Posted in Employment Litigation Employment Policies Wage-and-Hour

OUT OF SIGHT, BUT NOT OUT OF MIND

Wage and Hour Issues Involving Remote Employees

A 2017 Gallup survey found that nearly half of U.S. employees (43%) spend at least a portion of their working time away from their employer’s offices.  This represents a 4% increase since 2012 and a whopping 34% increase from 1995 and the trend appears to only be gaining momentum.  Work-from-home opportunities and flexible scheduling options not only influence a position’s attractiveness to applicants and employees, but also may benefit companies by, among other things, improving employee retention and morale and widening the pool of available employee talent.  There are, however, important potential wage and hour pitfalls that employers should consider when permitting employees to telecommute or work remotely on a full-time, part-time, or occasional basis.

Policies

As an initial matter, any arrangement which permits some or all employees to work remotely should be addressed in the company’s employee handbook or personnel policies.  At a minimum, the handbook should include clear timekeeping policies for non-exempt employees and address guidelines for tracking hours worked, prohibitions on off-the-clock work, and requiring permission before working overtime.

Employers that plan to offer more extensive telecommuting programs should consider implementing policies to address:

  • Who is eligible to telecommute, including, for example, procedures for requesting approval to telecommute and the conditions for telecommuting;
  • Employee responsibilities while telecommuting, such as accessibility during business hours, communication expectations with colleagues and supervisors, secure access requirements and proper protection of company proprietary information while working remotely, and conditions for using company-owned equipment; and
  • Employer responsibilities, such as the availability and extent of technical support for remote employees and reimbursement of any telecommuting expenses.

Payroll

Employers that have remote workers across multiple states must be sure to comply with the payroll laws in each such jurisdiction–not just the laws in which the company’s home office is located.  This requires, at a minimum, knowing the following:

  • The applicable minimum wage;
  • Whether the state exemption overtime calculation laws differ from the federal Fair Labor Standards Act (FLSA);
  • Payday frequency requirements;
  • Requirements as to what information must appear on paystubs, such as paid sick leave accruals; and
  • Laws addressing payment of final wages and payout of accrued, unused vacation.

Note that there can be payroll tax implications when an employee works in a state other than the state in which the company maintains a physical presence.  Generally, under the “physical presence rule,” employees pay taxes in the state in which they render services; however, a minority of states do not follow this rule so employers are advised to contact a tax expert to ensure its compliance with each jurisdiction’s tax laws.

Employee Classification

Employers are sometimes tempted to classify individuals who work remotely as independent contractors or consultants because they assume that they don’t have the requisite physical control for the offsite individual to be an employee; however, that is only one factor in the analysis of whether an individual should be classified as an employee or independent contractor.  Employers need to look beyond the physical location of the individual and analyze how much overall control the employer has over the individual.  This includes, for example, looking at the level of instruction and direction over the work; the degree of integration into the company’s business; the continuity of the relationship; payment of expenses; provision of materials and tools; realization for profit or loss; and exclusivity.  See e.g. IRS 20-Factor Test.  Employers can be subject to significant fines and penalties for misclassifying employees as independent contractors.

Overtime Laws

Employers with telecommuting employees should be sure to avoid potential pitfalls related to compliance with state and local wage and hour laws.  For example, certain states, including California, Pennsylvania, and Oregon, have different criteria for determining whether a position classifies as overtime exempt.  Where applicable state law differs from the FLSA, the stricter state exemption standard must be followed.

Once it is determined that a remote or telecommuting employee is non-exempt under applicable law, the employer must then ensure that it is complying with laws addressing meal and rest breaks and payment of overtime.  For example, a number of states, including Nevada, Alaska, Colorado, and California, require that non-exempt employees be paid overtime on a daily, not just weekly, basis.  Additionally, California has also recently rejected the FLSA’s de minimis doctrine, meaning that employers of California employees cannot generally disregard “insubstantial or insignificant periods of time beyond the scheduled working hours” when recording time worked.  Troester v. Starbucks Corp., 5 Cal.5th 829, 421 P.3d 1114 (Cal. S. Ct. 2018).

The FLSA is clear that non-exempt employees must be compensated for all hours worked, including all work performed at a remote location (see 29 C.F.R. § 785.12); however, time tracking for remote, non-exempt employees can be a more difficult task given that the employee cannot be physically observed in the workplace.  Employers with a sizeable number of non-exempt, remote employees may wish to consider implementing electronic systems for properly tracking hours worked.  Not only does the law require proper tracking, but such systems can be invaluable should the company ever find itself defending against an employee wage claim.  Such a system could include requiring remote workers to log in and out of the company’s computer system when working remotely; engaging task-monitoring devices to monitor URLs and apps accessed; using software that tracks keystrokes, takes randomized screenshots of the remote employee’s computer screen, or otherwise monitors productivity.  Of course, any such monitoring should be appropriately described in the company’s computer and electronic communications policies.  Regardless of whether a company uses a time tracking and/or productivity monitoring system, if it knows or has reason to know that a non-exempt employee is working beyond his or her shift, notwithstanding a policy prohibition from doing so, it must count the additional hours towards time worked and compensate the employee accordingly.  29 C.F.R. 785.12.

Posted in Employment Policies

Does Unlimited PTO Lead to Limitless Headaches?

In recent years, a number of highly visible companies in jurisdictions that prohibit “use or lose” vacation policies have adopted unlimited paid time off (“PTO”) programs, garnering ample media buzz.  Under such policies, employees can take off as much time as they choose (within reason) as long as they get their job done.  The focus is on producing results, not just logging hours.

Buzz aside, only about 1-2% of employers currently offer such policies – primarily in California due to its generous laws regarding vacation accrual and payout—and, because they are so new, courts and legislatures have not yet opined on them.  The following lays out the legal and practical issues for employers to consider when deciding whether to transition to an unlimited policy.

Benefits of an Unlimited PTO Policy 

  • Cost Savings:
    • There is an argument under current wage and hour laws that employers can avoid payout of accrued vacation upon termination, where applicable, because PTO is “unlimited” and does not “accrue” or “vest.” See e.g., Cal. Lab. Code § 227.3 (where “an employee is terminated without having taken off his vested vacation time, all vested vacation shall be paid to him as wages”) (emphasis added). That being said, there is currently a dearth of case law on this issue and we don’t know whether courts will agree or if legislatures will eliminate this perceived legislative loophole.   While there has not been case law regarding payout of “unlimited” vacation at termination, California has acknowledged the existence of “unlimited” plans as it relates to paid sick leave which indicates an understanding of this concept as something distinct from a traditional accrued vacation plan.
    • Unused, accrued PTO that rolls over each year and is paid out upon separation can be a significant expense on a company’s balance sheet. Indeed, one report estimates that American companies have $224 billion in liabilities on their balance sheets from unused vacation time. That liability can be decreased or eliminated with an unlimited PTO policy.
    • Some studies have shown that unlimited PTO policies may indirectly reduce the cost for other benefits (think health insurance, disability insurance and employee assistance programs) because employees can more easily take time for routine and preventative care.
  • Talent Acquisition Tool: The flexibility that these policies offer may make a company more attractive to top talent, especially to millennials.
  • Reduces Administrative Headaches: In many cases, human resources and payroll staff are relieved of monitoring time off and, in jurisdictions and companies with a “use or lose” policy, the end of the year rush to take unused PTO goes away too.
  • Employee Loyalty: If managed correctly, unlimited PTO may build higher morale and a culture of employee ownership because the policy conveys that the company trusts its employees to manage their time in a way that serves their personal needs while also meeting their obligations at work.

Drawbacks of an Unlimited PTO Policy

  • Not a Good Fit for Every Company Culture: These policies are better suited for results-driven companies that already provide employees with a certain amount of autonomy and flexibility. They are unlikely to be effective at companies where employees must be physically present at the worksite, like retail establishments, restaurants or manufacturing plants. Also, these policies may cause morale problems for more senior employees who may be upset that a junior employee now gets the same vacation time as someone who has been a loyal employee for many years.
  • Too Cumbersome for Non-Exempt Employees: These policies likely won’t make sense if the workforce is heavily comprised of employees paid on an hourly basis who are not exempt from overtime and minimum wage requirements because employers must still track non-exempt employees’ hours worked to ensure compliance with overtime, minimum wage, and meal and rest break laws. Additionally, non-exempt workers are paid based on time worked, not their completion of their work assignments, so the likelihood of abuse is much greater. Companies that otherwise wish to implement an unlimited PTO policy may do so for their exempt employees, while keeping a traditional vacation policy for non-exempt employees.
  • Requires Active Management of Employee Performance: Supervisors must proactively manage employee performance and create and communicate metrics to assess contribution and productivity without simply relying on hours logged at the office. Managers won’t be able to discipline someone for not being in the office, but rather for failing to complete their work, which requires more oversight. And remember, there will be some employees who will abuse this privilege by, for example, creating consistent long weekends through the summer.
  • May Dissuade Employees from Taking Time Off: If employees do not have clear expectations of how much time off is acceptable or if job security is low or employee competition is high, employees may fear taking time off absent a fixed entitlement to do so. This can defeat one of the reasons for providing unlimited paid time off in the first place.
  • Uncharted Territory: As these policies gain popularity, legal issues will arise. Not all companies will have the appetite to adopt a policy that has not yet been vetted by courts and legislatures.

Transitioning to an Unlimited PTO Policy

When making the transition to an unlimited PTO policies, employers should remember:

  • “Unlimited” Should Not Mean “Unmanaged”: It’s imperative to have a clear, written policy addressing: (i) eligibility; (ii) how to request time off; (iii) the rules and guidelines around the benefit (including that sufficient advanced notice is required for planned time off); (iv) that because vacation does not accrue, there will be no payout of PTO upon separation; and (v) that employees must meet their goals and maintain satisfactory job performance to remain eligible for the benefit. Supervisors should discuss with their teams how PTO will be managed so that there is no interruption of service for clients and to minimize headaches for other team members. Discipline under the new policy will be challenging initially and Human Resources should be very involved in these discussions to ensure consistency throughout the organization.
  • Must Comply with Other Legal Obligations: Companies must still comply with their FMLA, ADA, USERRA, paid sick leave, and similar obligations, if applicable. To minimize complications related to leave administration, employers should make clear how these policies interact with an unlimited PTO plan, in compliance with applicable local law. The PTO policy should establish clear limits on how PTO is used, and how long an employee can use it for in a single block of time (i.e., absences of more than 15 consecutive days are not covered by this policy). Remember that leave statutes and ordinances have anti-retaliation policies, so companies must be consistent in how the PTO use limits are applied.
  • Plan for the Transition: Companies transitioning away from a traditional PTO plan should give staff ample time to use their accrued days or cash them out in advance of the unlimited policy going into effect and have a clear communication plan in place. There should be clear talking points about why the change has been made and how the company will administer it. Supervisors should be armed with information and know when to pass questions onto Human Resources. This is key, as employees will always come to supervisors first, and without a communication plan in place before the transition, there is likely to be inconsistent (and otherwise problematic) responses without valuable input from Human Resources. And remember that everything is local here, and companies must balance the desire for uniformity with local rules regarding use and payout of accrued paid time off, medical leaves of absence, reasonable accommodations and paid sick leave.
Posted in Employment Litigation Employment Policies

West-Side! Washington Continues to Follow (And Pass) California On Allowing for Wage and Hour Class Action Litigation

For years, Washington’s employment laws were to California’s like Macklemore was to Dr. Dre – yes, they had a west coast flavor, but they weren’t as scary as California[1].  Washington laws provided for meal and rest breaks, but there wasn’t much class action litigation.  They allowed non-competes, and averaging of wages to determine if someone was paid minimum wage.  But Washington is now coming out as Snoop Dogg and fully embracing its West-Side street cred, just like the original on Dre’s The Chronic.

First, in 2015, the Washington Supreme Court in Demetrio v. Sakuma Bros., 183 Wash.2d 649 (2015),held that agricultural piece-rate workers must be separately paid for rest breaks, even if they are paid completely for their time worked.  This certainly had the flavor of California’s own decision in Gonzalez v. Downtown LA Motors, 215 Cal.App.4th 36 (2013), but was a good example of Washington paying homage to the godfathers like Cube and Jerry Brown down south that led the way, without overshadowing its mentor.

Then in 2017, Washington decided to make its own mark, announcing itself as a full member of the West-Side’s Death Row of employment laws by deciding in Brady v. AutoZone Stores, Inc., 188 Wash.2d 576,  that Washington employers have a “mandatory obligation” to provide meal breaks, and ensure those meal breaks complied with the law. This went beyond what California’s Supreme Court had held in Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012),  where the employer’s obligation is to “provide a reasonable opportunity to take an uninterrupted 30-minute break.”  Needless to say, there was rejoicing among the Plaintiffs’ bar at this decision, and class action litigation exponentially increased in Washington as a result.

Now fast forward to 2018, when Washington has followed up its cameo appearance with its own Doggystyle moment, holding that piece-rate agricultural workers must be compensated separately for “non-picking” tasks in Carranza v. Dovex Fruit Company, 416 P.3d 1205 (2018).  This decision is limited to agricultural workers, but aggressive plaintiffs lawyers have filed multiple class actions within days of this ruling and further litigation regarding piece-rate compensation will surely occur.

To understand Dovex, you have to look at the lyrics of the parties in this case.  On one side of the wage-and-hour battle, the Plaintiffs argued that work that did not fall within the piece rate must be paid out at a separate hourly rate.  The employer argued that what mattered is the total compensation paid to the employee for the total hours worked.

The Supreme Court broke this down to hold that, essentially, when a picker was not picking, he or she was not being paid . This varies from the federal interpretation of the FLSA, endorsed by (among others) the FLSA, which holds that minimum wage compliance is determined over the entire work week. Dovex does follow California law, however, which requires that employees be paid at least the minimum wage for “each and every separate hour worked,” and if an employee was paid via piece rate, he or she was not being paid for all the tasks they performed over the course of the day .  For now, Washington has regulations, WAC 296-126-021, that specifically allow for (non-agricultural) piece-rate workers’ weekly wages to be averaged across all hours worked in a workweek to determine minimum wage compliance.  California just seems to be too old-school to have a regulation that makes this much sense.

So what does this mean for Washington employers, and others who are operating on the West Coast? It is fair to say that there will likely be more class action litigation, and the cost of doing business may increase, just as it has in California.  Employers can proactively assess their policies in light of this trend, looking at the cases currently pending before the Washington Supreme Court to identify possible concerns, and address those before the rules are retroactively changed.  And employers can look to California to better understand where Washington is going, though knowing that the young ones are always trying to outdo the OGs.

_____________________________________
1. I’ll let you determine where Oregon falls within this analysis. My vote is for the Black Eyed Peas.

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.

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