Fall Management Update - August 2012

Avoiding Workplace Headaches During this Political Season

By Aisha S. Sanchez

As election time draws near, employers must be prepared to deal with numerous workplace issues that can arise from political discussions and campaigning in the workplace.  With controversial issues such as race, immigration, family values, national security and the economy on the political forefront, friendly workplace banter can quickly devolve into contentious disputes.  Employers need to be aware of their legal rights and obligations in addressing political discussions and activities in the workplace, as well as the practical impact of their actions.  

• The First Amendment Does Not Apply to Private Sector Employees' Workplace Discussions

While employees may believe they have a First Amendment right to free speech at work, the First Amendment only restricts government censorship of speech.  Accordingly, the First Amendment does not apply to private employers' regulation of employees' speech and does not preclude private companies from regulating or banning political discussion entirely1.  State and local laws may, however, protect political speech or activity.  Employers should become familiar with the state and local laws pertaining to political activity to ensure their policies and actions comply with these laws. 

• Consider Banning Political Discussions in Work Areas During Work Time

Most employers find it impractical to ban completely all political discussion in the workplace.  Additionally, such bans can have a detrimental impact on employee morale and may even raise issues under the National Labor Relations Act (NLRA)2.  Instead, employers may want to consider asking employees not to discuss political topics in work areas and during work time. 

• Reiterate Company Policies Governing Workplace Conduct

When addressing the issue of political discussions in the workplace, employers should remind employees of the company's policies prohibiting harassment, discrimination and retaliation as well as the company's complaint procedures.  Make sure employees understand that even conversations related to politics must comply with these policies – discussing politics isn't an excuse to harass or bully another employee.  Additionally, employers should promptly investigate any complaint of political harassment or bullying in accordance with company policies and procedures and ensure that any discipline is imposed uniformly.   

• Discourage Supervisors and Managers from Discussing Political Views with Subordinates

Employers should discourage supervisors and managers from discussing their political views with their subordinates, since this could make employees feel as if they are being pressured to agree with the supervisor¹.  Additionally, employees may rely on comments made during a political discussion as evidence of discrimination or harassment.  For example, a female employee who claims she was denied a promotion because of her sex may argue that her supervisor's comment that he would never vote for a woman reflects his discriminatory animus.  State and local laws may restrict an employer's ability to share its political views with employees.  Employers should ensure its policies and practices comply with these laws.

• Ensure Discipline is Imposed Uniformly

Employers are entitled to enforce rules of conduct and to discipline employees whose actions disrupt the workplace, even if the actions are politically related.  It is important to ensure, however, that any adverse actions focus on the employee's disruptive behavior, not the opinions expressed by the employee.  It is also important to ensure that any discipline is imposed uniformly, without regard to categories protected by anti-discrimination laws, such as religion, race, sex, disability, age or national origin.  Again, employers must also ensure that any discipline complies with applicable state and local laws.

• Consider Banning Political Solicitations and/or the Distribution of Political Material in the Workplace

Generally, employers can prohibit non-work related solicitations and the distribution of non-work related material in the workplace during working time.  This applies to solicitations for support of political candidates and the distribution of political paraphernalia.  To avoid unfair labor practice claims under the NLRA, no-solicitation/no-distribution policies must be properly drafted (that is, not overly broad) and uniformly enforced.  This means employers cannot permit the distribution of political material while prohibiting the distribution of union-related material.

The National Labor Relations Board (NLRB)3 takes the position that some forms of political advocacy may be protected under the NLRA.  In a Memorandum issued in 2008, the NLRB General Counsel stated that political activity related to employment concerns that occurs during non-work time and in non-work areas generally is protected if it does not disrupt the employer's work operations or interfere with the employer's ability to maintain discipline in its workplace.  The General Counsel also stated, however, that political advocacy that occurs during work time is subject to restrictions imposed by lawful, neutrally-applied work rules. 

• Consider Prohibiting Employees from Wearing Political Paraphernalia at Work

Employers can implement dress codes that prohibit employees from displaying political items at work, such as hats, pins, t-shirts, etc., as long as such policies are uniformly enforced.  Under the NLRA, however, employers generally cannot prohibit employees from displaying union-related material at work.4  Accordingly, while an employer may be able to prohibit an employee from wearing a "Vote for Obama" t-shirt, it generally cannot prohibit a t-shirt (or pin, button, hat, etc.) that says "IAM (or another union) Supports Obama." 

• Remind Employees Not to Use Company Resources to Discuss Politics 

Employers should reiterate that company resources, including computers, internet and e-mail should be used only for business purposes.  Consider redistributing electronic communication policies to ensure employees understand these restrictions.  Employers must ensure that these policies are applied uniformly; permitting the use of e-mail or other electronic resources for political campaigning while prohibiting such use for union-related purposes could violate the NLRA.

• Employees May Be Entitled to Time off to Vote

Although federal law does not require employers to permit employees to take time off from work to vote, most state laws provide some form of voting leave.  Because voting leave laws vary by state, it is important for employers to review their state's voting leave laws and adjust their policies accordingly.

Footnotes

^{1 Additionally, such discussions potentially could violate federal election laws.} 

Post-Macy Best Employment Practices for a Transgender Workforce

By Aisha S. Sanchez

The transgender community has seen a recent surge in legal, policy, and rule-making developments affording it greater protections from employment discrimination.  For example, although federal anti-discrimination laws do not explicitly prohibit discrimination on the basis of gender identity, 16 states¹,  the District of Columbia, and over 140 local governments now have laws expressly prohibiting discrimination on the basis of gender identity or expression.  In addition, the Eleventh Circuit recently ruled that while transgender individuals do not make up their own protected class, such individuals might still enjoy protection from discrimination under the recognized protected classes of sex and gender if an employer takes adverse action against them because their appearances and/or behaviors do not fit gender stereotypes.  See Glenn v. Brumby, (11th Cir. 2011). Finally, the Equal Employment Opportunity Commission (EEOC) ruled earlier this year, in Macy v. Holder, that Title VII protects transgender individuals from discrimination².   Although Macy does not bind federal courts, it will likely influence how courts view and decide transgender cases.  Moreover, the EEOC will now accept and investigate Title VII claims alleging discrimination based on transgender status against private-sector employers.

In the wake of these developments, employers should prepare for a possible increase in gender-identity discrimination claims and review their policies and practices to help reduce the risks of such claims.  The following are suggested practices for employers to navigate the new terrain:

• Revise Existing Policies and Practices:  Many issues affecting transgender applicants and employees are not unique, and an organization's existing policies and practices apply equally well with limited revision.  Employers should add "gender identity or expression" to their lists of protected categories in their EEO, anti-discrimination, and anti-harassment policies.  Likewise, employers should amend their employee orientation and management training programs to address the addition of transgender protections. 
   
• Audit Internal Forms:  From employment applications to direct-deposit authorizations, audit internal forms to see which ones require the person filling them out to check "male" or "female."  If such data is unnecessary, consider removing the question.  If the data is necessary, consider adding an "other" option.  Likewise, when processing social security number verifications, take second looks at "no match" letters.  Often, these arise when the applicant's stated gender does not match the Administration's records.  Gender is an optional data entry for employers, so consider not submitting gender at all, or resubmitting social security verifications without gender when faced with a "no match."
• Inspect Insurance Policies:  Employers should examine the coverage exclusions and limitations of the medical insurance plans they offer to employees.  While less common, some policies deny health coverage to transgender people altogether.  More subtle variations might include denying coverage for claims associated with gender transition even though those claims might be covered for others.  Examples include hormone therapy, hysterectomies, and psychotherapy.  Or, some policies might limit coverage to gender-specific conditions that could exclude transgender insureds.  Examples include if a male transitions to female but later develops prostate cancer.  A close analysis of insurance coverage can help an employer identify gaps in coverage that might adversely affect transgender employees.  
• Treat an Individual's Transgender Status Confidentially and Sensitively:  Again, an organization's existing employment policies and legal obligations often extend seamlessly to transgender individuals.  For instance, the Family Medical Leave Act (FMLA), Americans with Disabilities Act (ADA), HIPAA, and the Genetic Information Nondiscrimination Act (GINA) each limit an employer's ability to seek medical information and require employers to maintain employee medical information confidentially.  The same principles ought to apply when an employer learns that an applicant or employee is transgender.  Once an individual chooses to express a different gender at work, however, an untrained workforce could expose the employer to liability if the individual is harassed or discriminated against by supervisors and coworkers.  Training employees early on that such behavior is inappropriate and intolerable will reduce risk.
  
  Once an employee announces transition and begins to present full time as another gender, the employer should take appropriate measures to recognize the employee's "new" identity.  This includes changing the person's name and gender on all personnel and administrative records, e-mails, directories, business cards, and updating photos on identification badges and/or promotional materials.
   
• Restrooms, Locker Rooms, and Other Gender-Specific Areas:  Generally speaking, employees are to use those facilities that match their full-time gender presentation, regardless of one's stage of transition, if transgender.  Currently, there is no requirement for employers to construct new facilities to accommodate transgender people, and if there is a stand-alone bathroom/locker room, transgender employees should not be required to use it. 
• Dress Codes:  Reasonable dress and grooming codes that serve a legitimate business purpose are lawful.  Employers should review such codes to avoid gender stereotypes.  For example, instead of requiring men to wear suits and women to wear dresses, a gender-neutral policy would require everyone in the workforce to dress professionally.  To the extent dress or grooming codes do contain gender-specific rules, however, those should apply to employees based on the employees' outward gender expression, even if that does not match their presumed gender. 

As with all lists of "best practices," the suggestions above are not comprehensive and might not be practical for all employers.  In the wake of new developments in this area of the law, however, it is beneficial for employers to be attuned to potential risks and the opportunities for curtailing these risks. 

Footnotes

^{1 California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Nevada, Oregon, Rhode Island, Vermont, and Washington prohibit discrimination based on gender identity.
2 See Macy v. Holder, Appeal No. 0120120821 (April 20, 2012).}

Legal Risks Arising from International Expansion

By Kenneth Hannahs

Although global markets today face numerous challenges, U.S. headquartered companies increasingly turn to international expansion for growth.  The decision to embark beyond the security and known risks of the U.S. border requires careful strategic analysis including factoring in the costs and the risks related to laws and regulations that apply to multinational entities such as the following:

• Foreign Corrupt Practices Act ("FCPA"):  The FCPA prohibits any direct or indirect payment to a foreign government official or entity for the purpose of influencing any act or decision in order to obtain or retain business.  Additionally, inaccurate accounting and record keeping of such activities may violate the FCPA.  Any company (along with its subsidiaries and employees) with operations in the United States as well as operations outside the United States is subject to the FCPA.

The SEC and DOJ are aggressively pursuing prosecutions against companies as well as individuals in several high profile cases.  The law is very expansive in defining a government official or entity.  In many areas of the world, entities that are actively transacting business are government controlled (e.g.  large telecommunications companies in the Middle East) and thus subject to the law.

Ensuring compliance with the FCPA requires significant investment in designing a policy, training and due diligence.  The training should be companywide and driven by the executive leadership team.  Due diligence requires thorough vetting of business partners, agents, distributors and potential acquisitions.  Failing to ensure compliance by these third parties places the company at risk of violating the FCPA.

• Export Issues - Restrictions on Sales to Embargoed and Sanctioned Countries and Individuals:  U.S. export law imposes prohibitions on sales to certain countries (e.g. Syria, Cuba, and North Korea) and named persons as well as sanctions that require exemptions or licenses.  Additional laws address the sale of controlled items that may require a license or other exemption that varies upon the buyer of the product.  Thus, depending upon the products sold as well as the customers and their location, companies need to ensure compliance policies are in place and monitored. 

The scope of these laws requires careful training of relevant stakeholders to ensure they do not make affirmative and inadvertent disclosures.  Any training program should include concepts such as deemed export (where delivery of items to foreign nationals in the U.S. constitutes export).

• Permanent Establishment Issues:  Countries may impose income and value added tax liability on U.S. companies that create a "permanent establishment" in that country.  As its name implies, permanent establishment arises from the opening and maintenance of "permanent" offices, warehouses and factories.  However, limited activities in a country for purposes of sales and limited services over short durations of time are normally permitted, although the determination must be made on a country-by-country basis.  As a result, it is very important to obtain professional tax advice prior to engaging in active business in a country to determine the scope of activity that creates permanent establishment.

As a company's international business expands, creation of a permanent establishment in certain strategic countries is necessary to operate and manage its international business.  Doing so requires active participation of tax, finance, legal and sales leaders to ensure that locations are selected for their strategic importance, while monitoring the tax and regulatory effects.  Although business decisions should not be driven solely by these issues, careful planning often allows companies to address both strategic and tax goals.

• Repatriation of International Profits:  Companies may find that international tax rates around the world are substantially lower than in the U.S.  As a result, these low tax locations (e.g. Ireland, Luxembourg, Singapore) are often the sites of large operations and headquarter offices of U.S. companies oversees.

While these low rates are beneficial, the U.S. income tax costs of bringing those profits back to the U.S. may result in the decision to keep the cash off-shore.  International companies must create strategies that ensure stranded capital is put to efficient use (for example, funding international strategic alliances and acquisitions).

• Cultural Issues in Ensuring Compliance:  As countries embark on the journey of international expansion they must confront cultural impediments to implementation of policies and procedures that ensure compliance with U.S. laws.  For example, a U.S. company acquiring a company that sold to companies located in embargoed countries under U.S. law needs to address this issue immediately while not causing undue disruption of the business.  Bringing the acquired companies into compliance requires a deft touch that, if handled successfully, ensures achievement of the strategic goals of the multinational company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.