Employment Archives | Page 62 of 105 | EMPLOYEE BENEFITS BLOG

McDermott Releases An Employer’s Guide To Implementing EU-Compliant Whistleblowing Hotlines

by McDermott Will & Schulte | Aug 25, 2011 | Employment, Privacy and Data Security

by Heather Egan Sussman and Alison Wetherfield

Companies listed on U.S. stock exchanges are required under the Sarbanes-Oxley Act to establish a system for employees to internally report concerns over questionable auditing or accounting matters. These systems are often referred to as “whistleblowing hotlines”. When setting up hotlines around the globe, however, employers must be mindful of the European Union (EU) privacy regime. Previously, some EU regulatory authorities intimated that such hotlines could never be acceptable in their jurisdictions. Public company employers were left, therefore, with the unfortunate choice of foregoing the hotline and potentially violating Sarbanes-Oxley, or implementing the hotline and potentially violating EU privacy laws.

Over the past few years, however, a framework has developed, at both the EU level and among the member states, that provides guidance on how employers may lawfully implement such a hotline throughout most of the European continent. McDermott just released an article outlining a checklist of basic principles for public company employers to follow so they can stay within this framework. As explained in more detail in the article found here, these principles include:

1. Encourage “confidential” rather than “anonymous” reporting

2. Set up a filtration system

3. Ensure confidentiality and data security

4. Limit the nature and scope of the processed data

5. Ensure compliant transfers of data outside of the EEA

6. Retain and destroy data according to local requirements

7. Give employees the right of correction

8. Inform employees about the program

9. Follow authorization procedures

By observing these basic principles when setting up a whistleblowing hotline in the EU, and by following the other best practices detailed in the full article, public companies can best position themselves to mitigate the risk of an enforcement action on both sides of the pond.

New Connecticut Law Limits Employer Access to Employee Credit Data

by McDermott Will & Emery | Aug 8, 2011 | Employment, Privacy and Data Security

by Heather Egan Sussman, Stephen D. Erf and Sabrina E. Dunlap

Adding to the growing number of states limiting employers’ use of credit reports, including Hawaii, Washington, Oregon, Illinois, and Maryland), Connecticut recently passed Public Act No. 11-223 restricting employer use of credit reports and credit history for employees or job applicants. The Connecticut law goes into effect October 1, 2011, and prohibits employers from requiring an employee or job applicant to consent to a request for a credit report “as a condition of employment.” This includes reports that contain information about credit score, credit account balances, payment history, savings or checking account balances or savings or checking account numbers.

The law has four exceptions. Paraphrasing from the law, employers may request credit data if:

The employer is a financial institution;
A report is required by law;
The employer reasonably believes that the employee has engaged in specific activity that constitutes a violation of the law related to employment; or
Either (a) a report is substantially related to the job or (b) the employer requests the credit report for a bona fide purpose that is “substantially job-related” and discloses this purpose in writing to the employee or applicant.

Regarding the last exception, the law broadly defines “substantially related to the job” to mean that the information contained in the credit report is related to the following: a managerial position that involves setting direction and control of the business; a position that involves access to customers, employees or the employer’s personal or financial information (other than retail transaction information); involves a fiduciary responsibility to the employer; provides an expense account or corporate debit or credit card; provides access to confidential or proprietary business information; or involves access to the employer’s nonfinancial assets valued at $2,005 or more, including but not limited to, museum and library collections and to prescription drugs and other pharmaceuticals.

Job applicants and employees may lodge complaints alleging violations of the law with the Connecticut Labor Department. Employers will be liable to the Labor Department for a civil penalty of $300 for each improper request for a credit check. The Connecticut Attorney General can bring civil actions to recover penalties brought by the Labor Department.

As a result of these new restrictions, Connecticut employers should review hiring policies, and other policies that require employee credit information, and prepare to comply with the law by October 1, 2011.

French Supreme Court Rules Subsidiaries’ Works Council Entitled to Appoint an Expert During Mergers and Acquisitions Notified to the EU Commission

by McDermott Will & Schulte | Jul 21, 2011 | Employment

Cassation, the French Supreme Court, held that all the entities, whether directly or indirectly subject to a change of ownership, are parties to the concentration.

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Same-Sex Marriage Legalized in New York: Implications for Employee Benefit Plans

by McDermott Will & Schulte | Jul 14, 2011 | Employment, Health and Welfare Plans

by Joseph S. Adams, Todd A. Solomon and Brian J. Tiemann

Now that same-sex marriage has been legalized in the state of New York, employers should expect to begin seeing an increase in requests for spousal benefit coverage from employees who have legally married their same-sex partners. The new law takes effect on July 24, 2011.

To read the full article, click here.

French Supreme Court Rule For Change Of Control Clause In Management Employment Contracts

by Jackie Sinn | Jul 8, 2011 | Employment

by Jilali Maazouz and Sébastien Le Coeur

As of 26 January 2011, the French Supreme Court ruled that the change of control clauses in French executive-level employment contracts are valid, a consideration which international companies contemplating the acquisition of a company in the country need to consider. The control clause is also valid for both public and private companies.

In July 2005, further to the termination of several of Havas’s officers, one of the top managers decided to leave the company by claiming constructive dismissal under her change of control clause. A McDermott employment lawyer in Paris advised on the drafting of this landmark control clause upheld by the French Supreme Court.

This change of control clause within the Havas executive’s contract was as follows:

The identities of the top managers were key reasons as to why the employee entered into her/his employment contract.
Should one or several of these top managers be terminated by the company, the employee would be entitled to claim constructive dismissal, within a certain period of time.
The claim for constructive dismissal would trigger the payment of a golden parachute.
The French Supreme Court upheld the clause and justified this decision by the seniority of the employee’s position.

As a result of this landmark Supreme Court decision, companies in France can now apply the change of control clause as a deterrent to hostile takeovers through the entrenchment of its top management executives.

The French Supreme Court Decides that Employees with Jobs at Risk Take Precedence

by Jackie Sinn | Jul 7, 2011 | Employment

by Jilali Maazouz and Sébastien Le Coeur

Under French law, an employee can only be dismissed on economic grounds when all efforts have been well documented to redeploy him or her in an alternative position within a company.

On 7 April 2004, the French Supreme Court concluded that an employee facing economic dismissal has priority over an external candidate to fill a position available in the company.

On 23 March 2011, the French Supreme Court went even further and ruled that an internal vacancy within a company in France should be offered as a priority to the in-house employee who is at risk of redundancy.

This recent Supreme Court ruling extends the obligations of French entities or international entities operating in France contemplating redundancies. As a result, should an employer decide to offer a position to an employee who is not at risk of redundancy, he or she will be liable to pay damages to the employees who are eventually made redundant.

In the internal recruitment/redeployment process, the employee within the company facing economic dismissal has priority over an employee within the company whose economic dismissal is not contemplated and over an outside candidate. If priority is not given to him/her, the company’s redeployment obligation is not fulfilled and the dismissal is held unfair. That is why we recommend not having external or internal recruitment ads of the shortlisted positions.

Clients contemplating employees redundancies in France should consider the following steps to fulfil its redeployment obligation:

Collect information on the employees whose dismissals are contemplated (current and past positions, skills, current compensation, languages spoken, CV’s, recent training, annual reviews, etc).
List all the positions available in the company worldwide during the period of when the redundancies in France are planned (e.g. 3 to 6 months).
Shortlist all the available positions that match the employee’s current professional qualifications or are compatible with the employee’s skills. Even positions which require employees to have a short period of training or roles viewed as less of a position than the employee’s current status need to be listed. Avoid shortlisting employees for roles that: a) require knowledge of a foreign language not mastered or b) require relocation in countries where immigration laws would prevent the employee from working. Also be sure not to externally or internally advertise the shortlisted positions.
If one or several available shortlisted positions are located outside of France, the French entity must ask the employee in writing whether or not he/she would accept a position abroad. The letter must make a list of all the company’s geographic locations and require the employee to indicate any restrictions regarding redeployment, particularly in relation to the offices proposed and compensation given. Within six days of receiving this letter, the employee must provide a response. If the employee fails to reply within the allocated time than the employer can justify termination on the grounds of refusal to be redeployed abroad. The available positions shortlisted can then be reviewed and the freeze on [...]

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Companies Should Brace Themselves: It’s Going To Be Easier and Faster to Unionize America

by McDermott Will & Schulte | Jul 6, 2011 | Employment, Labor, Privacy and Data Security

by Stephen D. Erf, Heather Egan Sussman and Sabrina E. Dunlap

Recently, the National Labor Relations Board (NLRB) proposed new rules purportedly intended “to reduce unnecessary litigation” and streamline pre- and post-election procedures. The bottom line is that these new rules, if adopted, will make it easier to unionize American workforces. One way the new rules “streamline” the unionization process is by requiring the exchange of timely information, including employee contact data and required forms. The proposed rules also aim to defer potential litigation until after an election has been held, so that proceedings related to litigation do not slow down the election process, which will limit the opportunity for the employer to present its views regarding the issues. Given these proposed rules, American businesses may likely step-up union avoidance efforts.

The U.S. Department of Labor (DOL) simultaneously has released a new proposed rule that appears designed to discourage such union avoidance efforts. Under this proposed rule, an existing exemption from certain disclosure requirements for “advice” would be significantly narrowed such that employers would be required to disclose arrangements with consultants that draft communications on behalf of an employer designed to “directly or indirectly persuade workers concerning their rights to organize or bargain collectively,” even when the consultants do not contact employees directly. Under the proposed rule, the DOL said employers should disclose information about “union avoidance” seminars and trainings offered to employers by lawyers or labor consultants, because theses seminars “involve reportable persuader activity.” The DOL is warning employers against classifying such seminars as “advice” to avoid disclosure under the exception.

The combined NLRB and DOL efforts appear to be a governmental one-two punch aimed at American business – they make it easier for unions to organize workplaces on the one hand, and discourage union avoidance efforts on the other. Fortunately, however, we suspect corporate America will not be so easily discouraged, because it could be far more costly for companies to skip the union avoidance training, now that the NLRB has helped grease the skids toward organizing American workplaces. On balance therefore, we expect companies still will elect to move forward with the training, and just be mindful of their disclosure obligations, assuming these proposed rules go into effect.

Employee Benefits Blog Recognized as a Top 10 Compensation and Benefits Blog by HR Daily Advisor

by McDermott Will & Schulte | Jun 14, 2011 | Benefit Controversies, Employment, Executive Compensation, Labor

McDermott’s Employee Benefits Blog was recently recognized as one of the Top 10 Compensation and Benefits Blogs by HR Daily Advisor. Thank you to those who follow our blog on a regular basis. We appreciate your support and please contact our editors if you have suggestions on trending topics you’d like to hear more about.

To read the HR Daily Advisor article, click here.

Illinois Civil Unions Complicated by Federal DOMA and Potential DOMA Repeal

by McDermott Will & Emery | May 31, 2011 | Employment, Health and Welfare Plans

by Todd A. Solomon and Brett R. Johnson

The Illinois Religious Freedom Protection and Civil Union Act, which legalizes civil unions for same-sex and opposite-sex partners, takes effect on June 1, 2011. The law entitles civil union partners to all of the legal rights and obligations that opposite-sex spouses have under Illinois state law by requiring that a party to a civil union be included in any use of the terms “spouse,” “family,” “immediate family,” “dependent,” “next of kin” or other terms that denote a spousal relationship throughout Illinois law. Illinois will recognize as a civil union any same-sex marriage, civil union or substantially similar legal relationship entered into in other states.

The application of the Illinois law is complicated by the intersection of federal and state law. The federal Defense of Marriage Act (DOMA) continues to define a “spouse” as a husband or wife of the opposite sex. A civil union in Illinois will not, therefore, be a “marriage” under DOMA. As a result of DOMA, parties to an Illinois civil union will not be entitled to federal law benefits applicable to opposite-sex spouses (e.g., qualified joint and survivor annuity (QJSA) and qualified pre-retirement survivor annuity (QPSA) benefits under tax qualified retirement plans, COBRA coverage, etc.). Note, however, that on March 16, 2011, both the U.S. House and Senate introduced legislation to repeal DOMA (The Respect for Marriage Act of 2011), and to tie federal law marital status to an individual’s marital status in the State where the individual entered into the marriage. The Respect for Marriage Act bills currently rest with the Judiciary Committees of the House and Senate, and the next step for each (e.g., Committee vote, hearings, Senate and/or House floor vote) is unclear.

Because the new Illinois civil union law may impact areas such as employee benefit plans, employer leave policies (including the Illinois Family Military Leave Act) and any other employer-provided benefits covering spouses, employers should ensure such programs are in compliance with the June 1, 2011 law change. More information on the employee benefit plan implications of the legalization of civil unions in Illinois can be found here, while the impact on Religious Organizations benefits is discussed here.

California Adopts Federal Tax Treatment of Health Coverage for Adult Children

by McDermott Will & Emery | May 23, 2011 | Employment, Health and Welfare Plans

by Susan M. Nash, Amy M. Gordon, Todd A. Solomon, Raymond M. Fernando and Adrienne Walker Porter

On April 7, 2011, Governor Jerry Brown signed into law California Assembly Bill 36 (AB 36). AB 36 conforms certain California income and employment tax laws to certain changes to the United States Internal Revenue Code (the Code) and Internal Revenue Service (IRS) guidance relating to the favorable tax treatment of health benefits coverage for adult children under age 27. The favorable state tax treatment afforded under AB 36 applies retroactively as of March 30, 2010, which also conforms to the effective date of the parallel provisions under the Code. For a more detailed summary of AB 36, see our related On the Subject, "Health Care Reform: California Adopts Favorable Federal Tax Treatment of Health Coverage for Adult Children Under Age 27."

Background
The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the Act), generally requires group health plans that provide dependent coverage for children to continue to make such coverage available for adult children until age 26, beginning as of the first plan year commencing on or after September 23, 2010. Effective as of March 30, 2010, the Act also afforded certain favorable tax treatment under the Code with respect to such coverage. See our related On the Subject, "Health Care Reform: IRS Guidance on Health Coverage for Children Under Age 27."

Discrepancies Between State and Federal Tax Laws
Some states’ tax laws do not automatically conform to corresponding changes in federal tax laws. Thus, although the Act made various changes to the Code relating to the tax treatment of health coverage and reimbursements for children under age 27, some states’ tax laws did not automatically conform to those changes. California recently adopted AB 36 to conform to such changes under the Code.

Next Steps for Employers and Plan Administrators
Employers and plan administrators should take action now in the following ways:

Employers and plan administrators subject to California state tax should take steps to ensure that their reporting and payroll systems comply with the changes made under AB 36.
Employers and plan administrators should consider circulating employee communications regarding the impact of AB 36.
Employers and plan administrators should continue to monitor California and other state laws for further tax reform related to health coverage for adult children under age 27.

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