By Marjorie CulverJeremy Corapi, and Dan Waldman

Seyfarth Synopsis: In the world of cross-border mergers and acquisitions, complex human resource and employment considerations arise during the transaction’s due diligence process. Depending on the transaction’s structure, these issues can be diverse and range in topics from immigration requirements to employee benefit matters to employee representative consultation obligations.

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From the purchaser’s perspective, proper human resource and employment due diligence can help structure a transaction’s terms and limit any unwanted surprises after the deal is signed or closes. Conversely, failure to spot key human resource and employment diligence issues can cause business interruptions and liabilities and negatively impact employee morale.

In this short article, we outline some essential human resource and employment items for cross-border transaction due diligence. This is not intended to be an exhaustive list of due diligence matters and, as with any piece of this kind, should not be relied upon as legal advice.

Employee Consultation Obligations and Collective Bargaining Agreements

In many countries, a target company’s employees may be represented by a union, works council, or other employee representative body and covered by a collective bargaining agreement.

Closely analyze employee representative arrangements to assess if there are notification or consultation obligations that must occur before the transaction is signed and/or the deal is closed. It may take anywhere from a few weeks to a few months to satisfy the applicable requirement, so it’s important to build sufficient time into the deal timeline to account for the necessary processes. In some cases, employee representatives may also have co-determination rights, which require the applicable employee representative to consent to the transaction before it proceeds.

Failure to properly observe applicable notification, consultation, or co-determination rights can result in criminal liability. It can also result in litigation and materially delay the transaction’s consummation.

Change in Control and Severance Provisions

To determine whether any meaningful payouts or entitlements will be triggered by the transaction, review key employees’ agreements.

In particular, perform diligence on any agreements containing transaction bonuses, severance provisions, equity acceleration clauses, or so-called “change in control” terms. Assessing this before signing the transaction will help the purchaser determine if new employment agreements should be provided in connection with the transaction (or as a condition of the transaction) to supersede existing entitlements.

If the transaction will trigger such payments or entitlements, this may also result in material tax issues. As a result, tax diligence should also be performed as part of this review.

Pension Schemes

Review employee retirement and pension schemes, and pay particularly close attention to the types of pension plans the target company has in place in any asset purchase transaction or transaction where employees are changing employers outside the US. If the target company participates in or has participated in a defined benefit pension scheme outside the US (as opposed to a defined contribution pension scheme), there may be significant liabilities. In such case, perform robust due diligence before the transaction’s signing to ensure all legal requirements are followed, the transaction agreement adequately protects the purchaser from the target company’s existing liabilities, and the purchaser understands its pension obligations if it moves forward with the transaction.

Independent Contractor Status

Many companies engage individuals as independent contractors, but treat them like employees in practice. Most countries require a company to reclassify an individual as an employee if the individual is being incorrectly categorized as an independent contractor. If the misclassified individual who provides services to the company is not employed by another entity that is properly treating the individual like an employee (e.g. withholding taxes and remitting social security contributions, accounting for overtime, etc.), liabilities for the company can be significant. This is especially true if the company’s relationship with the individual has gone on for a significant period of time at a high pay rate.

Review a global census of the target company’s independent contractor engagements to assess if independent contractor misclassification might be a material issue. If it is, conduct additional diligence to determine if the purchaser should seek a specific compliance representation with a corresponding indemnity in the transaction agreement.

Immigration Issues

Companies that have multinational workforces often employ individuals with visa requirements or other immigration needs. When a change in ownership of the company or corporate structure that sponsors the applicable employee visa or work permit occurs, the change typically requires a filing or notification with the local immigration authority. Failure to adhere to applicable immigration filing and notification requirements can result in stiff fines, the suspension of the sponsored employee’s ability to work, and the inability to sponsor employees in the future.

Assess whether the transaction triggers a change of corporate ownership or employer that will require updates to any employee’s visa or work permit. If updates are required (including obtaining a new visa or work permit), bake sufficient time and terms into the transaction to account for them (e.g., filings and approvals from the local immigration offices). Such authorizations can take several months depending on the country and type of change. Review any immigration restrictions or waiting times that may also be in place due to COVID-19.

If the target company is a company with a moderate US headcount, conduct diligence on the target company’s I-9 compliance. Failure to comply can result in material fines and other criminal penalties.  Performing diligence on this issue will also help the purchaser assess whether it should redo target company employee I-9s within the prescribed post-closing time period to mitigate any legacy liability.

Unique State or Local Requirements

Depending on the transaction type and jurisdictions involved, conduct targeted local due diligence. For example, California has several notable state and local laws on employee privacy, restrictive covenants, paid sick leave, vacation payout, and employee classification that do not apply to many other US states.  If the transaction has a material nexus to California, perform diligence into the target company’s compliance with California specific employment laws. Similarly, depending on the nature of the target company’s business and the transaction’s nexus to the EU, performing due diligence on employee staff leasing, GDPR compliance, and pay equity obligations may be worthwhile.

Conclusion

While there are many other important diligence items that should be reviewed as part of standard human resource and employment due diligence on a cross-border transaction, do not overlook the foregoing items. As a best practice, ensure the purchaser’s deal team has a thorough checklist of all due diligence items it wants to cover as part of the transaction’s due diligence process. As due diligence progresses, hone in on key issues based on the information gleaned from the target company’s diligence responses.  Submit supplemental diligence requests to flesh out any material open issues.

Marjorie, Jeremy, and Dan are all part of Seyfarth’s leading International Employment team who help leading employers navigate global workforce issues. To find out more about cross-border transaction human resource and employment issues, and how they might affect your business, please reach out to them or anyone else on our specialist team.

By Brent I. ClarkJames L. CurtisBenjamin D. BriggsMark A. Lies, IIAdam R. YoungA. Scott HeckerIlana MoradyPatrick D. JoyceDaniel R. BirnbaumMatthew A. Sloan, and Craig B. Simonsen

Seyfarth Synopsis: In light of rising cases of COVID-19, the CDC has recently reversed its prior facemask guidance, and has now required that both vaccinated and unvaccinated individuals wear masks indoors in public spaces in areas where there is significant transmission of COVID-19. Certain local jurisdictions have adopted similar rules that renew requirements for facemasks. In a significant move, OSHA has announced on its website that it has reviewed the latest guidance, science and data on COVID-19, and is not otherwise amending its COVID-19 Emergency Temporary Standard for Healthcare at this time.

OSHA’s June 2021 COVID-19 Emergency Temporary Standard for Healthcare employers provides a clear exception to general mask rules for (1) vaccinated employees (2) in well-defined areas, (3) where there is no reasonable expectation that any person with suspected or confirmed COVID–19 will be present. Accordingly, compliant with the ETS, health care employers are lawfully permitting employees to unmask in office settings where all employees are vaccinated and no COVID+ patients will be present. While the ETS was published at a time when COVID-19 seemed to be receding, data from recent weeks shows that cases are rising in certain parts of the country. The CDC has issued a new facemask recommendation, which advises that individuals wear masks when indoors in public spaces if they are in a county with substantial or high COVID-19 transmission. Accordingly, a healthcare employer who complies with the ETS and allows vaccinated employee to unmask in public spaces, in a county with substantial or high COVID-19 transmission, would potentially run afoul of the CDC’s updated guidance.

Healthcare employers were unclear whether continued adherence to the ETS, and its facemask exceptions, would be permissible given the new CDC Guidance and OSHA’s General Duty Clause, which requires employers to keep a workplace free from any recognized hazard. In terms of the impact the new CDC guidance has on ETS compliance, OSHA has published the following disclaimer on its website:

OSHA has reviewed the latest guidance, science and data on COVID-19 and has consulted with the Centers for Disease Control and Prevention (through the National Institute for Occupational  Safety and Health). DOL has determined that neither CDC’s guidance on healthcare settings nor the underlying science and data on COVID-19 in healthcare settings has materially changed in a way to necessitate changes in the health and safety requirements contained in the ETS released on June 10, 2021. OSHA has determined that no changes to the ETS are necessary at this time, but the agency will continue to monitor and assess the need for changes each month.

Accordingly, OSHA has made it clear that permitting mask exceptions for vaccinated employees will still be permissible for employers, despite the new CDC guidance. It seems that OSHA understands that the data from the pandemic is constantly in flux and will take its time in revisiting the ETS or any requirements for employers, rather than react in a knee-jerk fashion. For employers this is an encouraging sign and indicates that OSHA’s enforcement priorities are not subject to sudden reversals as may have been the case with the CDC’s guidance.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Brent I. ClarkJames L. CurtisBenjamin D. BriggsMark A. Lies, IIAdam R. YoungA. Scott HeckerIlana MoradyPatrick D. JoyceDaniel R. BirnbaumMatthew A. Sloan, and Craig B. Simonsen

Seyfarth Synopsis: President Biden recently laid out his administration’s next steps in efforts to get more Americans vaccinated.

On July 29, 2021, the White House released “Remarks by President Biden Laying Out the Next Steps in Our Effort to Get More Americans Vaccinated and Combat the Spread of the Delta Variant.” In his remarks, the President has stated that every federal government employee will be asked to attest to their vaccination status. “Anyone who does not attest or is not vaccinated will be required to mask no matter where they work; test one or two times a week to see if they have a — they have acquired COVID; socially distance; and generally will not be allowed to travel for work.” In addition, the President extended the new vaccination requirements to all federal contractors as well.

The President’s remarks follow the Department of Veterans Affairs requirement issued earlier in the week that doctors, nurses and other healthcare workers who provide medical care to veterans must get vaccinated for COVID-19. The President also called on all states and local governments to consider ways to encourage vaccination among employees, including potentially giving $100 to anyone who gets fully vaccinated.

Employers who do business with the federal government must update their COVID-19 policies to comply with vaccination and attestation requirements. Additionally, local or state governments may follow the lead of the federal government and adopt similar policies. Moreover, more private companies could voluntarily adopt mandatory vaccine requirement policies, as Google and Facebook have already done. Accordingly, all employers should evaluate their COVID-19 policies to prepare for mandatory vaccination or attestation requirements.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Brent I. ClarkJames L. CurtisBenjamin D. BriggsMark A. Lies, IIAdam R. YoungA. Scott HeckerIlana MoradyPatrick D. JoyceDaniel R. BirnbaumMatthew A. Sloan, and Craig B. Simonsen

Seyfarth Synopsis: On July 27, 2021, the CDC revised its mask guidance in response to the burgeoning threat of the COVID-19 Delta variant, recommending that all individuals — including those who are vaccinated — wear masks indoors in public in areas of “high” or “substantial” transmission.

Once considered a watershed moment in the nation’s fight against the COVID-19 pandemic, the CDC announced in May 2021 that fully vaccinated individuals were no longer required to wear a mask in most outdoor and indoor settings. Unfortunately, as the COVID-19 Delta variant spreads among the unvaccinated, and even some vaccinated populations, the CDC changed course and now recommends that “to maximize protection from the Delta variant and prevent possibly spreading it to others, wear a mask indoors in public if you are in an area of substantial or high transmission.”  According to the CDC, substantial or high transmission includes any county where there are more than 50 cases per 100,000 people in the area, over a seven-day period, or that the COVID-19 test positivity rate is higher than 5%.

Individuals and employers can track here whether their county is deemed an area of “high” or “substantial” transmission.  A considerable swath of the US is currently seeing “high” (red) or “substantial” (orange) rates of transmission, where masks are now advised indoors in public for all individuals, regardless of vaccination status.  In the remaining pockets of “moderate” (yellow) and “low” (blue) transmission, the CDC’s recommendation does not currently apply to fully vaccinated individuals.

While this presents a frustrating reversal for vaccinated individuals and employers who have adjusted their protocols in recent weeks, the revised guidance is ultimately limited to “indoors in public.”  The CDC does not define a “public” place, which appears to give employers in non-public facing environments continued discretion in enforcing mask requirements for vaccinated employees.  Nonetheless, employers should prepare for the possibility that many state and local governments will act on the CDC’s guidance and reinstate recently-lifted indoor masking requirements for vaccinated individuals.

For instance, just this week, California state officials announced that it will require all state employees to prove they’ve been vaccinated, or otherwise will wear a mask in the office and get tested for the coronavirus at least once a week. New York City will begin requiring COVID vaccinations or weekly testing of all workers in its public hospitals and clinics in an attempt to slow an increase in cases.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.

By Erin Hawthorne, Tessa Cranfield, and Daniel E. Waldman

Seyfarth Synopsis: For a variety of historical and social reasons, US law permits (and in some cases requires) employers to affirmatively track and provide opportunity to historically underrepresented groups in the workplace. Companies are permitted to (and in some cases must) gather data from candidates and employees regarding their identification with a protected group, so long as they are sufficiently qualified for the position. And, provided an employer’s actions do not discriminate in violation of US equal opportunity laws, US law allows for employers to increase opportunities for underrepresented employees.  

Setting aside any social, historical, and political considerations, laws that allow companies in the US to promote diversity, inclusion, and belonging programs often differ in material respect from international employment laws.

The idea of lawfully gathering this information and then actively using it for ongoing employment decisions is fairly unique to the US, and few American multinationals realize it.

Many other countries approach inclusion and diversity from a “color blind” standpoint: employers are generally not permitted to inquire about candidates’ and employees’ identification with protected groups, at least for purposes of making hiring decisions, and they are required to treat every person objectively fairly without regard to their identification. While some jurisdictions allow the gathering of some personal information, and in a few narrow cases require employees to use this information (e.g., hiring of workers with disabilities), no jurisdiction permits employers to gather as much information and allows them to act on it as broadly as the United States.

Unwelcome news for US employers…

The first time a global client asked one of the authors (based outside the US) for a “template employment diversity form,” she was so unfamiliar with the American approach to inclusion and diversity that she didn’t know what they were after.

They wanted to track their workforce’s diversity attributes (asking every person about race, gender identity, sexual orientation, disabilities, etc.) so that they could track performance on their broader diversity targets. Again, this is typical practice in the US, where both discrimination and data privacy considerations are different.

When our colleague flagged that there were restrictions in Australia, the client patiently explained that “this is for diversity” and were incredulous when given the bad news that it still might be unlawful in Australia.

A different landscape outside the US

In Australia, it is generally not sufficient for an employer to simply seek to achieve workforce diversity. Discrimination is prohibited at Commonwealth and state level. Under many of these laws, positive discrimination is only lawful if an employer can demonstrate that there is current substantive inequality that will be remedied by the proposed measure.

Further, some laws (such as the NSW Anti-Discrimination Act 1977) require a formal exemption from a Tribunal, with limited or no capacity for unilateral positive discrimination. There are around 750,000 Australian business with NSW as their main state, but fewer than 150 organizations have current exemptions permitting positive discrimination. If information will be used for discrimination, it can be a separate breach of some state laws to collect it, raising the prospect that even asking for diversity details can result in risk for an employer.

This is a concern given that many diversity goals seem like aspirational rather than reachable targets. For example, 2017 research showed that there were fewer Australian companies run by women than by men named Peter or John. By 2020, there had been some improvement for gender diversity, but only around 5% of board directors in the ASX300 came from non-Anglo-Celtic backgrounds.

Australia is not alone in these issues. In Europe, positive action is only allowed within narrow limits. In the UK, the Equality Act 2010 allows positive action where there is demonstrated under-representation or disadvantage for a protected group and, specifically, the individual concerned. The employer also has to show that the positive action is proportionate – another hurdle to get over. For hiring and promotion, the exemption is even narrower – essentially allowing under-representation to be a “tiebreaker” only where candidates are equally qualified.

Ultimately, positive action that goes beyond target-setting and into practical steps is a risk for employers. For example, a UK police force recently lost a case for selecting a minority candidate over a white candidate to improve its diversity, on the basis the candidates were “not equally qualified.”

There are complex reasons for lack of diverse representation in many companies, and we do not suggest the discrimination laws are a cause. However, they result in complexity, risk, and difficulty instead of making it simple or easy for businesses to implement diversity initiatives outside the US.

Time for a re-think?

Many global companies are increasingly looking at diversity as a commercial issue, and seeking to partner with business that meet various diversity targets. Some employers are willing to take these risks, for example by insisting on all women shortlists for board roles, in order to speed up the pace of change. In countries where discrimination laws create complex hurdles to navigate, employers might miss the opportunity to get on board.

The American experience with inclusion and diversity, which permits employers to gather rather personal information and then make employment decisions based on that information, is an outlier. American employers must bear this distinction in mind when implementing inclusion and diversity initiatives globally.

Is it time to diversify discrimination laws outside the US so that we can all do better?

Erin, Tessa, and Dan are part of Seyfarth’s leading International Employment team. To find out more about discrimination laws outside the US and how they might affect your business, please reach out to them or anyone else on our specialist team. You can also read more about Global Employee DEI Data here, where Seyfarth experts Marjorie Culver and Caitlin Lane previously discussed ESG and DEI efforts.

By: Lauren Parris Watts, Lisa Nichols, and Patrick Joyce

Seyfarth Synopsis: In light of the record-breaking heat wave, Washington state announced new emergency rules to provide outdoor workers with additional protections from heat exposure. These rules update the existing Outdoor Heat Exposure mandates, and are in effect as of July 13, 2021.

On July 9, 2021, Washington announced new emergency rules to provide outdoor workers additional protections from heat exposure. The emergency rules amend existing rules that are in place annually from May through the end of September.

The new emergency rules update the existing to include the following protections:

When the temperature is at or above 100 degrees, employers must respond to the extreme heat by:

  • Maintaining a shady area large enough to accommodate the number of employees on a meal break or rest break and that is either open to the air or has ventilation or cooling and does not adjoin a radiant heat source (such as machinery or a concrete structure), or providing another sufficient means for employees to cool down; and
  • Ensuring workers have a cool-down rest period of at least 10 minutes every two hours. The preventative cool-down rest period required may be provided concurrently with any meal or rest period and must be paid unless taken during a meal period.

See WAC 296-62-09555.

When temperatures are at or above 89 degrees, the new rules, combined with existing rules, require employers to:

  • Provide water that is cool enough to drink safely;
  • Allow and encourage workers to take additional paid preventative cool-down rest to protect from overheating;
  • Be prepared by having a written outdoor heat exposure safety program and providing training to employees; and,
  • Respond appropriately to any employee with symptoms of heat-related illness.

See Department of Labor and Industries’ announcement.

Questions and Answers

To which employers does the rule apply?

This emergency rule applies to any employers with employees working outdoors who may be exposed to extreme heat, including: those working in agriculture, construction and other outdoor industries.

When must employers start complying?

Employers should have been in compliance since Tuesday, July 13th.

May employers provide a rest break at the same time as a cool-down rests?

Yes.  Cool-down rests may be provided concurrently with required rest and meal breaks.

Should cool-down rests be paid?

Cool-down rests must be paid unless taken during a meal break.

Is this rule permanent?

This rule is not yet permanent. The state Department of Labor and Industries (the “Department”) intends to begin the process of updating the existing state Outdoor Heat Exposure rule established in 2008, according to the agency’s announcement.

Of note, there will be opportunities for public input during the permanent rule making process.

What are the penalties for non-compliance?

Penalties will be calculated using the criteria, methods and procedures found in Chapter VI of the DOSH Compliance Manual. Penalties vary based upon the gravity of the offense and can range from $0-$1,000 for a general violation, $100-$7,000 for a serious violation, up to a maximum of $70,000 for willful or repeated violations.

The Department states that “special attention” will be given to ensuring appropriate considerations for “good faith, history, and employer size” apply when calculating the penalty. See Enforcement Procedures (updated last in 2009).

What if I have additional questions?

If you need help complying with the emergency heat prevention rules, or any other mandate affecting employers in Washington, please feel free to contact a Seyfarth attorney.

Additionally, you may contact the Department directly by contacting Shawn Apperson, at (360) 902-5478 or appt235@lni.wa.gov.

By Fritz Smith and Becca Mitchell

Seyfarth Synopsis: In Roberts v. Glenn Indus. Grp., Inc., No. 3:17-CV-745-GCM, 2019 WL 356809, at *2 (W.D.N.C. Jan. 29, 2019), aff’d in part, vacated in part, remanded, No. 19-1215, 2021 WL 2021812 (4th Cir. May 21, 2021), the plaintiff employee filed a lawsuit against his former employer alleging same-sex sexual harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”).  The district court granted the defendant employer’s  motion for summary judgment, holding that the plaintiff: (1) failed to present evidence of one of the scenarios described in the Supreme Court’s Oncale opinion  to satisfy the “based on sex” prong of a sexual harassment claim based on a hostile work environment; and (2) failed to satisfy the causal relationship prong for a retaliation claim.  The Fourth Circuit affirmed the district court’s ruling as to the retaliation claim, vacated summary judgment as to the same-sex sexual harassment claim, and remanded for further proceedings.

The Fourth Circuit’s ruling clarified that: (1) same-sex sexual harassment claims can be satisfied based on situations outside of those identified in Oncale; and (2) constructive knowledge of a plaintiff’s protected activity is insufficient to satisfy the causal relationship prong of a retaliation claim.

Factual Background

Defendant is a Charlotte-based company providing underwater inspection and repair services to utility companies.  The plaintiff started working for the defendant in July 2015 as a “diver tender” or diver’s assistant.  Upon his hire, the plaintiff was provided a copy of the employee handbook that included a “No Harassment” policy, which required all complaints of sexual harassment be reported to the company’s CEO.  From the start of his employment, the plaintiff alleged that his supervisor repeatedly called him “gay”; made sexually explicit and derogatory remarks towards him; and physically assaulted him at least twice, including slapping him, knocking off his safety glasses, pushing him, and putting him in a chokehold.  The plaintiff complained to two other supervisors and the company’s Vice President and Human Resources Manager, but the plaintiff’s supervisor was not disciplined or counseled.  The plaintiff never complained to the company’s CEO, and the CEO did not become aware of the harassment until after the plaintiff was terminated.  After two workplace safety incidents in March and April of 2016, the CEO terminated the plaintiff in April of 2016, citing the safety incidents as the company’s grounds for termination.

In February 2018, the plaintiff filed a lawsuit alleging, among other claims, violations of Title VII for sexual harassment and retaliation for the plaintiff’s complaints of sexual harassment.  The district court granted summary judgment for the employer.  The Fourth Circuit affirmed the district court’s summary judgment as to the plaintiff’s retaliation claim, but vacated summary judgment as to his sexual harassment claim and remanded the case for further proceedings.

Same-Sex Harassment Based on Gender

To establish a prima facie case of sexual harassment based on a hostile work environment, a plaintiff must prove: (1) unwelcome conduct; (2) based on the plaintiff’s sex; (3) sufficiently severe or pervasive to alter the plaintiff’s conditions of employment and create an abusive work environment; and (4) that is imputable to the employer.  The district court, citing to the U.S. Supreme Court’s decision in Oncale v. Sundowner Offshore Service, 523 U.S. 75, 118 S. Ct. 998, 140 L. Ed. 2d 201 (1998), explained that to succeed on a claim of same-sex sexual harassment based on gender, a plaintiff must show: (1) credible evidence that the alleged harasser is homosexual and made “explicit or implicit proposals of sexual activity”; (2) that the harasser was motivated by general hostility to the presence of members of the same sex in the workplace; or (3) “direct comparative evidence about how the alleged harasser treated members of both sexes in a mixed-sex workplace.”  In Roberts, the district court found that none of the three Oncale situations applied to satisfy the “based on sex” prong of the prima facie case of sexual harassment based on a hostile work environment, and granted summary judgment for the employer.

The plaintiff appealed, arguing that the district court misapplied the Supreme Court’s ruling in Oncale, and the Fourth Circuit agreed.  The Fourth Circuit rejected the district court’s narrow interpretation of the Oncale decision and clarified that the three evidentiary routes identified in Oncale were not intended to serve as an exhaustive list of the ways to prove that same-sex harassment was based on sex.  Rather, the Oncale situations were intended to serve as examples of the various ways that a plaintiff may prove a same-sex sexual harassment claim.  Citing to the recent Supreme Court decision in Bostock v. Clayton County, ––– U.S. ––––, 140 S. Ct. 1731, 207 L. Ed. 2d 218 (2020), the Fourth Circuit acknowledged that the evidentiary routes by which a plaintiff could prove he or she is the victim of same-sex harassment would also include instances where the harassment was motivated by the fact that the plaintiff was perceived as not conforming to traditional male stereotypes.  The Fourth Circuit also directed the district court to examine on remand whether physical assaults, even those not overtly sexual, may support a claim of a hostile environment based on sex, which further clarifies the evidentiary routes available to plaintiffs bringing such claims.

Knowledge Requirement to Prove Retaliation

The district court granted the defendant’s motion for summary judgment on the plaintiff’s retaliation claim, holding that a plaintiff must show that the decisionmaker was aware of the protected activity at the time the alleged retaliation occurred in order to satisfy the causation prong.  The district court explained that the plaintiff could not establish the causation prong because the company’s CEO, who was the sole decisionmaker, fired the plaintiff without actual knowledge of the harassment or the plaintiff’s complaints of harassment to company employees.

On appeal, the plaintiff argued that constructive knowledge of protected activity based on complaints made to supervisory employees is enough to support a causal link between that activity and a decisionmaker’s adverse employment action.  The Fourth Circuit, however, rejected the plaintiff’s attempt to expand the knowledge requirement to include constructive knowledge, explaining that the Fourth Circuit has consistently required proof of the decisionmaker’s knowledge of protected activity to support a Title VII retaliation claim.  While the Fourth Circuit acknowledged the fact that the plaintiff notified several supervisory employees of the harassment, the Fourth Circuit ultimately held that such knowledge could not be imputed to the decisionmaker to establish a causal relationship between the protected activity and the decisionmaker’s termination decision.

Implications For Employers

For employers facing Title VII same-sex sexual harassment claims, this ruling clarifies that the Oncale situations are not the only evidentiary routes available to plaintiffs and that employers should be aware of other statements or actions in the workplace that could support a claim of a hostile environment based on sex.

For employers facing Title VII retaliation claims, the Fourth Circuit decision provides reassurance that the knowledge of other employees cannot be imputed to the decisionmaker and that actual knowledge of the decisionmaker remains the standard for establishing a causal relationship between a plaintiff’s protected activity and an adverse employment action.  Employers, nevertheless, could still face liability for failing to address complaints of harassment in the workplace and should ensure they are taking steps to prevent workplace harassment.

 

About the Program: Telehealth is being introduced to a healthcare system that suffers from inequities. Disparities in healthcare for underserved and rural communities were well documented prior to the pandemic. COVID-19 significantly exacerbated many of these underlying inequities and shone a much-needed light on barriers to equitable healthcare. Proactive steps must be taken to assure telehealth equity and that telehealth can become a great equalizer. In partnership with the Illinois Telehealth Initiative (ITI), this Telehealth Forum series features three interactive panel discussions on the current legal and regulatory environment.

This, the second of this series – scheduled for July 19, 2021, from 2:30 to 3:30 CDT – will address broadband expansion to enable telehealth to underserved communities. It is critical to take specific actions to eliminate barriers associated with the equitable deployment and utilization of telehealth services. Affordable connection to the Internet is a link for vulnerable communities to access through telehealth care they need.

While there is no cost to attend, the available spots are limited, so please register early, by selecting the below link:

Register Here

The Speakers:

John Windhausen Jr., Executive Director, Schools, Health & Libraries Broadband Coalition, will present the National Perspective. John founded the SHLB Coalition in 2009 with the support of the Bill & Melinda Gates Foundation. He was the principal staff person responsible for drafting the Telecommunications Act of 1996 and served as chief legal adviser on telecom issues to Senators Fritz Hollings and Daniel Inouye.

Matt Schmit, Director of Illinois Office of Broadband, will speak on the Illinois Perspective. Matt oversaw the $420 million broadband expansion effort and is responsible for discussions between municipalities, providers , local and outside the region, to provide a better digital infrastructure that supports telehealth services. Matt is a former state senator in his native Minnesota where he helped lead successful broadband expansion efforts.

Ronda Sauget, Executive Director and CEO of the Leadership Council Southwestern Illinois, will address the Community Perspective. Ronda is responsible for identifying and mobilizing effective partnerships to address regional economic development issues. The Leadership Council led significant telehealth efforts in the region that were made possible because of broadband expansion

If you have any questions, please contact Julianne Holdsberg at jholdsberg@seyfarth.com and reference this event.

By Jeremy CorapiChristine Hendrickson, and Shardé Skahan

Seyfarth Synopsis: On July 7, 2021, Canada’s Minister of Labour announced an August 31, 2021, effective date for Canada’s Pay Equity Act.  The Act and its implementing regulations contain detailed and strict requirements for employer pay equity plans, so employers should begin thinking about the process for developing their pay equity plans.

On July 7, 2021, Canada’s Minister of Labour, Filomena Tassi, announced that the country’s Pay Equity Act will be effective August 31, 2021 and phased in over a three year period. As part of that announcement, the Government published final Pay Equity Regulations.  The forthcoming implementation of the Act is seen as furthering the Government’s goal of economic recovery after the pandemic, which has had a disproportionate negative effect on women in the workplace.

The Act requires that men and women in federally regulated workplaces (e.g. federal public sector, private sector, parliamentary workplaces, and the Prime Minister’s and ministers’ offices), receive equal pay for work of equal value. At this time, the Act and Regulations will not apply to Indigenous governing bodies as employers.  The first Pay Equity Commissioner, Karen Jensen, will administer and enforce the Act and its Regulations.

The Act applies to employers with ten or more employees and requires those employers to:

  • Establish a pay equity plan that examines any differences in compensation between positions of equal value that are mostly held by women and those mostly held by men;
  • Eliminate differences in compensation identified in the plan; and
  • Revise and update their pay equity plan at least every five years to ensure that no gaps have been reintroduced and to close gaps if they exist.

Establishing a Pay Equity Committee

Whether an employer is required to develop a pay equity committee to implement the pay equity plan depends on the size of the employer.  The Act also sets forth specific requirements for the composition of the pay equity committee, which must include employer and employee representatives, so employers should carefully review the requirements when determining who it will include on its pay equity committee.  If the employer cannot satisfy the requirements, it must apply to the Pay Equity Commissioner for authorization to establish a committee with an alternative composition.

Required to “Make All Reasonable Efforts to Establish” Pay Equity Committee Pay Equity Committee Voluntary
Employers with 100 or more employees Employer with 10 to 99 employees if all of its employees were non-unionized employees on the date on which the employer became subject to the Act
Employers with 10 to 99 employees if some or all of its employees were unionized employees on the date on which the employer became subject to the Act

 

Role of Pay Equity Committee and Purpose of Pay Equity Plan

The employer’s pay equity committee is responsible for developing and implementing the employer’s pay equity plan.  Smaller employers without unionized employees may implement their pay equity plan without having to establish a pay equity committee.

The goal of the pay equity plan is to identify pay gaps between male and female employees and then determine necessary modifications to close said pay gaps.  Employers must post their pay equity plans and take active steps to maintain and update the plan as needed.

Timing Requirements

Employers with ten or more employees will have three years to develop and implement a pay equity plan.

If an employer begins employing an average of ten or more employees at any time after the Act becomes effective, those employers will be subject to the Act January 1 in the following year.  Those employers will then be required to develop a pay equity plan within three years of that day.

Developing a Plan

Employers must follow a number of steps to develop their pay equity plan:

1. Identify Job Classes. Identify the existing job classes.

2. Determine Gender Prominence. Employer or pay equity committee determines the gender predominance of each job class.

A job class is to be considered predominant in one gender if (a) at least 60% of the positions in the job class are occupied by one gender; (b) historically, at least 60% of the positions in the job class were occupied by one gender; or (c) the job class is one that is commonly associated with women or men due to gender-based occupational stereotyping

3. Calculate Employee Compensation. Employer or pay equity committee determine the value of work and calculate the compensation associated with each gender predominant job class by considering the skill, effort and responsibility required to perform the work and the conditions under which the work is performed.

The employer or committee must include any form of remuneration payable for work performed by the employee (e.g. salaries, commissions, vacation pay, severance pay, bonuses, benefits and employer contributions to pension funds).

4. Identify Necessary Compensation Increases. The employer or pay equity committee compares the compensation associated with female-predominant and male-predominant job classes of similar value in order to determine which female-predominant job classes require compensation increases. The Act provides two calculation methods employers or pay equity committees must use to compare employee comparison, referred to as the “Equal Line Method” or the “Equal Average Method.”

5. Set Date Compensation Increases Become Payable. The employer or pay equity committee must identify the date by which it will pay compensation increases. The increases are required to be paid the day after posting the final pay equity plan unless the total amount of compensation increases exceed 1% of the employer’s annual payroll, in which case the increases can occur in phases over a number of years.

Posting Requirements

Employers or pay equity committees must post a number of documents under the Act, including: draft and final versions of pay equity plans, certain documents issued by the Pay Equity Commissioner such as notices and orders, and the results of the Canadian Human Rights Tribunal’s inquiries into questions of law or jurisdiction.

Employees are permitted to submit comments on the draft plan.

The Regulations provide details to guide employees in creating their pay equity plans, so employers should refer to the regulations when developing and maintaining their pay equity plans to ensure the pay equity plan comport with the Act’s requirements.

In light of the complexity of these new rules, employers should work with legal counsel to ensure they are properly complying with the Act and its Regulations when developing their pay equity plans.

Penalties

Failure to comply with the Act could result in substantial fines and penalties.  Employers who do not comply with the Act could face the following:

  • $30,000 fines for employers with up to 99 employees.
  • $50,000 fines for larger workforces.
  • Compliance audits and orders.
  • Possible complaints being filed with the Pay Equity Commissioner (which may get referred to the Canadian Human Rights Tribunal).

As always, Seyfarth’s Global Pay Equity Group’s attorneys are available to assist employers in navigating these new requirements and ensuring that they are ready for the ongoing trend toward greater pay transparency generally.

By Brent I. ClarkJames L. Curtis, Mark A. Lies, IIAdam R. YoungA. Scott HeckerPatrick D. Joyce, Daniel R. Birnbaum, and Craig B. Simonsen

Seyfarth Synopsis: On June 28, 2021, OSHA published a Compliance Directive, DIR 2021-02 (CPL 02), covering inspection procedures and enforcement policies for the Emergency Temporary Standard for COVID-19. The new directive sheds light on OSHA’s thought process in enforcing new provisions of the ETS, including the controversial medical removal payment provision. OSHA’s intent is to aggressively enforce the regulation, giving consideration to potential punitive damages or referral to OSHA’s Whistleblower Protection Program for certain infractions.

As we blogged about here, OSHA previously issued its COVID-19 ETS which went into effect on June 21. On June 28, 2021, OSHA issued Compliance Directive 2021-02 that covers inspection procedures for Compliance Safety and Health Officers in enforcing the ETS. The Directive establishes OSHA’s field inspection and enforcement procedures designed to “ensure uniformity in enforcing the ETS when addressing workplace exposures to SARS-CoV-2.”

The new inspection procedures shed some light on how OSHA plans to enforce the ETS, including the controversial medical removal requirements regarding maintenance of pay and provision of paid leave. Namely, OSHA has been directed to issue “Serious” citations as a matter of course if an employer does not pay an employee their regular rate of pay when working remotely or in insolation as part of a medical removal. As such, this could mean that subsequent infractions of employers not providing appropriate benefits to employees could be cited as a “Repeat” citation subject to a $136,532. The Compliance Directive also considers punitive damages as a possible remedy under OSHA’s whistleblower statue, Section 11(c). Compliance Officers are encouraged to refer cases to the Whistleblower Protection Program if they suspect retaliation.

In terms of determining compensation, the Compliance Directive permits some leeway to Compliance Officers. Namely CSHOs are directed to “determine whether the employer is appropriately compensating employees who are medically removed due to COVID-19. The determination regarding compensation for medical removal may depend on various factors including the size of the company, other sources of compensation to the employee, and payroll records.”  As such, it may be that an employer’s careful consideration of distributing existing benefit programs may “offset” the pay provisions.

In issuing citations, Compliance Officers are directed that costs accrue until payment, including back wages, insurance premiums and the like and, as an example, encourage Compliance Officers to draft citations that indicate the employee’s regular rate of pay, time worked per week, and dates when payment should be made, less customary deductions when the employee was required to work remotely due to COVID-19 exposure.

The Compliance Directive further directs Compliance Officers to be cognizant of the shift in employees’ incomes due to the pandemic and urging that Compliance Officers “take extra care to determine current wages.” OSHA directs its CSHOs to interview employees with similar job titles and seniority to determine the proper wages to be paid and consult an OSHA whistleblower protection investigator to determine how to calculate the amount owed to employees. Employers should be careful to analyze employee payment, to ensure no retaliatory intent could be inferred from benefits provided during medical removal. The Compliance Directive also notes that another factor in determining pay should be whether the employees would receive a bonus during the time period or medical plan.

The Compliance Directive makes clear that OSHA intends to aggressively enforce the new paid leave provisions of the new ETS, including issuing Serious citations, considering potential for punitive damages and referral to OSHA’s whistleblower protection program. Employers should consult experienced counsel to understand their compliance obligations with regard to these new provisions in order to minimize their liability.

For more information on this or any related topic, please contact the authors, your Seyfarth attorney, or any member of the Workplace Safety and Health (OSHA/MSHA) Team.