. Morgan, No. CIV.A. 11-4303, 2012 WL 4739436 (E.D. Pa. 2012) addressed a dispute over the ownership of a LinkedIn account.  There, the former employer accessed the LinkedIn account, changed the password, and updated the account with information on the former employee’s successor.   The former employee won but failed to prove damages.

Another employer ended up in court when an employee left the company and took the Twitter account (and its 17000 followers). Although the parties settled, the employer’s claims of misappropriation of trade secrets, conversion, and intentional interference survived a motion to dismiss. PhoneDog v. Kravitz, No. C 11-03474 MEJ, 2012 WL 273323 (N.D. Cal. 2012)

Practice Pointers

To minimize ownership battles, there are steps to undertake.

The must list includes the following:

  • A signed written agreement spelling out that the employer owns the account, customer lists, friends, followers, content, username, passwords, and e-mail addresses;
  • A clause indicating that the account is for business, not personal use;
  • A clause agreeing to register the social media accounts in the company name;
  • A policy stating that whatever the employee creates on company time or with company resources belongs solely to the employer; and
  • A procedure outlining the return of login information upon extended absences or departures.

The “nice but not necessities” includes the following additional steps:

  • A prohibition on employees conducting company business over social media using personal accounts held in their own name;
  • A policy limiting the number of employees with administrative control over the account(s) and designating the specific employees that have permission to post on the account;
  • A clause highlighting that the account login information is confidential;
  • A guide setting out acceptable content;
  • A liquidated damages provisions establishing damages due to the difficulty of calculating damages in ownership litigation; and
  • A non-solicit clause setting limits on communications over social media with the former employer’s clients and employees for a period of time

When mixing and matching from the bullet points above, employers should be cognizant that policies that are too draconian may affect recruiting, particularly in industries where the employee has a personal brand that has its own value. Employers must strike a balance between protecting content and protecting culture in their workplace.

Despites the risks, the considerations, and the policy choices to be made, employers may doubt the stars are fire, doubt the sun doth move, doubt truth to be a liar, but should never doubt the power of social media. Nor the importance of planning its ownership in advance.

Posted in Employment Litigation Employment Policies

Challenges for Employers in a Post #MeToo World

Today, “[t]here is a temptation to simplify matters by viewing all harassers and their offenses as equally awful . . . .”  (NY Times: How Should We Respond to Sexual Harassment?)  This reflex treats all alleged harassment as equally problematic and warranting equal repercussions.  This is evident in the press of the prominent parading regularly through the daily news stories. 

Employers’ responses to allegations of harassment ought not be so simple. 

Let’s begin by separating opinion judgments from law-informed employment judgments.  Opinion judgments – which include voting judgments with respect to politicians – arise from public reactions. There is no “standard of proof” nor due process rights in this context: the public will respond as it sees fit, regardless of culpability, proof or veracity.  Calls for Al Franken to resign, for John Conyers to step down, or for Roy Moore to drop out of his bid for a Senate seat are classic examples of such opinion judgments.

Employment judgments come with different sets of consequences and are governed by discrete rules.  Harassment is unlawful under Title VII (the primary federal anti-discrimination statute) only if it is “severe” or “pervasive.”  This means that Title VII is not a general civility code, so there is a range of behavior that may be impolite (if not boorish) but still fall well short of being harassment.  Fink, Gender Sidelining and the Problem of Unactionable Discrimination (July 28, 2017) https://ssrn.com/abstract=3010235.  This analysis is further constrained: unlawful harassment must be both “objectively” offensive to a reasonable person and “subjectively” offensive to the victim.

Proper differences between opinion judgments and law-informed employment judgments have disappeared in the face of the public outcry over too many incidents of harassment by too many public figures.  This outcry is legitimate but the loss of nuanced analysis is not: “[a] moral panic is always a reaction to something that has been there all along but has evaded attention – until a particular crime captures the public imagination.” (The New Yorker: When Does a Watershed Become a Sex Panic.)

For now, the panic generally seems limited to public figures: politicians (who aren’t employees) and entertainers (who are only sometimes employees).  The danger for employers is that their response relies more on the news cycle than on the court cases delineating what is or is not harassment.  Maybe, that is a good thing?  Perhaps, but, let’s reflect and deliberate first, as it poses certain challenges to employers.

First, is it possible that a snap judgment is wrong? Because of increased media attention, employers may now be tempted to take lightning-quick remedial action, often before a thorough internal investigation has been conducted.  Michael Crichton’s novel Disclosure offers a cautionary tale to this end, building its plot around an opportunistic, but false, accusation of harassment.  Adopting a “believe all women” mindset could also actually be counterproductive, as it may be viewed as paternalistic and “unintentionally fetishizes women.”  (NY Times: The Limits of “Believe All Women”.)

Second, is it possible that this newly-minted zero-tolerance standard for violating company policies is a Trojan horse?  Zero tolerance is a great sound bite for today’s news cycle but an awkward policy tool in any context for enforcing rules.  (Chicago Tribune: Have We Gone Overboard With Zero Tolerance.)  Employers who announce – but then fail to apply consistently – any such standard will risk creating more claims and more lawsuits: for example, the harasser claiming sex discrimination because the zero-tolerance policy was not applied to other policy violations by women, by persons of color, etc.

Third, is there no room for differentiation between venial and mortal sins (to steal a line back from Catholic catechisms)?  For example, the Faragher/Ellerth defense (which requires an employer to show that it exercised reasonable care to prevent and promptly correct harassing behavior) does not require terminating all who violate the policy.  Indest v. Freeman Decorating, Inc., 168 F.3d 795, 805 (5th Cir. 1999) (holding that suspension and reprimands may constitute appropriate remedial action in applying the Faragher/Ellerth defense).

Fourth, when does public perception override everything else?  Employers must struggle with conduct that is facially inappropriate, but may not be harassment because the “victim” was not offended.  Senator Franken has been accused of groping Arriana Huffington, but as Huffington tweeted, far from being offended, “Franken groping me in a comedy sketch photo trivializes sexual harassment because he was no more ‘groping’ me than I was ‘strangling’ him in the photo I just tweeted.”  (Twitter: AriannaHuff.)  Context matters, including distinctions between conduct that is admitted or documented (Franken) and conduct that is denied or even debated (Moore).

Finally, what about allegations that predate employment or are unrelated to employment?  Looking at Senator Franken again, the majority of the allegations against him precede his election to the Senate (while he was arguably specializing in sophomoric humor), but are the basis for calls for him to resign.  How does an employer respond where allegations arise from conduct that did not occur “on its watch”?  Allegations from the distant past (incidents that lawyers would say are “time barred”) are another conundrum and Roy Moore is the poster boy for that issue.

There are no easy answers in a #MeToo world for exercising good judgment.

Yet, judgments must be made by employers who cannot wait for criminal prosecutions against the accused or defamation lawsuits by the accused.  So these employment judgments must be made without a trial record by recognizing another fallacy of opinion judgments: a debater’s use of due process in a context where the process due is other than a full trial.

There is no obligation to believe all victims nor to believe all harassers who deny misconduct.  Every employer (and their counsel) must make judgments in investigating harassment based on the best available evidence.  The key is to ensure that those judgments are legally-informed judgments rather than opinion polls.

Posted in Employment Litigation Employment Policies

When Is Enough Leave . . . Enough: Revisited

            The Labor Dish tackled leave as a reasonable accommodation in 2015 (When Is Enough Leave Enough).  Based upon the law at that time, our post suggested that less than 6 months of leave is seldom enough and that more than 18 months is too much.  But a 2017 decision from the Seventh Circuit totally restructures 2015 advice by affirming summary judgment for an employer who had denied post-FMLA leave.

            Severson v. Heartland Woodcraft, Inc., 872 F.3d 476 (7th Cir. 2017), considered whether an employer violated the Americans with Disabilities Act (“ADA”) by failing to grant more leave.  The facts are a commonplace scenario: Severson took 12 weeks of FMLA leave to deal with back issues but then needed surgery, which would require another 2-3 months of recovery time beyond the FMLA leave.  His leave was denied and he was fired.

            The Seventh Circuit’s opinion  begins by challenging the concept that leave is a legally-mandated accommodation: an employee “who needs long-term medical leave cannot work and thus is not a ‘qualified individual’ under the ADA,” which only protects qualified individuals who can perform the essential functions of the job. Id. at 479.  It concludes that “[a] multimonth leave of absence is beyond the scope of a reasonable accommodation under the ADA.”

            Severson is a homerun for employers right?  Not so fast.

            First, Severson is controlling authority only for federal courts in the Seventh Circuit (Illinois, Indiana, and Wisconsin).  It may have persuasive authority elsewhere but the EEOC’s 2016 guidance still states that leave is a reasonable accommodation, albeit without providing exact guidelines on permissible leave time (https://www.eeoc.gov/eeoc/publications/ada-leave.cfm).  There is contrary case law elsewhere too:

  • LaFlamme v. Rumford Hosp., 2015 WL 4139478, at *15-16 (D. Maine, July 9, 2015) (denying summary judgment to employer where employee requested 2 months of leave to deal with a back injury; jury would decide whether request was reasonable);
  • Cleveland v. Fed. Express Corp., 83 Fed. Appx. 74, 79-80 (6th Cir. 2003) (denying summary judgment to employer and finding that fact issues existed as to whether request for 6 months of leave to deal with lupus constituted a reasonable accommodation); 
  • Nunes v. Wal-Mart Stores, Inc., 164 F.3d 1243, 1247 (9th Cir. 1999) (where employee needed 2 months of leave at the time she was terminated to deal with a fainting disorder, stating that “extended medical leave, or an extension of an existing leave period, may be a reasonable accommodation if it does not pose an undue hardship on the employer”); and
  • Clayton v. Pioneer Bank, 2008 WL 5787472, at *16-17 (D. N.M. Dec, 31, 2008) (finding that employer violated ADA and that former employee’s request for 6 months of leave constituted a reasonable accommodation).

           Second, Severson didn’t green light firing every employee after 12 weeks of FMLA leave.  Instead, there is a limiting principle: “a short leave of absence—say, a couple of days or even a couple of weeks—may, in appropriate circumstances, be analogous to a part-time or modified work schedule” that qualifies as a reasonable accommodation.  Thus, sound judgment will be needed: e.g., is a one month request too much?

           Finally, employers still must engage in the ADA’s interactive process to determine the exact length of leave requested in addition to the other standard accommodation considerations such as are any other reasonable accommodations beyond leave available, is reassignment to a vacant position an option, does the company have a light-duty position to offer the employee, and would any of the requests impose an undue hardship.

            Stay tuned to The Labor Dish for future updates on this recurring but difficult issue.

Posted in Employment Policies International Employment Law

Unlimited Paid Time Off: Can Ferris Bueller’s Dream Go Global?

Thirty years ago, Ferris Bueller taught us how important a day off is. Fast forward, the recent rise of unlimited paid time off (PTO) policies sounds like Ferris’ heaven. Ferris would definitely take advantage.  So what is causing this recent trend in the U.S. and how can it be managed in a global workplace?

Pros in the U.S.

Most countries require mandatory paid vacation and sick days for employees. Not the U.S.

The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave or holidays. These benefits are matters of agreement between an employer and an employee or state law. Only seven states and 30 cities or counties currently require paid sick leave. Yet, it is not unusual to see U.S. companies offering a specified number of days of PTO.

Now, some employers are voluntarily offering unlimited PTO policies – why?

  1. Savings: Unlimited PTO policies allow companies to cap the amount of vacation owed to employees on the books at current levels; eliminate additional accrual in the future; and thereby reduce vacation payouts at termination (where that is required by law or Company policy).
  2. Reduced Administrative Burdens: Unlimited PTO policies remove the need to monitor and track vacations.
  3. Recruiting Tool: Unlimited PTO policies can attract talent (e.g. millennials who are often credited with pressing for flexibility and autonomy) and bolster an egalitarian culture.

Cons when Going Global

Some U.S. multinationals are trying to take this innovation of unlimited PTO global.

Yet, benefits seen in the U.S. do not necessarily cross borders. Unlike the U.S., most overseas countries have minimum legal entitlements to paid vacation and sick leave. Thus, combining U.S. style unlimited time-off policies with local statutory requirements can be difficult to reconcile.

  1. Savings Not Equivalent: Outside the U.S., the potential cost savings of removing vacation liabilities from the books does not generally exist. The norm is that a company must at least grant employees statutory vacation, which includes requirements to carry certain accruals. Multinationals could argue U.S. style unlimited policies are more generous than such statutory requirements and, as such, permissible. But, if a company using an unlimited policy does not track statutory vacation at all, that can create significant cost issues on termination because accrued but unused statutory vacation (which can roll over into a large balance over time) will still need to be paid out in most countries.
  2. Administrative Burdens Not Reduced: Outside the U.S., it is virtually impossible to eliminate tracking unused statutory vacation and its accrual. Local statutory vacation entitlements are the mandatory minimum threshold and must be granted no matter how much vacation an employee can theoretically take in excess. Therefore, to be able to demonstrate compliance with local law, companies with unlimited PTO policies will still need to track vacation. This removes the administrative advantages enjoyed in the U.S for unlimited PTO.

    Beyond statutory entitlements for vacation, employees outside the U.S. typically have enhanced contractual rights (either by individual contract or collective contracts with unions or work councils), which define the terms and conditions of employment and require employee consent before alteration. Arguably a change to unlimited PTO could be viewed as an improvement to benefits for which consent is unnecessary, but this argument has not yet been tested. Either way, the adding of unlimited vacation could not be pulled back without consent.

  3. Not Viewed as a Recruiting Tool: There are cultural expectations outside the U.S. which need to be carefully navigated. Internationally, the pattern is well-established for set statutory vacation or sick leave and tracking their use. As a result employees outside the U.S. may well have the perception that an “unlimited vacation” really means that there is “no vacation”.

  4. Risks of Abuse: Employees abroad come out of a different culture and different tradition. For example, employees outside the U.S. are actually expected to take their vacation days; in many countries taking vacation is considered a health and safety issue. This (along with the absence of at-will rules for employment) make it precarious to discipline or discharge employees overseas for doing too little work and taking too much time off. Although arguably contrary the principle of “unlimited” PTO, it may be necessary to protect the company by placing certain “limits” outside the U.S.: e.g., limiting how much time off employees can take at once or implementing systems requiring preapproval of vacation time companywide (to ensure fair and equal treatment across the board).

The Direction of Travel?

Ferris Bueller is quintessentially American.  So too unlimited time off polices?

Such policies have upsides in the U.S. that are not mirrored for companies implementing internationally. Global implementation undermines the U.S. drivers to have a policy that is less expensive, less burdensome and less bureaucratic. This is not to suggest it cannot be done, but only that rolling out such policies globally is today fraught with caveats.

Perhaps, more countries outside the U.S. will begin catching up quickly. Until then, prudence requires contemplating adding safety valves to any non-U.S. extensions of “unlimited” time off policies: e.g., requiring (and tracking) employees use of statutory vacation entitlement prior to use of any unlimited leave policy.

Ferris knew: “The question isn’t what are we going to do; the question is what aren’t we going to do.”

Posted in Employment Litigation Employment Policies

Hashtag — Zero Tolerance Policy?

Jules: Hash is legal there in Amsterdam, right?

Vincent: Yeah, it’s legal, but it ain’t a hundred percent legal. I mean, you can’t just walk into a restaurant, roll a joint and start puffing away. You’re only supposed to smoke in your home or certain designated places.

Jules: And those are hashbars?

Vincent: Yeah. It breaks down like this: it’s legal to buy it, it’s legal to own it, and, if you’re the proprietor of a hash bar, it’s legal to sell it. It’s still illegal to carry it around, but that doesn’t really matter ‘cause…get a load of this: if you get stopped by the cops in Amsterdam, it’s illegal for them to search you. I mean, that’s a right the cops in Amsterdam don’t have.

Jules: I’m going, that’s all there is to it, I’m *^`#ing going.

Vincent: Yeah baby, you’d dig it the most.

Twenty plus years after Vincent Vega educated Jules Winnfield in Pulp Fiction on Dutch drug law (and, perhaps more memorably, on the metric system’s impact on appropriately naming a hamburger), marijuana is now legal in twenty-nine U.S. states and the District of Columbia, which includes recreational use in eight of those thirty jurisdictions.

Yet, as Katharine Liao detailed effectively (Reefer Madness),employers have remained largely unaffected by that legalization. Courts have repeatedly held that employers may fire employees testing positive for marijuana, even where used to treat a disability.

But, nothing lasts forever, even cold November rain. A recent Massachusetts Supreme Judicial Court opinion breaks ranks with prior courts’ treatment of this issue.  In Barbuto v. Advantage Sales & Marketing, LLC, 477 Mass. 456 (2017), Barbuto sued her former employer alleging disability discrimination after being fired for testing positive for marijuana, which she used to treat Crohn’s disease (a debilitating gastrointestinal condition).

Barbuto was a sympathetic plaintiff: she had informed her employer that she used marijuana for medicinal purposes in limited quantities at her home with dinner and received confirmation “that her lawful use of medical marijuana would not be an issue ….” But, she was later fired after failing a mandatory drug test despite that she already been performing the job well; had not used marijuana at work; and had never reported to work intoxicated.

The Massachusetts Supreme Judicial Court held that Barbuto had a claim under the state disability discrimination statute: “an exception to an employer’s drug policy to permit its use is a facially reasonable accommodation” because Massachusetts’ marijuana law provides “that patients shall not be denied any ‘right or privilege’ on the basis of their medical marijuana use.”

In Barbuto, defendants waived any argument that federal law (which still criminalizes marijuana possession and use) preempts any claims for protection of marijuana use under state law. Other courts have addressed preemption issue but with no consistent result. Compare Noffsinger v. SSC Niantic Operating Co. LLC, No. 3:16-cv-1938 (JAM), 2017 WL 3401260 (D. Conn. Aug. 8, 2017) (rejecting federal preemption of Connecticut’s Palliative Use of Marijuana Act that prohibits employers from discriminating against authorized persons who use medicinal marijuana outside of the workplace) with Emerald Steel Fabricators, Inc. v. Bureau of Labor & Indus., 348 Or. 159, 177-78 190 (2010) (holding that to the extent Oregon law affirmatively authorized the use of medical marijuana, it stands as an obstacle to the Controlled Substances Act and is preempted).

As such, similar to Vincent Vega’s point that although marijuana may be legal in Amsterdam, “it ain’t a hundred percent legal.” There are three discrete limitations that Vega would add to his commentary on Barbuto.

  1. The Massachusetts high court emphasized that its ruling does not require employers to tolerate on-site use of medical marijuana. So, as Mr. Vega so eloquently laid it out, it’s not as if an employee can just walk into work, “roll a joint and start puffing away. You’re only supposed to smoke in your home or certain designated places.”
  2. The court recognized that accommodation would be an undue hardship in some situations: “For instance, an employer might prove that continued use of medical marijuana would impair the employee’s performance of her work or pose an ‘unacceptably significant’ safety risk to the public, the employee, or her fellow employees.”
  3. The Massachusetts court noted that the language of its marijuana act distinguished this case from cases in other states (i.e., California). Put with the bluntness (pun intended) of the Pulp Fiction script, Massachusetts and Amsterdam may each be unique: places that employees failing drug tests elsewhere wish were home.
Posted in International Employment Law

Global Employment Law: Comparing Countries

When your water cooler is actually a set of water coolers in 40+ countries like at DLA Piper, water cooler talk must be digital. News reports of changes in France’s labor laws — Code du Travail – prompted speculation (and debate) among DLA’s attorneys on which countries now provide the best climate for business expansion after looking at both economic and legal factors in combination.  Bets were made and a template was agreed upon for each competitor to research from.

Here is how the US looks on that template on a scale from 1 (best business climate) to 10 (least promising climate).

Economic/Political Stability:  USA has been #1 on the A.T. Kearney Foreign Direct Investment Confidence Index for 5 years running

Labor Costs:  Productivity is key: USA is #5 in OECD – more “bang per buck” than any other country on this competition

Corporate Tax Rates:  USA’s effective tax rate is 18.6% but more than 2/3 of US corporations pay no tax

Ease / Cost of Set Up:  World Bank ranks USA first among larger countries and in top ten overall in this category

Talent Pool:  40+% college educated + more patents filed per year than any other country + availability @ OECD and G-7 averages

Labor Market Regulation: 

Collective Engagement:  USA has no works councils; few unions (less than 8% of private sector covered by union contracts)      

Key HR Legal Considerations:  Employment at will = maximum business flexibility (e.g., no equivalent to “Transfer of Undertakings: Protection of Employment” regulations (TUPE) that are commonplace in the UK and the EU       

Evaluative scores for the other participating countries (ranked from lowest/best score to highest/worst score) on that business pain cycle entailed individualized judgment. Each participant attempted to pinpoint how difficult the employment laws in his or her country were.  Those scores initially ran as follows:

  • USA – 1.5
  • UK – 3
  • Romania – 3
  • UAE – 4                                  
  • Spain – 4
  • France – 4
  • Netherlands – 4
  • German – 5
  • Australia – 5
  • China — 7

Circulation of those scores (which were submitted by each participant simultaneously to the London office for tabulation) triggered further debates, which may continue until Christmas. Comments from the wagerers/debaters illustrate the difficulty of such transnational comparisons as well as their depth of knowledge of the laws in each other’s countries:

    • “Are you saying France is only a 3? If so, Australia must be a zero then!”
    • “UAE should come down to 2 – limited unfair dismissal regulations and discrimination regulations plus no unions.”
    • “I thought that in Spain we suffer more pain than in the UK but less than in France; I need to recalibrate Spain.”
    • “The world has gone mad! Given these ratings, Germany must be a 2.”

Passion runs high in the best professionals. Here, however, there is not only passion but the willingness to do the research to confirm each point. That is why I love working with (and debating with) my international colleagues, who are wicked smart and who track not only what happens in their own country but globally.   This crew is a truly talented team regardless of how you score each country.

But, you can see that for yourself. These debaters are among the contributors to DLA’s new Guide to Going Global, which contains additional information about employment and labor law basics in 56 jurisdictions throughout the Americas, Asia Pacific, Europe, the Middle East and Africa.

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