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Equal pay is an increasingly high profile issue for employers with a noticeable rise in equal pay claims in the private sector in the UK. This was underscored recently in a high profile case estimated to result in around £30 million in backpay.

With the implementation of the EU Pay Transparency Directive on the horizon, and the UK’s Labour government proposing to expand the right to equal pay to ethnic minorities and those with disabilities, this is a topic that employers can’t ignore.

Tune in HERE as we explore some tricky points and key takeaways that apply for UK and multinational employers.

Background and References

  • The EU Pay Transparency Directive mandates equal pay for equal work and will be enforced across EU member states starting June 7, 2026, with the first reports due by June 7, 2027. Notably, the PTD requires extensive reporting on pay gaps and mandates transparency in pay structures. Employers will need to assess all roles for equal value and publish detailed information on any identified pay gaps. Joint pay assessments with employee representatives will be triggered if gaps of 5% or more are found. Additionally, the PTD prohibits asking job applicants about their pay history and requires employers to provide clear criteria for pay determination, accessible to both workers and their representatives. Reporting thresholds vary according to employer headcount, with annual or triennial reporting obligations for those with 100 or more employees. The PTD also demands public disclosure of pay gap data and remediation of unjustified differences in pay.
  • The Corporate Sustainability Reporting Directive is the new and expanded version of the existing EU ESG reporting directive (the so-called Non-Financial Reporting Directive). In-scope businesses will need to report on cross-cutting ESG issues, and to make specific disclosures in relation to a wide range of issues such as labor relations, lobbying activities, climate neutrality plans and targets, etc. It mandates that companies report on their pay practices, including the gender pay gap. This involves breaking down the average gender pay gap by employee category and distinguishing between full-time and part-time workers. Additionally, companies must disclose any actions taken to rectify pay difference. More than 50,000 EU and non-EU companies are covered, including a very large number of US-headquartered companies.
  • The new UK Employment Rights Bill includes a provision requiring large employers (one employing 250 employees or more) to produce annual equality action plans on how to address their gender pay gaps and on how they will support employees through the menopause.

For support conducting proactive pay equity analyses or equal pay audits, understanding your pay transparency obligations globally, and fulfilling your reporting obligations, please contact your Baker McKenzie employment lawyer.

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US companies have been granting various forms of share-based awards to employees around the globe for many years, and companies in other countries are increasingly following suit.

Because share-based awards are ubiquitous, and for many companies an important part of the total pay package, we are now also seeing an increasing number of lawsuits and other disputes involving such awards.

Broadly, these disputes can be categorized as follows:

Entitlement Claims

These can arise if a company is eliminating or paring back a previously offered share program. In this case, employees who are no longer eligible for awards or receive less/reduced awards may claim that they have become entitled to the awards, such that the company cannot unilaterally eliminate/reduce the program without otherwise compensating the employee. Employees may also try to raise constructive dismissal claims.

A related issue in this situation is whether a company has to notify or consult with existing Works Council or other employee representative bodies regarding the changes to the share program. If Works Council is found to have a consultation right, implementing the change without such consultation can be very problematic and Works Council can take the company to court.

Increased Severance Pay

If an employee is involuntarily terminated, they are often entitled to statutory severance pay. Severance pay is typically calculated based on the employee’s salary paid during a certain period prior to termination. If share-based award income has to be included as salary for this purpose, this can increase (in some cases, significantly) the amount of severance pay due to the employee.

Continue Reading Mitigation Strategies for Claims Related to Share-Based Awards
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Immigration and mobility considerations can significantly impact corporate transactions, especially those in cross-border deals. Employers must ensure continued work authorization for impacted employees, manage visa statuses in other countries, and identify and address immigration issues up front. In our latest Global Immigration and Mobility Video chat, our on-the-ground immigration and mobility attorneys from EMEA, Latin America, and the US share valuable insights and best practices companies can adopt to manage issues encountered during a corporate transaction. 

Click here to view the video.

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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 Austria, Italy, Japan, Philippines, Singapore, Thailand, and the United States.

Click here to view.

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Even employee claims of sexual harassment that occurred before the effective date of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA) may end up in court. In Olivieri v. Stifel, Nicolaus & Co., the Second Circuit Court of Appeals held that acts occurring before the effective date of the EFAA can be deemed to be part and parcel with acts occurring after the effective date–so that all of the claims accrue as of the later date and are subject to the EFAA.

What happened

Patricia Olivieri filed suit against her employer Stifel, Nicolaus & Co. (Stifel) and several coworkers in 2021 alleging gender-based discrimination, hostile work environment and retaliation claims under Title VII and the New York State Human Rights Law (NYSHL). Olivieri alleged her manager sexually assaulted and repeatedly sexually harassed her, and that after she reported her manager to the company, the defendants allegedly subjected her to a hostile work environment characterized by discrimination and retaliation.

Stifel moved to compel arbitration of Olivieri’s claims based on an arbitration clause in the plaintiff’s employment agreement. The US District Court for the Eastern District of New York initially granted Stifel’s motion to compel in late March 2022, not having been made aware of the enactment of the EFAA on March 3, 2022 by any party. (The EFAA allows a plaintiff alleging sexual harassment or sexual assault to void a pre-dispute arbitration agreement at their discretion. Claims under the EFAA accrue “on or after” March 3, 2022.) In light of the EFAA, Olivieri subsequently moved for reconsideration of the district court’s order requiring her to arbitrate her claims, and the district court turned course, vacating its prior decision and denying the employer’s motion to compel arbitration. The district court concluded that the plaintiff’s hostile work environment claims–which alleged a hostile work environment and retaliation both before and after the effective date of the EFAA–were subject to the continuing violation doctrine of accrual and accrued after the EFAA’s effective date. Therefore, the EFAA applied to allow the plaintiff to void her pre-dispute arbitration agreement. On appeal, a three-judge panel of the Second Circuit unanimously affirmed.

Continue Reading Before, After, or Both? Second Circuit Rules Pre-EFAA Activity Can Go to Court Instead of Arbitration
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Employers across the country have been relieved of the obligation to comply with the Federal Trade Commission’s rule banning most postemployment noncompetes — for now. On August 20, U.S. District Judge Ada Brown of the U.S. District Court for the Northern District of Texas granted summary judgment for plaintiffs in Ryan LLC v. FTC.

Judge Brown set aside the rule just two weeks before it was scheduled to go into effect on September 4 and ordered that it cannot be enforced nationwide.

As a result, employers do not need to comply with the rule’s notice and other requirements at this time. Employers can continue to maintain and enforce their current noncompetes pending resolution of the outstanding challenges to the rule.

Click here to continue reading this article.

Original article published in Law360.

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SHRM reports that one in four organizations currently use AI to support HR-related activities, with adoption of the technology expanding rapidly. The compliance risks arising from generative AI use also are intensifying, with an increasing number of state and local laws restricting employer use of AI tools in the United States. And not to be outdone, substantial regulation impacting multinational employers’ use of AI is emerging in other parts of the world (e.g., the EU AI Act).

One rapidly growing use case is applicant recruiting and screening, a trend likely to continue given recent increases in remote hiring and hybrid work arrangements. AI tools can streamline talent acquisition tasks by automatically sorting, ranking, and eliminating candidates, as well as potentially drawing from a broader and more diverse pool of candidates.

Employers who use AI tools must comply with significant new (and existing) laws that focus on data protection, privacy, information security, wage and hour, and other issues. The focus of this blog, however, is the legislative efforts in the US to protect against algorithmic bias and discrimination in the workplace stemming from the use of AI tools to either replace or augment traditional HR tasks.

IL Becomes the Second State (After CO) to Target Workplace Algorithmic Discrimination

On August 9, 2024, Gov. Pritzker signed H.B. 3773, making it unlawful for employers to use AI that has the effect of discriminating against employees on the basis of protected class in recruitment, hiring, promotion, discipline, termination and other terms, privileges or conditions of employment. The law, effective January 1, 2026, also prohibits employers from using ZIP codes as a stand-in or proxy for protected classes.

Like Colorado, Illinois’ new law also contains a notice requirement: employers must notify applicants and employees when using AI with respect to “recruitment, hiring, promotion, renewal of employment, selection for training or apprenticeship, discharge, discipline, tenure, or the terms, privileges, or conditions of employment.”

Continue Reading Illinois Joins Colorado and NYC in Restricting Generative AI in HR (Plus a Quick Survey of the Legal Landscape Across the US and Globally)
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This summer SCOTUS published three major decisions impacting workplace immigration decisions. Two of the decisions may require employers to shift their strategies for managing foreign-national talent, and the third essentially preserves the status quo.

Below we outline the impact of the decisions on US-based employers:

1. SCOTUS strengthens the doctrine of consular nonreviewability limiting options for employers and visa applicants who receive unfavorable denial

      In Department of State v. Munoz (July 21, 2024), SCOTUS ruled that US citizens do not have a fundamental liberty interest in their noncitizen spouses’ ability to come to the US.

      In Munoz, the spouse of a US citizen was denied an immigrant visa by a US consulate on ground that the consulate had “reason to believe” the spouse would participate in illicit activity if admitted to the US. The consular denial provided limited explanation for the decision – simply citing the “reason to believe” statute (a legal standard under which foreign nationals can be barred from entering the country if USCIS has a “reason to believe” the individual has been involved in illicit or illegal conduct) – and was extremely slow in providing this basis for its decision. The US citizen petitioning spouse sought judicial review and argued that she had a liberty interest in the matter given her US citizenship and that the impact of the consular decision deprived her of the fundamental right to marriage. But after receiving a favorable decision by the Ninth Circuit Court of Appeals, the Supreme Court reversed and held that no such liberty interest exists in this context.

      While the facts of Munoz did not involve a US employer, the underlying doctrine at issue – the ability to challenge a consulate’s decision on a visa – has direct implications to US employers who seek employment-based visas for employees. In reversing the Ninth Circuit’s decision, the Court upheld and arguably expanded the doctrine of “consular nonreviewability” – i.e. the inability to challenge the decision of a consular officer in US federal court.

      Takeaway:

      Munoz leaves employers and visa applicants with limited, if any, means for judicial redress in the event of an incorrect or unjust consular decision. Other avenues for challenging an unfavorable decision exist – including requesting supervisory review, review from the State Department’s Legal Net, or re-filing the application – but these fall short of and lack the teeth of formal judicial review.

      Continue Reading Triple Feature: SCOTUS Issues 3 Blockbuster Immigration Decisions This Summer Impacting Employers and Foreign National Employers
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      Last month the UK voted for a new government. The Labour party promised sweeping changes to UK employment law in its manifesto, and the King’s Speech confirmed the new government’s proposals to pursue numerous employment law reforms. Immediately following these announcements, Baker McKenzie employment partners Julia Wilson, Kim Sartin, Stephen Ratcliffe and Jonathan Tuck, and pensions partner Tom McNaughton discussed the implications of the new government’s proposals on employment and pensions law during our New Government, new law? webinar.

      The government intends to make changes impacting “exploitative contracts,” unfair dismissal law, parental leave, statutory sick pay and industrial action laws. Our key takeaways document outlining steps UK employers can take now is available HERE.

      And, for a deeper dive on the government’s proposals in relation to trade unions, industrial relations and collective rights, and how they might impact businesses, watch our quick chat HERE. Jon Tuck and Jess Bowden discuss Labour’s proposals in relation to trade union recognition and trade union access in the workplace and provide insights into what organizations can start thinking about before consultations open, as well as some useful tips on how you can develop your key stakeholder’s knowledge and approach when looking at your industrial relation strategy.

      For more, reach out to your Baker McKenzie employment attorney.

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      In June, we offered our annual Global Employment Law webinar series sharing expert insights on the business climate in major markets around the world for US multinational employers. Baker McKenzie attorneys from over 20 jurisdictions outlined the key new employment law developments and trends that multinationals need to know in four 60-minute sessions.

      ICYMI: click below to hear updates for the Americas, Asia Pacific, Europe and the Middle East and Africa and contact a member of our team for a deeper dive on any of the information discussed.

      Session 1: The Americas 

      Presenters: Andrew Shaw, Clarissa Lehmen*, Daniela Liévano Bahamón, Benjamin Ho, Liliana Hernandez-Salgado and Matías Gabriel Herrero

      Click here to watch the video.

      *Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

      Continue Reading Summer Replay: Tune In To Our Global Employment Law Update Series (Recordings Linked!)