Managing Employees in an Increasingly Mobile World. December 15, 2016

Transcription

1 Managing Employees in an Increasingly Mobile World December 15, 2016

2 Presenters Bill Flanagan Hogan Lovells Partner, Northern Virginia and Washington, D.C. T bill.flanagan@hoganlovells.com Ellen Rice Dell Inc. Assistant General Counsel ellen.rice@dell.com Barbara Roth Hogan Lovells Partner, New York T barbara.roth@hoganlovells.com George Ingham Hogan Lovells Senior Associate, Northern Virginia T george.ingham@hoganlovells.com Hogan Lovells 2

3 Today s presentation Focus: Transfer from U.S. company to affiliated business in foreign country Checklist of considerations to reduce legal risk and avoid surprises Considering company s business objectives Application of host country law Application of U.S. law Structuring assignment Documentation of assignment Terminating assignment Case study Presenter biographies Hogan Lovells 3

4 What are the business objectives of the assignment? Key factors to consider in structuring the assignment: What is the length of the assignment? What control will be exercised by the home company over the expatriate? Is there a need to maintain any ties with expatriate? Is continued employment with home company expected or guaranteed at conclusion of assignment? Does home company care about creating a permanent establishment in the host country? Hogan Lovells 4

5 What law applies? Default law Choice of law clauses? Laws of host country U.S. law Example in E.U. member states: Default law is country where employee habitually carries out his work in performance of the contract. Hogan Lovells 5

6 Choice of law clauses Host country mandatory rules (broad) can t be blocked with choice of law clause Common mandatory rules: minimum wage, working hours, overtime, discrimination protections, health and safety Consider whether choice of law clause is enforceable in host jurisdiction Selecting jurisdiction other than host country creates risk of being required to comply with two sets of laws (employee gets to pick most favorable) Consider a selective choice of law clause that applies only to specific issues Consider forum selection/arbitration Consider mediation Hogan Lovells 6

7 Laws of host country Work or residency permit required? Employment agreement required? Data privacy obligations? Restrictive covenants permitted? Regulations governing employee terminations? Taxes Labor law Wage payment obligations (e.g., itemized pay statements) Hogan Lovells 7

8 Extraterritorial reach of U.S. law Most U.S. employment laws do not apply abroad Key employment laws that apply abroad: Title VII, ADA, ADEA, USERRA General rule: apply to protect (1) U.S. Citizens; (2) employed in foreign country; (3) by a U.S. employer or a foreign company controlled by a U.S. employer. What is a U.S. employer? What does it mean to be controlled by a U.S. employer? Foreign laws exception to extraterritorial coverage Applies if (1) employee is working in a foreign country; (2) complying with U.S. law would require employer to violate a foreign law; (3) the law at issue is where the employee works. Narrowly construed Hogan Lovells 8

9 Structuring assignment to meet business objectives Must consider: Level of control needed Desirability of assignment to expat Risks Permanent establishment Dual employment U.S. company subjected to suit in foreign jurisdiction Hogan Lovells 9

10 Key concepts Permanent establishment (PE) If U.S. company creates a PE in a country, it may face tax liability in that country PE typically created if U.S. company employs worker in a foreign jurisdiction Dual employment Employee is employed by both U.S. employer and host company Typically not advisable; complex; likely creates PE May have tax benefits May be necessary where host country requires employment by local entity, but want to maintain U.S. employment contract with restrictive covenants Hogan Lovells 10

11 Options for structuring assignment Secondment: home company remains employer and pays worker Risk of permanent establishment Secondment light : home company remains employer; host company pays worker Risk of dual employment Transfer/Localization: ties with home company severed; hired by host company Simpler for employer but generally less attractive to expat Dual employment: home and host companies are employers; payment by one or both Risk of permanent establishment; dual employment; termination complex Hogan Lovells 11

12 Documenting the assignment Formal agreement between home country and worker Foreign assignment letter to worker Agreement between home and host companies Best practices expatriate relocation policy Global ethics policy (Foreign Corrupt Practices Act) Hogan Lovells 12

13 End-of-Assignment/Termination issues Consider these before making assignment: Main dispute areas Termination for performance during assignment Termination as part of RIF/redundancy Termination where no available job upon return Dispute resolution mechanism Forum selection Choice of law Hogan Lovells 13

14 Case study John Managing Director of Company A Worked in New York for five years Asked to move to London subsidiary for 3-5 years to develop new area of business Also required to work in Madrid Secondment agreement: guaranteed base salary, relocation expenses, $2M guaranteed bonus after 1 year U.S. company remained his employer At end of secondment, would be brought back to N.Y. and given comparable or better job with comparable or better benefits Subsidiary gives John an employment contract Hogan Lovells 14

15 Case study (continued) John Javier (boss) blames John for mistake; demands that he accept salary decrease or reduction in guaranteed bonus John refuses and is terminated John files actions in three locations: London, Madrid, New York Hogan Lovells 15

16 Risk management How could Company A have better managed risk from John s situation? Hogan Lovells 16

17 Questions? Hogan Lovells 17

18 Bill Flanagan Hogan Lovells Partner, Northern Virginia and Washington, D.C. For more than 25 years, Bill Flanagan has worked side-by-side with clients, from start-ups to global businesses, on their most difficult employee and workplace challenges. He advises them on legal compliance and works with them to develop best practices and strategies to avoid litigation. When disputes arise, he helps them achieve success in complex litigation, from individual cases to class actions, before federal and state courts and governmental agencies in the mid-atlantic region and nationally. His cases range from individual claims to class and collective actions involving thousands of employees. Bill works with management on all types of employment disputes, including those under federal and local anti-discrimination, employee leave, whistleblower, wage payment, and other employment statutes. He has extensive experience representing clients on corporate raids, trade secrets, and non-competition matters, and he litigates cases seeking emergency injunctive relief to protect client confidential information. Much of Bill's work has been for major companies and institutions in the energy, defense and government services, education, real estate, financial institutions, and life sciences sectors. Bill also regularly advises clients on business restructuring programs (whether voluntary buyouts or reductions-in-force), and on all employment-related aspects of corporate transactions, including negotiating deal terms, leading diligence efforts, and negotiating and drafting the full spectrum of executive employment, compensation, and severance agreements. Bill's practice extends beyond the United States. He works with colleagues from offices throughout the world on projects involving employee mobility, secondments, data transfer, and the development of cross-border policies, practices, and procedures. T bill.flanagan@hoganlovells.com Areas of Focus Employment Education J.D., The George Washington University Law School, 1988 A.B., University of Detroit, 1980 Hogan Lovells 18

19 Ellen Rice Dell Inc. Assistant General Counsel Ellen Rice is an Assistant General Counsel at Dell, which recently acquired EMC, where she has worked as an employment law attorney for almost 12 years. Ellen counsels executives and human resources personnel on a broad range of employment law issues and risks. In addition, she develops and implements policies, prepares and conducts training, supports mergers and acquisitions, and handles employment litigation and internal investigations. She also advises and improves on business processes related to information security and records management. T ellen.rice@dell.com Prior to joining EMC, she served as Assistant General Counsel in the General Counsel s Office of the United States Department of Justice s Executive Office for United States Attorneys, Associate General Counsel at a nationwide food distribution company, and as a labor and employment law associate at the law firm Paul Hastings. Hogan Lovells 19

20 Barbara Roth Hogan Lovells Partner, New York As the global head of the firm's internationally recognized Employment practice, Barbara Roth keeps a watchful eye on developments across the world that affect management's interests in the workplace. Barbara uses her decades of experience working with multinational companies to craft creative solutions to employment-related problems, while never losing sight of the client's economic and business goals, the need to minimize risk, and avoidance of costly litigation. Barbara also represents U.S.-based clients in many industries on every aspect of the employment relationship, including litigation of discrimination and retaliation claims (including class actions), statutory employment allegations (including Employee Retirement Income Security Act of 1974 (ERISA), FMLA, Worker Adjustment and Retraining Notification Act (WARN), and others), wage-and-hour issues, restrictive covenant disputes, team-poaching lawsuits, and whistleblower claims, among others. While litigation is rarely desirable, when it cannot be avoided Barbara focuses on early case assessment and setting of strategy, which often provides the client with predictability of outcome and expense as well as outstanding results. With an enviable record of success, Barbara has expansive experience representing financial institutions and broker-dealers in federal and state courts and in arbitrations on topics ranging from hiring to firing to compensation and everything in between. T barbara.roth@hoganlovells.com Areas of Focus Employment Education LL.M., New York University School of Law, 1997 J.D., DePaul University College of Law, 1978 B.A., magna cum laude, University of Illinois at Urbana-Champaign, 1973 Hogan Lovells 20

21 George Ingham Hogan Lovells Senior Associate, Northern Virginia George Ingham represents and counsels clients in a wide range of labor and employment matters. Experienced in deciphering the complex and ever-changing landscape of employment law, he offers guidance that takes his clients' practical needs into account. George has successfully represented clients in litigation, arbitration, and administrative proceedings. His experience includes providing advice to clients in the areas of discrimination, whistle-blowing, non-competition agreements, background checks, personnel policies and practices, labor and employment laws applicable to government contractors, and labormanagement relations. George is especially well-versed in a number of current hot topics in employment law, including paid sick leave laws and "wage-theft" laws. Prior to joining the firm, he served as a law clerk to the Honorable Karen LeCraft Henderson of the U.S. Court of Appeals for the District of Columbia Circuit and the Honorable W. Harold Albritton III of the U.S. District Court for the Middle District of Alabama. George is a member of the Virginia and District of Columbia Bars. T george.ingham@hoganlovells.com Areas of Focus Employment Litigation and Arbitration Education J.D., summa cum laude, George Mason University School of Law, 2010 Economics Degree, cum laude, The College of William & Mary, 2007 Hogan Lovells 21

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