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Special thanks to co-authors, Stephen Ratcliffe, Monica Kurnatowska and Rob Marsh.

The European Parliament has now formally adopted the Pay Transparency Directive having reached political agreement on its provisions with the Council of the EU at the end of 2022. Its provisions are likely to enter into force in most EU member states in 2026.

The measures in the Directive are significant and touch on many aspects of the employment lifecycle. They include pre-employment pay transparency requirements, broad worker and representative rights to workforce pay information. The most significant and onerous requirement is likely to be the requirement to conduct detailed pay audits in certain circumstances, including an equal value assessment, and to address pay gaps in co-operation with worker representatives.

The EU Commission has deliberately applied a longer transposition period for the Directive than normal with the stated aim of “ensuring that employers will have non-discriminatory pay structures in place so as to ensure full application of the new rules at the time of transposition”. Significant advance planning will be required to address both the basic compliance steps required by the Directive, and to mitigate the substantial risk of equal pay liability arising as a result of the joint pay assessment provisions of the Directive.

Click here to read more.

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Special thanks to co-presenters, Daniel Urdiain and Nell Slochowski.

Our on-the-ground immigration and mobility attorneys explore considerations for US employers looking to send foreign national employees to work in Canada or Mexico if they were not selected in the H-1B visa lottery this year and what steps to take before the next H-1B cap lottery period opens. 

Click here to watch the video.

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Special thanks to co-presenter, Jennifer Bernardo.

With a surge in layoffs taking place over the past year, many of those originally hired to diversify the workplace have been impacted, and studies show that inclusion, diversity and equity (ID&E) professionals have been affected by layoffs at a higher rate than others. The harm? Other than potentially hurting employee morale and sidelining efforts to improve ID&E in the workplace, employers risk exposing themselves to litigation.

In this installment of ID&E IMPACT, our labor and employment team in the US and Canada explore employer concerns including an uptick in discrimination and harassment claims, the proliferation of claims based on pay disparity, bias claims arising from the use of AI in recruitment and hiring, and practical tips to mitigate risk from an ID&E perspective. 

Click here to watch the video.

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California legislators met on April 11, 2023 to discuss a proposed overhaul of employment-related criminal background checks. Simply put, if the Fair Chance Act of 2023 (SB 809) is passed into law, California will have the most restrictive criminal background check law in the country, and will significantly limit the way California employers can vet applicants for employment. Under existing state law, California employers may conduct a criminal background check for most positions only after making an initial offer of employment, and they may make adverse employment decisions based on criminal history only after conducting an individualized assessment that considers the nature of the offense and the duties of the job. While these existing restrictions are significant in their own right, the proposed new law will effectively eliminate criminal history consideration in most circumstances, allowing legislators to further reduce barriers to employment for people with criminal histories.

The Fair Chance Act will, among other things, “make it an unlawful employment practice to take adverse action against an employee or discriminate against an employee in the terms, conditions, or privileges of their employment based on their arrest or conviction history.” SB 809. In essence, the proposed law will all but ban employment-related criminal background checks, except for positions for which such checks are authorized or required by statute. And in the limited circumstances where criminal history checks are permitted, the Fair Chance Act will require employers to post a clear and conspicuous notice informing applicants and employees of their rights. The new law also will impose on employers additional document and data retention obligations for completed background checks.

Continue Reading California Seeks to Ban Most Criminal Background Checks
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New Jersey may have started a trend. As of April 10, covered New Jersey employers must now comply with new requirements under the New Jersey mini-WARN Act (see our blog here). New York and California are giving chase, with proposed amendments to New York State’s WARN Act regulations, New York State’s WARN Act, and California’s WARN Act. And New York employers should take note: New York’s WARN Portal is set to go live this month.

Proposed Amendments to NYS WARN Regulations–And a New NYS WARN Portal

The New York State Department of Labor has proposed amendments to the New York State WARN Act (“NYS WARN”) regulations that are intended to account for the post-pandemic workforce, including clarifying how remote work impacts NYS WARN compliance and simplifying language to ensure employers understand their obligations under the law. The Department of Labor is accepting comments to the proposed regulations until May 30, 2023. 

Key items in the proposed amendments to the NYS WARN regulations include:

  • Remote employees included in threshold count: The employers covered by NYS WARN has been expanded to include any employer who employs 50 or more full-time employees, who work at the single site of employment plus individuals that work remotely but are based at the employment site, which may include remote employees in New York as well as other states.
  • Certain notices must be provided electronically: Notices being sent to the New York State Department of Labor Commissioner (“Commissioner”) must be provided electronically and are no longer required to have original signatures.
  • Notice must include additional information: The notice to the Commissioner must include more detailed information about the affected employees, including telephone numbers, job titles, and whether they are paid on an hourly, salary or commission basis. The notice to affected employees must include any other information relevant to their separation, such as information related to any financial incentives an employee may receive if they remain employed by the employer until the effective date of the employment loss, as well as available dislocated worker information.
  • The exceptions for notice are changing:
    • Faltering company exception reduced: The faltering company exception will apply only to plant closings, and will no longer apply to mass layoffs, relocations or reductions in hours.
    • Unforeseeable business circumstances exception expanded: The unforeseeable business circumstances exception will be expanded to expressly include in certain circumstances a public health emergency (including a pandemic) or a terrorist attack.
    • Exception to notice requires determination by Commissioner: The 90-day notice period can be reduced in limited circumstances (including under the faltering company, unforeseeable business circumstances, and natural disaster exceptions) only if:
      • The employer submits a request for consideration for eligibility of an exception to the Commissioner within 10 business days of providing the required notice under NYS WARN to the Commissioner (unless the Commissioner grants an extension);
      • The employer provides a reason for reducing the notice period in addition to any other documents the Commissioner may require; and
      • The Commissioner determines that the employer has established all of the elements of the claimed exception.
  • The calculation of back pay is being clarified for hourly employees: The calculation to be used to determine the average rate of compensation and final rate of compensation for hourly employees is clarified. Such calculation uses the number of hours worked instead of the number of days worked. The days worked method of calculation should still be used for non-hourly employees.
  • The use of payment in lieu of notice is being clarified: Liability for an employer’s failure to give the required notice to employees under NYS WARN will be reduced by amounts paid to an employee in lieu of notice, except where the following conditions are met (then such payments will be considered wages for the notice period):
    • There is an employment agreement or uniformly applied company policy that requires the employer to give the employee a certain amount of notice before a layoff or separation;
    • The employee is laid off without the required notice; and
    • The employer pays the employee an amount equal to the employee’s wages and any benefits for the required notice period.
Continue Reading Employer WARN-ING: Potential Changes to New York’s and California’s WARN Acts Barreling Down the Turnpike
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Join us for a four-part webinar series as our US moderators welcome colleagues from around the globe to share the latest labor and employment law updates and trends. US-based multinational employers with business operations in Asia Pacific, Europe, the Middle East and Africa, and the Americas regions will hear directly from local practitioners on the major developments they need to know, and come away with practical tips and takeaways to implement.

In each 60-minute discussion, we will explore:

  • The impact of the current economic and political climate on multinational employers
  • The current restructuring and cost-cutting landscape (benchmarking & jurisdiction-specific hurdles to plan for)
  • New significant legislative developments
  • Local hot topics in the inclusion, diversity and equity (ID&E) space

We look forward to welcoming you at the sessions relevant to your business — no passport or line ups for customs necessary!

ASIA PACIFIC
Australia, China, the Philippines and Singapore
Wednesday, May 3, 2023
3 pm PT/ 6 pm ET
Click here to register.

EUROPE
France, Germany, the Netherlands, Spain and the UK
Wednesday, May 10, 2023
9 am PT/ 12 pm ET
Click here to register.

THE MIDDLE EAST AND AFRICA
Egypt, Saudi Arabia, South Africa, Türkiye and the UAE
Wednesday, May 17, 2023
9 am PT/ 12 pm ET
Click here to register.

THE AMERICAS
Argentina, Brazil, Canada, Colombia and Mexico
Wednesday, May 24, 2023
9 am PT/ 12 pm ET
Click here to register.

To view these programs in a different time zone, click here. 
Please “register” for a copy of the recording and materials if you are unable to attend live.

To view the complete roster of presenters for each regional program, click here.

CLE Accreditation

Each program is approved for 1.0 general California CLE credit, 1.0 general Illinois CLE credit, 1.0 areas of professional practice New York CLE credit, and 1.0 general Texas CLE credit. Participants requesting CLE for other states will receive Uniform CLE Certificates. Baker & McKenzie LLP is a California and Illinois CLE approved provider. Baker & McKenzie LLP has been certified by the New York State CLE Board as an accredited provider in the state of New York. This program is appropriate for both experienced and newly admitted New York attorneys. Baker & McKenzie LLP is an accredited sponsor, approved by the State Bar of Texas, Committee on MCLE.
 
Each 1-hour activity can be applied towards the 9 Substantive Hours of Continuing Professional Development (CPD) required by the Law Society of Ontario.
 
**While CLE credit may be pre-approved in certain jurisdictions, final CLE accreditation approval is anticipated, but not guaranteed.

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As discussed in our blog here, in February the National Labor Relations Board issued the McLaren Macomb decision prohibiting employers from “tendering” to employees separation or severance agreements that require employees to broadly waive their rights under the National Labor Relations Act.

Then, on March 22, the NLRB General Counsel Jennifer Abruzzo issued guidance addressing some of the outstanding questions that employers have been grappling with in the wake of McLaren.

GC Abruzzo issued the Guidance to assist NLRB Regional Directors, Officers-In-Charge, and Resident Officers in addressing McLaren‘s holding. While the GC guidance is not binding or controlling law, it is helpful for understanding how the Regions might prosecute matters post-McLaren, as well as how the Board might enforce the decision. Of course, it remains to be seen how courts will interpret McLaren.

Here’s a summary of the GC Guidance:

  • McLaren applies retroactively. According to the Guidance, agreements proffered to employees prior to the February decision may be subject to challenge.

  • In GC Abruzzo’s view, McLaren could apply to agreements with supervisors. The Guidance restates the established rule that the Act does not protect supervisors unless they oppose conduct prohibited by the Act, so an agreement with a supervisor or higher level employee could include provisions barred by McLaren. This is not new.

    But what is somewhat new, however, is Abruzzo’s opinion that “an employer who proffers a severance agreement to a supervisor in connection with Parker-Robb Chevrolet-related conduct, such as preventing the supervisor from participating in a Board proceeding, could also be unlawful.” Given this position, if a supervisor has opposed conduct that may be prohibited by the Act, such as objecting to an employer requirement that line employees sign broad confidentiality agreements, prudence suggests that any agreement offered to that supervisor should have strong Section 7 carve outs and limited confidentiality and non-disparagement covenants similar to line employee agreements post-McLaren.

  • Severance agreements are not prohibited, even if they prohibit defamatory conduct, so long as they do not have “overly broad provisions that affect the rights of employees to engage with one another to improve their lot as employees.” This is not surprising. Lawful severance agreements may continue to be proffered, maintained and enforced as long as they do not contain overly broad provisions limiting the rights of employees to engage with one another for their mutual benefit relating to terms and conditions of employment.

    Additionally, the Guidance explains that certain kinds of non-disparagement provisions are permissible. Non-disparagement provisions that are “limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity” are allowed.

  • A savings clause or disclaimer language won’t necessarily save overly broad provisions, but may help explain the agreement’s restrictions. The Guidance says that though specific savings clause or disclaimer language may be useful to resolve ambiguity over vague terms, such clauses won’t necessarily cure overly broad provisions.

    The Guidance includes a model savings clause that is a detailed and lengthy description of nine specific protected activities. The most conservative approach would be to conform Section 7 carve outs to this “prophylactic statement of rights,” but since the Guidance is not absolute, and companies’ appetite for risk varies, employers should consult with counsel to find the best language and approach for their company.

  • Severability clauses may not be necessary, but we still recommend them. According to the Guidance, the NLRB Regions generally will make decisions based solely on the unlawful provisions and will seek to have individual provisions voided as opposed to entire agreements–regardless of whether the agreements contain a severability clause. Though not required in GC Abruzzo’s view, severability clauses certainly can’t hurt.

  • Interestingly, the Guidance says that employees who want confidentiality or non-disparagement protections in a separation agreement also may not seek or request prohibited confidentiality or non-disparagement provisions. So even if an employee negotiates for broad and mutual confidentiality and non-disparagement language, employers could still violate the law by agreeing to include such language in an agreement.

As shared in our previous post discussing McLaren, your approach will depend on the type of workforce you have, your risk tolerance, and what you are trying to protect. We are standing by, ready to assist, should you need further guidance.

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Special thanks to co-author, Jeff Bauman.

It is common practice for US-based multinational companies to adopt executive severance plans to provide for additional benefits to be paid to executives in the event of certain specified termination events, including those in connection with the change of control of the parent. These benefits may consist of cash payments, favorable treatment of equity awards, and/or other benefits (e.g., payment of health insurance premiums).

These types of plans help companies recruit and retain talent and also provide some certainty around payments which will be made to executives upon termination while securing a release of claims for the company. Multinationals with executives in countries outside the US often desire to cover their non-US executives under the same plan.

In our latest NASPP guest blog post, we explain why it is difficult to extend US executive severance plans to non-US executives and the approaches companies can consider to provide equivalent severance benefits to their non-US executives.

To read more, click here.

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As volatility and uncertainty in the global economy continues, many multinationals are taking (or considering) major changes to their workforce composition. Labor costs are typically the largest cost center for any company, so of course businesses need to understand how best to flex up and down as markets change. At the same time, a company’s greatest assets are its people so changes must be implemented precisely, thoughtfully and artfully.

Without the right strategy and protections in place, layoffs can be detrimental to a company’s inclusion, diversity and equity (ID&E) goals. In this episode of ID&E IMPACT, we discuss the nuances of thinking about how proposed restructuring changes might impact a company’s ID&E goals and offer tips to help guard against unintended discrimination during layoffs. 

Click here to watch the video.

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Special thanks to Jose (Pepe) Larroque, Carlos Martin del Campo and Javiera Medina-Reza.

The Mexico Ministry of Labor and Social Welfare (STPS) has announced that it will carry out an estimated 42,000 inspections in 2023. The inspections carry the possibility of significant fines and penalties issued per violation, per employee. It is imperative for global employers with operations in Mexico to train personnel and response teams on best practices for managing potential inspections and mitigating risk, including maintaining all necessary information and documents that must be supplied during an inspection.

In this Quick Chat video, our Labor & Employment partners in Mexico along with the Managing Partner for Baker McKenzie’s Mexico offices discuss what to expect from an inspection and outline the penalties for noncompliance. They also share insights from the field, discuss the potential defenses and warn against the possible registration cancelation for specialized service providers.

Click here to watch the video.