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Pay transparency issues have been on the radar for some time, with employers navigating the patchwork of jurisdictions across the US demanding the disclosure of salary and wage ranges in job ads. So what’s new? Enforcement of these laws is on the rise, and employers have already been hit with fines and citations.

In this video, our Labor & Employment experts discuss enforcement trends and share practical tips to help keep employers out of the compliance crosshairs as the uptick in enforcement continues.

Click here to view the video.

Baker McKenzie’s Pay Equity Compendium

The proliferation of pay transparency laws, and potential penalties for non-compliance, make it more important than ever for employers to keep up with the ever changing pay transparency landscape. For a quick and easy way to stay on top of pay transparency obligations globally, we offer a fixed fee Global Pay Equity Compliance Compendium that monitors the legal pay transparency and reporting requirements and forthcoming developments across 70+ jurisdictions (of which over 40 currently have pay transparency or reporting requirements). Please contact a member of our team for more information.

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The Department of Labor’s “new” rule for classifying workers as employees or independent contractors under the Fair Labor Standards Act took effect March 11, 2024. The DOL’s Final Rule returns employers to a familiar pre-Trump administration totality of the circumstances test that focuses on the “economic realities” of the worker’s situation. The practical impact is that it is now harder for businesses to classify workers as independent contractors, and it will likely increase federal wage and hour claims.

There are mounting legal challenges to the Final Rule contesting the DOL’s rulemaking authority. However, to date, none of the suits have been successful at blocking implementation of the Final Rule. So, for now, it stands.

Practice pointer: different legal tests for different laws

Employers new to the US are often baffled to learn that no single test exists to evaluate independent contractor status for all purposes. This means compliance is complicated since different tests may apply depending on the context. And yes, this also means that it’s feasible for a worker to be an independent contractor for some purposes and an employee for others (such as under state and federal law, for example). Continue reading for a summary of the key tests that come up most often for US multinationals.

Why does this matter?

Misclassification is a key issue for US employers since many laws apply only to employees – not independent contractors. Thus, if workers are misclassified as independent contractors and subsequently determined to be employees under the law, a cascade of unforeseen obligations will be thrust upon the company.

Misclassification can lead to significant liability. The FLSA requires employers to provide minimum wage and overtime pay to qualified employees—but not to independent contractors. In addition, most employees, especially full-time employees, are also entitled to various statutory benefits, such as state law paid sick leave entitlements, workers’ compensation benefits, unemployment benefits, and to benefits under an employer’s ERISA-governed benefit plans, such as group health insurance policies and 401(k) plans. Failure to properly classify workers can result in substantial damages and penalties (even if unintentional), including: back pay, including overtime compensation; employee benefits, including stock options, retirement benefits, and health plan coverage; disability payments and workers’ compensation; tax and insurance obligations; liquidated damages; and civil monetary penalties.

Continue Reading New DOL Rule Makes it Harder for Businesses to Classify Workers as Independent Contractors Under the FLSA (Plus a Quick Reminder of the Key Misclassification Standards Across the US)
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You’re not alone in wondering where the Equal Employment Opportunity Commission’s (“EEOC”) final regulations to implement the Pregnant Workers Fairness Act (“PWFA”) are. In fact, they are well past their due date.

How it started

The PWFA became effective on June 27, 2023. In August 2023, the EEOC published proposed regulations to implement the PWFA. (We outlined the proposed regulations in our blog here, and about the PWFA here). The public comment period for the proposed regulations closed October 10, 2023, and the proposed regulations were delivered to the Office of Information and Regulatory Affairs (“OIRA”) on December 27, 2023 for review.

How it is going

However, to date, no final regulations have been issued, despite the PWFA’s requirement that the EEOC issue regulations by December 29, 2023. The regulations, once finalized, will provide clarity for employers implementing policies and practices to comply with the PWFA. For instance, the proposed regulations outline a nonexhaustive list of what the EEOC considers potential accommodations under the PWFA, including job restructuring and part-time or modified work schedules.

However, even without final regulations in place, employers are required to meet the PWFA’s mandates. The proposed regulations can still be used to offer insight into how the EEOC believes the PWFA should be interpreted.

Continue Reading Pregnant Pause: The EEOC’s Delay In Issuing Final Regulations For The Pregnant Workers Fairness Act Should Not Delay Compliance
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As a consistent trend-setter in passing employee-friendly legislation, California has enacted the country’s first workplace violence prevention safety requirements applicable to nearly all employers in the state.

SB 553 requires California employers to adopt a comprehensive workplace violence prevention plan, train employees on workplace violence, and begin logging incidents by July 1, 2024.

Detailed Requirements for a Written Plan

The workplace violence prevention plan must be written, available and easily accessible to employees (as well as authorized employee representatives and Cal/OSHA representatives).

Continue Reading California Employers: Prepare Your Workplace Violence Prevention Plan (Deadline In T-Minus 3 Months)
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Multinational companies with headcount in the UK will be keen to know how the legal landscape across the pond is shifting this spring. We’ve highlighted updates below in 3 key areas (employment law, immigration law and HR privacy).

First, there are number of employment law changes coming into force in April impacting:

  • Rights to time off work (e.g. paternity leave and carer’s leave) and flexible working, and
  • Increases to statutory payments and compensation (e.g. statutory sick pay, national minimum wage and more). Find the details HERE.

Second, there are changes to the immigration rules for business visitors to make it more attractive to do business in the UK. Read more HERE.

Third, click HERE for our quarterly EMEA HR Privacy Newsletter. This includes key updates from the UK Information Commissioner’s Office (ICO), notably enforcement orders to employers to stop using facial recognition technology and finger print scanning to monitor the attendance of its staff for the purposes of determining pay. There is also draft guidance from ICO on keeping employment records in compliance with data protection law.

For questions about any of these updates, please contact a member of our team.

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With thanks to Monica Kurnatowska, partner in our London office.

In the UK, in principle, it is possible for employers to restrict employees’ expressions of views. But where those views reflect a religious or other belief protected under the Equality Act 2010, the scope to do so is far more limited. A number of employment tribunal decisions have highlighted the financial and reputational perils for employers
of getting things wrong.

Our UK colleague, Monica Kurnatowska, recently authored an article identifying the 8 key principles that emerge from the case law that employers should take into consideration, namely:

  1. The importance of freedom of speech and expression
  2. There is no right not to be offended
  3. Consider the context – determining whether something is objectionable will be context specific
  4. Do not make assumptions about an employee’s views or what an individual might do
  5. Ensure your policies are clear and employees are regularly given training that all beliefs are treated equally
  6. The importance of even-handed leadership
  7. The need to handle complaints with care
  8. Take a balanced approach

This week the UK government’s “Inclusion at Work” panel endorsed and adopted her guidance.

To view Monica’s full article in Practical Law UK click here.

Brief Reminder: Religious Discrimination in the US Workplace

In 2022, the EEOC reported that the number of religious discrimination charges filed by employees was six times higher than in previous years.

Last June, the US Supreme Court ruled in Groff v. DeJoy that under Title VII of the Civil Rights Act, employers must reasonably accommodate an employee’s religious beliefs or practices unless doing so would result in substantial increased cost in relation to the conduct of the employer’s particular business. For more, reread our previous blog here.

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With thanks to Jonathan Isaacs, Baker McKenzie’s APAC Chair, Employment & Compensation, China / Hong Kong and Emma Pugh, Knowledge Lawyer, Employment & Compensation, Hong Kong.

The economic effects of the COVID-19 pandemic and the change in geopolitical landscape have forced employers globally to reassess and re-evaluate their business priorities. Our team is working with multinationals to navigate this tricky terrain. Many are looking to stabilize or reduce their operations and headcount in various jurisdictions including China, and are approaching us with questions about layoff strategies and requirements.

To help you get on a jump start on such thought exercises, here are 4 key tips for approaching business change in China right now.

1. Remember that cost-cutting is not a valid ground for termination in China

Employment laws in China set strict limitations on employment terminations and there is no such concept of “termination at will” for full-time employees. Employers must have a statutory grounds to terminate employment, which includes termination upon mutual agreement (no collective consultation process is required).

Two options for terminations that are effectively mass dismissals include: (1) showing a “major change”  in objective circumstances affecting the company (again, cost-cutting does not count) and (2) using the “mass layoff” grounds that has specific headcount triggers and requires adhering to a prescribed process.

2. Your company’s termination strategy may need to vary by city

Courts in different cities interpret the grounds discussed above differently (e.g. Beijing tends to have a high threshold for what qualifies as a “major change,” Shanghai courts tend to disfavor mass layoff filings, etc.). Thus it is not uncommon to use different grounds for termination in different locations based on counsel’s recommendations.

3. Maintain communication with the local government

It is a best practice to keep the local government agencies and labor authorities (and even labor unions) apprised (at a high level) of any plans for major lay-offs. They are incentivized to maintain labor stability and will appreciate being kept in the loop even when not specifically required.

4. Plan execution and implementation details carefully with counsel

For the announcement of any significant or substantial change, it is important to have someone sufficiently senior and trusted by the employees to deliver the news. This not only shows respect to the impacted employees, but underscores that the announcement is a firm and final decision. Depending on the circumstances, counsel may advise you to consider engaging a PR company and / or private security to support the communications process.

Also, be certain to secure company chops, business licenses and confidential information in advance.

Staying Ahead of the Curve

While we will continue to post important updates regarding managing employees in China on the Employer Report, you may also enjoy subscribing to our APAC Employment & Compensation Quarterly Update using the form linked here. Also, to get up to speed on how the economic climate is shifting in China, some of us found this CBS 60 Minutes news segment (from March 25) interesting.

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We are pleased to share with you The Global Employer – Global Immigration & Mobility Quarterly Update, a collection of key updates from Brazil, China, Italy, South Africa, Spain, the United Kingdom, and more.

Click here to view.

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We’re monitoring a few new twists in the story of remote work, including:

  • Enhanced risk for bias suits targeting remote staff for layoffs
  • More ADA claims alleging mishandling of accommodation requests
  • Changes to digital nomad visas in different jurisdictions around the globe, and
  • The critical need to identify where all employees are located when the company is part of a M&A transaction or spinoff.

In addition, the importance of getting your arms around this topic cannot be understated from the point of view of corporate tax exposure. As you are likely keenly aware, each state, local, or foreign jurisdiction has its own provisions related to remote and hybrid workers with varying levels of expense and complexity.

Spring is an excellent time to check-in on your remote work policies ahead of summer travel. Should you like support and a fresh perspective, our team at Baker offers a cross-disciplinary approach to plant the seed for success in this area. For more on this, click here.

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Baker McKenzie’s North America Trade Secrets Practice is a true cross-disciplinary team of industry ranked and recognized intellectual property, employment, tech transaction, litigation and trial attorneys exclusively dedicated to helping clients identify, protect, prosecute and defend their most valuable, complex and market-differentiating trade secrets throughout the US, Canada, Mexico and globally.

Our Focus on Trade Secrets Video Chat Series helps you stay abreast of and navigate key issues.

The Latest in the North America Video Chat Series

Presenters: Bradford Newman, Michael Brewer, William Dugan and Emily Brait

5 Key Considerations in Protecting Trade Secrets While Employing AI Tools (Episode 22)

Presenters: Bradford Newman, Jessica Nall and Jonathan Tam