Download The Globalization of Labor and Employment Law

The Globalization of Labor and
Employment Law
April 22, 2010
Michael W. Hawkins, Esq.
Colleen P. Lewis, Esq.
Dinsmore & Shohl LLP
255 East Fifth Street, Suite 1900
Cincinnati, OH 45202
Phone: 513.977.8200
Email: [email protected];
[email protected]
www.dinslaw.com
Michael W. Hawkins, Esq.
Michael Hawkins is a partner with the Cincinnati, Ohio ALFA International law firm of Dinsmore & Shohl,
LLP. He received his J.D. from the University of Kentucky, College of Law (1972), Order of the Coif,
Lead Article Editor, Kentucky Law Review and his B.A. from the University of Kentucky (1969). He
serves as a Mediator and Arbitrator on the American Arbitration Association Commercial and
Employment Panels and for the National Arbitration Forum. He is a frequent speaker and writer on
mediation and arbitration. He taught Conflict Resolution and Mediation at Xavier University where he
was an Adjunct Professor. Mr. Hawkins' practice includes representing employers in all aspects of
employment law and litigation and labor relations as well as business competition litigation. Mr. Hawkins
currently serves as Chair of ALFA International. Mr. Hawkins has been listed since 1992 in The Best
Lawyers in America and selected as an Ohio Super Lawyer. He argued National Labor Relations Board
v. Kentucky River Community Care and Humphries v. CBOCS West, Inc. before the United States
Supreme Court.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Colleen P. Lewis, Esq.
Colleen P. Lewis is a Partner in the Labor and Employment Law Department. Colleen's
practice includes the defense of private and public employers on a wide array of
traditional labor and employment issues, including discrimination and civil rights issues,
Family and Medical Leave Act compliance, Americans With Disabilities compliance,
breach of employment contracts, employment-at-will, wage and hour, and National Labor
Relations Act. She handles collective bargaining and arbitrations. She also has extensive
experience reviewing and drafting Affirmative Action plans and representing companies
before the OFCCP. Colleen's practice encompasses both national and regional
representation of clients in state and federal courts and she has handled labor and
employment matters in 13 states. Colleen is former Chair of the firm's Recruiting
Committee. Colleen is Chair of the Firm's Workplace Harassment Committee. She is a
member of the firm's Professional Development and Diversity Committees.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
The Globalization of Labor and Employment Law

To keep up with competitors, businesses have been
expanding around the globe. These expansions offer
unique but exciting human resources opportunities and
challenges.

Language barriers are not the only issue a human
resources representative may encounter when attempting
to set up operations in a different country.

Cultural differences in recruiting, compensation, laws and
daily procedures may present difficult challenges and
require unique solutions.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Involvement of Human Resources Representatives
During Potential Mergers and Acquisitions

Companies have historically focused on the mere
financials of a merger or acquisition to determine whether
it would be a good fit with another company for expansion.

Unfortunately, this philosophy tends to ignore the largest
asset of the merger – the acquisition of the workforce and
the people involved.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Hiring Local Executives Rather Than Transferring
Company Executives

Eliminating this “us-vs-them” approach early helps
demonstrate the company’s confidence in the newly
formed or acquired branch.

These “local executives” are typically more familiar with
the local workforce (who will be the backbone of this local
office) and can connect more easily.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Advantages of Hiring a “Local Executive”

Cheaper

Knows local market customs so they can better spot
emerging trends

Understands how to motivate other local national staff

Increasingly knows English and are more available and
qualified
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Disadvantages of Hiring a “Local Executive”

Takes time to be brought up to speed on highly technical
product lines

Lacks the personal connections at corporate headquarters

Demand for local executives typically exceeds supply
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Advantages of Transferring a Company Executive

Knows the Company’s products and culture

Unlikely to steal propriety knowledge and set up
competing business

Does not put “country” ahead of “company”

Easily communicates with corporate headquarters
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Disadvantages of Transferring a Company Executive

High cost (relocation, housing, training)

Difficulty in moving spouse, children

Concern for life-style changes and security

Concern for negative out-of-sight, out-of-mind impact on
career development
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Global Employment Policies

Rather than creating different policies for every country
where a company is located, companies have began to
establish a global approach to employment policies and
procedures.

These policies serve as a global framework for a
company’s practices and help in integrating the company’s
beliefs about issues that are applicable across the globe.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Global Employment Policies

Poverty Alleviation. Give priority to productive
employment to the working poor as basis for all
development strategies and policies.

Sustainability. Integrate economic, social and
environmental objectives in all global strategies and
national policies and give priority to new technologies,
production methods and consumption patterns, through
which economic growth can be decoupled from pressure
on national resources.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Global Employment Policies

Gender Equality. Mainstream equal opportunities between
men and women in all global strategies and national
policies and ensure that women are enabled to fully
contribute to and benefit from economic and social
development.

Employability and Adaptability. Give priority to life long
learning to make people ready for existing and future jobs,
and strengthen social dialogue to facilitate flexibility of
enterprises and to promote workers’ security in
employment.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Developing Global Compensation and Benefits

Having a universal philosophy eliminates the potential for
disparate treatment between different locations or the
establishment of a precedent that may be impossible to
attain as the company continues to expand.

Competitive comparisons would be made against other
leading companies in each country.

Base salary policies normally would be established at the
median, or 50th percentile.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Developing Global Compensation and Benefits

Management incentive plans would be structured to
provide total compensation at the upper quartile, or 75th
percentile, provided performance targets were met or
exceeded.

Benefit plans would be established not to exceed market
median.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Safety in the Workplace

Dealing with everything from civil wars to global terrorism,
companies recognize the safety concerns of both its local
workers and when sending employees from its
headquarters to another location.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
The Current Economy

Frequently, local divisions are more expensive to run, but
companies feel a sense of commitment to its own
economy, thus creating a difficult decision.

In response to these economic times, companies are
creating unique solutions, such as having employees work
four longer days and then have three days off.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Checklist for International Expansion

Employment/Immigration Issues
–
Ensure labor laws do not transcend employment agreements.
Understand mandatory bonus, vacation, termination payment
laws.
–
Does “at-will” employment exist

If not, employer responsible for payment after employee
termination.
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Checklist for International Expansion

Must a training program be created and registered?

Native hiring
–
Does the country have this requirement?
–
How many citizens must be hired?
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Checklist for International Expansion

Are “noncompete” agreement recognized?

Employee inventions
–
Level of employee right to ownership
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Checklist for International Expansion

Visa requirements for U.S. workers (personal tax
ramifications)

Employment Agreements, policies, handbooks

Expatriate package, tax and estate planning, tax
equalization

Mandatory profit sharing requiring the consideration of
alternate structures
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
International Labor and Employment Checklist

Terms and Conditions of Employment
–
Contracts
–
Written employment applications, contracts, handbooks and
statements of employment
–
Lifetime employment, severance indemnities
–
Modification/Absence of Employment At Will
–
Form agreements for Senior and employees
–
Independent Contractors/Distributors
–
Staffing Agencies/Temporary Workers
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Discipline

Codes of Conduct

Employee Handbooks

Disciplinary Procedure
–
Notification
–
Grievances
–
Appeal
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Unionization/Collective Bargaining

Right to Organize

Organize Workers’ Freedom of Association

Power of Unions
–
i.e. – All-China Federation of Trade Unions
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Termination

Process (Notice)

Grievance Procedure

Arbitration

Severance

Lay Off/Shutdown Procedure
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Legal Concerns

Application of American Discrimination Laws Abroad

Alien Tort Claims Act

Railway Labor Act

Choice of Law

Simultaneous Application of U.S. and foreign law to U.S.
workers abroad

U.S. and other Export Control Laws
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Legal Concerns

Immigration/Naturalization Laws

Sales agents deemed employees?

Independent contractors deemed employees?

Employee’s income tax/equalization and estate tax issues
for dual nationals

Restrict authority/ability to bind through local powers of
attorney or otherwise?
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com
Legal Concerns

Authority over bank accounts limited?

IP ownership/inventions?

Mandatory profit sharing, bonus and vacation

Mandatory native hiring schemes?

Tax incentives for local hiring?
© 2010 Dinsmore & Shohl LLP | www.dinslaw.com