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The article was first published in Duff on Hospitality Law blog.

November 2016 held more than one shock for many in America. Not only did the presidential election cycle come to a dramatic close, but the government introduced its new Form I-9, Employment Eligibility Verification.

First introduced in 1986, the “Form I-9, Employment Eligibility Verification,” must be completed for every new employee. Over time, it has been expanded from one page to two. And its instructions have grown from less than a page, to six pages for the 2013 edition to 15 pages of Instructions – more than four for the employee section alone – for the 2016 edition in English and in Spanish.

iStock U.S. Flags and Wall Street SignIn our latest installment of our Resource for Doing Business in the U.S., we focus on key laws an investor in the U.S. needs to know when employing personnel in the U.S. These laws apply whether the personnel are transferred from abroad or hired locally – and, as you will see, there can be laws related to employees at the local, state and federal level. It’s definitely an area where one cannot merely assume the laws will be similar to the laws at home. The laws also vary state to state and city to city within the U.S. To avoid exposing their employers to significant risks, even experienced Human Resources managers seek legal advice in this area.

By way of introduction to the topic, the installment you find here sets out the basics of what you need to know as a new U.S. employer. GSB also offers AdviceOnline, a resource for employers that dives into much greater depth on various labor and employment related matters. It is a useful tool to help our clients deal with some routine undertakings on their own, and also to know when it is best to seek legal assistance.

We hope these tools are useful in providing you the necessary guidance to minimize legal claims from personnel and to keep your workforce happier.

Two asian business men yogaJapan’s labor and employment laws are generally more favorable to employees than the U.S. counterparts. Against this background, companies in Japan must maneuver carefully when they need to reduce their workforce. A recent newsletter from Kojima Law Offices in Tokyo explains the background and offers some pointers for companies trying to navigate these waters. Also discussed is the new requirement as of this month that employers of a certain size offer (and pay for) an annual “stress check” to their employees.

To read the full article, go to: http://www.kojimalaw.jp/en/newsletters/KLO_Newsletter(Vol.8).pdf

Companies sometimes hire workers through staffing agencies.  Sometimes they participate in joint ventures or have subcontracting relationships.  Companies and individuals today enter into a variety of contractual arrangements to reduce costs and maximize available capital, flexibility, talent and efficiency.  A typical feature of these arrangements is for one company to use and incorporate the work performed by employees of another company into the products and services it ultimately delivers. This is common in the world of cross-border transactions and relationships, where it makes sense to arrange for another company to perform the work needed due to its expertise, location or cost overhead.

Enter the National Labor Relations Board (“NLRB” or “Board”), whose decision in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (August 2015) may change how many of these relationships function.  It even raises questions about whether some of these arrangements are now too risky.  Under Browning-Ferris, the NLRB has shifted the standard for determining whether two companies constitute joint employers under the National Labor Relations Act (“NLRA”).  The new joint-employer standard increases the risk that employers could be liable for claims and actions against the entities with whom they contract.

In its decision, the Board first restated that it may find that two or more entities are joint employers of a single work force if they essentially share or codetermine matters that govern the essential terms and conditions of employment of those employees.  After restating this general principle, however, the NLRB proceeded to expand the standard for assessing joint-employer status and to overrule legal precedent it had been following for the past 30 years.

The case involved Browning-Ferris Industries, which operates a recycling facility and staffs its operation with about 60 of its own employees and an additional 240 workers contracted through a staffing agency, Leadpoint Business Services.  When a local union filed a petition to represent Leadpoint’s employees, it argued that Browning-Ferris was a joint employer with Leadpoint, and should, therefore, be required to engage in collective bargaining with the union with respect to the Leadpoint workers.

The Board supported the union’s argument, holding that it would no longer require that an employer actually exercise authority over workers’ terms and conditions of employment and that the mere possession of such authority was sufficient to make an employer a joint employer.  Conditions of employment include such issues as hiring, firing, wages, scheduling, discipline, supervision and direction of work.  The Board also overturned its prior requirement that a joint employer’s control must be exercised directly and immediately.  Control exercised indirectly, through an intermediary, may now suffice to establish joint-employer status.

Why Does Browning-Ferris Matter?

Browning-Ferris does not mean that every employer who uses contract labor will now be found to be a joint employer.  In fact, other agencies besides the NLRB apply varying joint-employer standards under particular statutes and regulations, including Title VII of the Civil Rights Act, which addresses issues of discrimination, and the Fair Labor Standards Act, which addresses wage and hour issues.  Those agencies and the courts presumably will continue to apply their own standards, and may or may not be influenced by the NLRB decision.

But a company should care about Browning-Ferris and its implications for joint-employer status if it contracts with other entities, such as staffing agencies, subcontractors and franchisees, to deliver, develop or manufacture certain of its goods and services or perform functions like those typically performed by the company’s employees.  Under the new test, if the contract reserves the right of Company A to control or to specify any of the terms or conditions of employment of Company B’s employees, then Company A, even if it does not exercise those rights, could be deemed a joint employer of Company B’s employees for labor matters.

There are four clearly identifiable consequences of a determination of joint-employer status under the NLRA:  (1) the obligation of the joint employer to engage in collective bargaining alongside the primary employer; (2) exposure of the joint employer to joint liability for unfair labor practices and breaches of collective bargaining agreements; (3) removal of the joint employer’s insulation from a union’s dispute with the primary employer, including what would otherwise constitute secondary strikes, boycotts and picketing; and (4) it will be more difficult for a company to terminate or rebid contracts with clients who have a unionized work force.

The potential applicability of Browning-Ferris could arise in a variety of contexts in cross-border transactions, including:

  • A company in one jurisdiction (“user”) may seek to employ the services of a company in another jurisdiction (“supplier”) whose workers are represented by a union. In that case, the non-unionized user company will want to take affirmative steps to avoid joint-employer status with the supplier.
  • A company in one jurisdiction may have a franchisor-franchisee relationship with a company in another jurisdiction. In that case, the franchisor will want to structure the relationship to avoid joint-employer status.
  • A company in one jurisdiction may have a parent-subsidiary relationship with a company in another jurisdiction. The Board’s adoption of the “potential control” standard likely presents additional challenges for the parent to insulate itself from joint-employer status with its subsidiary.

To reduce the possibility of a company’s joint-employer status with another company and the consequences that flow from a joint-employer relationship, the company should consider the following practices:

  • Avoid contract language that reserves for the company any potential control over the terms and conditions of employment of the other company’s employees. Incorporate a disclaimer of such control if the circumstances allow.
  • Refrain from exercising actual control over the other company’s workers. The NLRB may determine that a company’s exercise of actual control is sufficient to confer joint-employer status even if the company has disclaimed a right to do so in the contract.
  • Avoid contracting for work that is similar to the duties already performed by the company’s employees.
  • Require the other company to provide a written agreement stating that it will comply with all federal, state and local labor laws and regulations, specifying in particular those pertaining to labor and employment. If the circumstances allow, require an indemnity clause in which the other company agrees to indemnify for any claims or liabilities arising out of an alleged violation of these laws.
  • On paper and in everyday practice, focus on the results to be delivered by the other company, not on the methods or means it utilizes to achieve those results.
  • Minimize contact with the other company’s non-supervisory employees. Avoid providing direction, materials, training or benefits to these employees.  If the other company’s workers are represented by a union, do not participate or retain the right to participate in collective bargaining or in administration of the collective bargaining agreement.

Asian man in suitJapan’s recent revisions to the Worker Dispatch Law came into effect as of Oct. 1, 2015, despite objections from labor unions and other opponents. These revisions form part of a larger effort by Prime Minister Shinzo Abe to loosen labor laws in a country known for long-term relationships between employers and their employees. Here are three important changes to the temporary workers system that those doing business in Japan should note:

  1. Time Limit – The time limit restricting the use of temporary workers has effectively been lifted. Previously, most industries could only employ a temporary worker in a given position for a maximum of three years. That three-year limit now only applies to a specific temporary worker, so a company may continue to employ temporary workers in a given position so long as no individual worker holds that position for more than three years. This three-year limit may be reset if the employing company asks the opinion of either a labor union or other representative of the majority of employees. Notably, the new three-year limitation will also apply to individuals not previously covered by the three-year term limit, including those working in 26 industries deemed to require special skills, such as translators, software developers, and interior designers. The former temporary worker may be assigned a new job and continue to work for the same company for more than three years, but not in the same capacity, without full-time employment.

  1. Governmental Permission – Temporary staffing agencies must now receive governmental permission to operate. Such agencies also must request that a company hire a temporary worker as a permanent employee when such a worker has completed a three-year position, and must hire the workers themselves or introduce them to alternative firms if the company declines to permanently hire that worker. These changes are a significant departure from the previous law, under which a company employing a temporary worker in a given position for three years was required to offer that temporary worker a permanent position. These new measures are intended to stabilize employment for temporary workers within the revised scheme.

  1. Reporting and Benefits – Firms using temporary workers should also be aware of several new requirements. Such firms now must provide temporary staffing agencies with information detailing the pay and benefits it pays permanent workers, as well as information on vacancies for permanent positions. Temporary workers must be allowed access to relevant trainings and “welfare facilities” made available to permanent workers, including dorms, cafeterias, recreational and other facilities. Similarly, temporary staffing agencies are also now required to provide career training and counseling to their temporary workers.

These changes and others are expected to shake up the temporary worker system is significant ways, although their likely impact on Japan’s broader economy is not yet clear. However, we can certainly expect to see more important legislation as Prime Minister Abe’s economic reforms move forward.

HiResA good business plan involves consideration of both short-term and long-term goals. Your plans should do the same for your management and business employees; getting them into the U.S. as you start or grow your business, and keeping the organization properly staffed as it succeeds. This occasional blog provides guidance regarding some of the most common and important employment-based U.S. immigration options.  

Today’s blog focuses on an employment-based immigration option available to citizens of particular countries; in this case, Japan. I will follow up with additional information about these options for other countries in the future.

In my last blog, I wrote about one of the fastest and easiest ways to transfer a valued employee to the U.S. to work for a related business entity: the L transfer option. But what options do you have if the person you have identified for a U.S. position has never worked for you, or has worked for you, but not for the one year required for the L transfer option? Or what if the person qualifies for the L transfer option, but U.S. employment is sought for more than the up to seven years authorized for L status, and the person does not want to become a U.S. permanent resident?

An additional employment-based immigration option is available if the business operating in the U.S. happens to have significant (50% or more) Japanese ownership or investment. The U.S. and Japan have a “Treaty of Commerce and Navigation” that makes it possible to hire Japanese citizens, whether they are still in Japan or already in the U.S., to provide executive, managerial, or “essential” services. No previous employment with any of your companies is required.

The E process may involve a filing at a U.S. consulate overseas and/or a mail-in petition in the U.S. Government-charged filing fees at U.S. consulates in Japan start at $270. Mail-in filings in the U.S. have a $325 filing fee. Mail-in filings can take one month or more for review, and visa issuance in Japan can take just as long or longer, depending on the availability of appointments.

One particular advantage of this option is that the status has the potential of being renewed indefinitely, which is the reason why many Japanese businesses choose the E process for many employees, even if other employment based immigration options are available.

Two versions of E status are available.

The E-1 (“Treaty Trader”) is available based on the U.S. business having “substantial trade” with Japan. Items of trade include but are not limited to:

  • Goods
  • Services
  • International banking
  • Insurance
  • Transportation
  • Tourism
  • Technology and its transfer
  • Some news-gathering activities.

To qualify for E-1 classification, the Japanese employee of a treaty trader must be an employee engaging in duties of an executive or supervisory character, or if employed in a lesser capacity, have special qualifications.

The other version of E status is the E-2 (“Treaty Investor”), which is available based on a “substantial investment” by Japanese in a U.S. business, such that the U.S. business is at least 50% owned or controlled by Japanese.

The treaty investor must be Japanese and must have invested, or be actively in the process of investing, a substantial amount of capital in a bona fide enterprise in the United States. The government does not define how much the investment must be. It can vary from a relatively low percentage compared to the total cost of purchasing or establishing a large U.S. business, up to 100% for a relatively small U.S. business. And the investment must generate more than enough income to provide a minimal living for the treaty investor and his or her family. Treaty Investor E-2 status is available for the qualified investor who seeks admission to develop and direct the enterprise, as well as for non-investing executives, supervisory and essential workers.

The Immigration Group is available to work with you as you consider employment-based immigration options for you or your employees.

 

iStock_000040646252_LargeWill recent international laws impact the role of women in business? Can a country legislate the role of women in corporations?

In the last week, two countries reportedly adopted new laws to increase women’s role in companies.

Japan’s Law on Promoting Women’s Role in the Workplace

In the last week, two countries reportedly adopted new laws to increase women’s role in companies.

On Aug. 28th, the Japanese parliament approved a bill aimed at promoting and enhancing women’s role in the workplace. Companies with over 300 employees must analyze their current status and set numerical targets for promoting and employing women.

The analysis must consider various aspects of women’s participation in a business:

1) The ratio of women in recruitment;

2) The difference between genders in the duration of employment;

3) The working hours for women;

4) The ratio of women in management positions; and

5) Other aspects of women’s participation.

Companies must then establish numerical targets for at least one of these aspects of the operations in their action plans to be implemented beginning April 1, 2016. Their plans must be made public. The law also calls for creating an environment where women can balance work and family.

Others are also impacted by the law. The new law imposes similar obligations on central and local governments. Companies with 300 or fewer employees are also required to make efforts to comply with the law, but without any set process.

Although there are no mandatory numerical goals and no penalties for anyone, the law is viewed as a significant development. The Japan Institute for Labor Policy and Training, reports that women make up 11 percent in management positions in 2013. This law aims to increase that number.

Germany’s Law on Requiring Women on Boards

Similarly, last week, Germany passed a law requiring public companies to give 30 percent of board seats to women. In companies on the S&P 500, women represent under 20 percent of the directors. Even in England, where there has been a concerted, voluntary effort to increase the number of women on boards, called the 30% Club, the New York Times recently reported in "Women on Boards: Where the U.S. Ranks" that the boards of Britain’s biggest stock index companies are only 23 percent female. This phenomenon persists, despite studies such as that from David A. Carter, Frank D'Souza, Betty J. Simkins & W. Gary Simpson, indicating that gender and ethnic diversity on boards has a significantly positive effect on return on investment, (See, The Gender and Ethnic Diversity of U.S. Boards and Board Committees and Performance, 18 CORP. GOVERNANCE: AN INT'L REV. 396, 400 (2010).)

Will these laws make positive change for corporations by allowing firms to explore any benefits of greater numbers of women in the corporate world or will laws mandating such change just be an ineffective annoyance?

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About Us
The International Practice Group of Garvey Schubert Barer is a cross-disciplinary group of attorneys practicing in areas ranging from business transactions, immigration, maritime, government regulatory work, transportation and logistics, and estate planning. The group members include bilingual and multicultural attorneys who are well-versed in handling these subject matters in a cross-border context. The firm’s attorneys have been actively practicing in the international arena since the early 1970s. 
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