Archive for the ‘Labor & Employment’ Category

In the SEA M&A Liquidity Advisor Newsletter, I am discussing what business owners should know about I-9 audits.

Unless you’ve been hunting in the Outback for the last few years, you should be deeply aware of government’s concern regarding the employment of undocumented workers. In fact, the Department of Homeland Security Immigration and Customs Enforcement (ICE) has dramatically stepped up its audit and enforcement activity, otherwise known as I-9 audits.  The number of I-9 audits multiplied over the past decade, rising from three audits in 2004 to 3,004 in 2012. I-9 audits used to be random, but now they are more often the result of disgruntled former employees complaining to ICE.

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Previously, we published PART I, II, III, and IV of our series, Going Global: A Review of Critical Issues of Executive Mobility.  Here is Part V, our last in the series, on issues to be considered when developing a Global Executive Mobility Strategy:

Labor and Employment Issues – Certain foreign countries require formal employment contracts for expatriate executives on assignment and employers need to fully understand the larger implications of such requirements. On the other hand, employers should be careful not to accidentally create a contract or establish an employment relationship in countries that do not have a contract requirement. Any agreement should address the relationship between the Home and Host country employers with regards to the Executive. Applicable laws, including the US Foreign Corrupt Practices Act and other Host-country ethics considerations, need to be addressed when any Global executive Mobility Strategy is developed. Also, a concise policy needs to be developed to take issues like job guarantees upon the Executive’s return into account.

There are a multitude of issues that need to be considered in connection with the development of a Global Executive Mobility Strategy and a whole host of legal, tax, accounting and immigration law implications.. This article highlights major issues to consider and suggests several potential Best Practices. However, this article is by no means exhaustive, comprehensive nor complete. The author strongly urges anyone involved with these issues to consult with qualified legal and Tax counsel before committing to any course of action.

Previously, we published PART I, II, and III of our series, Going Global: A Review of Critical Issues of Executive Mobility.  Here is Part IV, another issue to consider when developing a Global Executive Mobility Strategy:

Employee Benefits and Executive Compensation Issues – Generally, companies seek to maintain continuity of benefit coverage and parity of compensation for assigned executives in relation to similarly situated home country executives . So, for example, participation and vesting credit in home country social security programs, company pension plans, health and welfare programs,  as well as existing equity and long-term incentive programs, should be maintained and continued where permitted by law and by the specific terms of the applicable plans and programs.  Regarding continued participation in the U.S. Social Security system, U.S. law generally requires social security contributions to be paid on the earnings of a U.S. citizen or resident alien who is working for an U.S. employer anywhere in the world.  An American employer could include a foreign division, subsidiary, or branch of a U.S. employer, where such branch is “a mere extension of the U.S. employer.”  Therefore, wages paid would be subject to FICA withholding.  Also, an American employer can enter into a voluntary agreement to continue coverage under Social Security for U.S. citizens who are employed by a foreign affiliate, which is at least 10% owned by the American employer), or when a US employee is “seconded” to a foreign employer, but the U.S. company retains the right to “direct and control” that employee.

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AILA has just issued a follow up Practice Alert to the Alert of last Friday concerning the availability of EB2 visas for China and India.  The Chief of the Visa Control and Reporting Division at the U.S. Department of State, Charles Oppenheim has advised AILA that the EB2 priority date will retrograde to August 15, 2007, when the May Visa bulletin is issued.   According to the Alert, the USCIS will continue processing EB2 adjustment applications from China and India (which they refer to as “preadjudication”) if filed by the end of April.  The preadjuicated cases will be held as “pending” just in case the visa numbers reopen during the current fiscal year.  There was no mention of the EB3 regression dates in the Alert.  If you have been thinking of filing for EB2 and you are from China or India, this is not good news at all.  It is also not good news for U.S. employers who need the skills those who qualify for EB2 status have.    The U.S. will fall further and further behind in the international market place until such time as Congress wakes up and reforms this unpredictable and inefficient system of visa allocation.  Make the employer verify that it can not hire from the U.S. work force, but let the marketplace, not arbitrary numbers, govern the number of people who can come and  contribute to the economy of the U.S.

Previously, we published PART I & II of our series, Going Global: A Review of Critical Issues of Executive Mobility.  Here is Part III, another issue to consider when developing a Global Executive Mobility Strategy:

Tax issues related to the executive’s foreign assignment are complicated and can potentially create concerns for both the employer and the executive. For instance, the executive’s activities on behalf of the employer could potentially create a taxable presence in the foreign jurisdiction for such employer and thereby create the risk of double taxation. Different countries use multiple standards to determine a whether a “taxable presence” exists for Tax purposes. These issues are typically addressed in a Tax Treaty which attempts to standardize the circumstances by which an employer maintains a “Permanent Establishment” for carrying on a trade or business in the jurisdiction for Tax purposes. In addition, will the executive become subject to taxation in the foreign jurisdiction? Once again, Treaties generally define the terms and condition of residency and whether there will be tax on local-source income only or on worldwide income earned. US taxpayers are generally subject to taxation of worldwide income ( with a partial exclusion for certain foreign-source income and housing allowances and a foreign tax credit may be available for all or part of foreign taxes paid). Currently, theU.S. has entered into Tax Treaties with 68 countries. It is critical that these issues be fully analyzed by competent Host country and international tax advisors.

There are a multitude of issues that need to be considered in connection with the development of a Global Executive Mobility Strategy and a whole host of legal, tax, accounting and immigration law implications. This series of posts will highlights major issues to consider and suggests several potential Best Practices.  However, this series is by no means exhaustive, comprehensive nor complete. The author strongly urges anyone involved with these issues to consult with qualified legal and tax counsel before committing to any course of action.

UPDATE:
PART I. Going Global: A Review of Critical Issues of Executive Mobility
PART II. Going Global: A Review of Critical Issues of Executive Mobility – Immigration
PART IV. Going Global: A Review of Critical Issues of Executive Mobility – Employee Benefits and Executive Compensation Issues

Previously, we published PART I. Going Global: A Review of Critical Issues of Executive Mobility in our series on Global Executive Mobility Strategy.  Here is Part II, another issue to consider when developing a Global Executive Mobility Strategy:

Immigration laws and visa requirements vary from country to country and the process of obtaining the appropriate visa or other permit in order to legally work in the host country can be challenging and time consuming.  Initially, the duration of the assignment must be determined.  Will it be for a short-term or temporary stay where the Executive is “seconded” to the host employer or will the assignment be for a long-term or indefinite stay?  Most countries have entered into treaties or bilateral agreements which provide guidance regarding the applicable rules and arrangements regarding work visa or permit requirements, the tax treatment and recognition of income earned in each jurisdiction, and other important requirements.  Accordingly, it is important that every contingency regarding foreign employment be analyzed by a host country attorney prior to the commencement of the assignment.

There are a multitude of issues that need to be considered in connection with the development of a Global Executive Mobility Strategy and a whole host of legal, tax, accounting and immigration law implications. This series of posts will highlights major issues to consider and suggests several potential Best Practices.  However, this series is by no means exhaustive, comprehensive nor complete. The author strongly urges anyone involved with these issues to consult with qualified legal and tax counsel before committing to any course of action.

UPDATE:
PART I. Going Global: A Review of Critical Issues of Executive Mobility
PART III. Going Global: A Review of Critical Issues of Executive Mobility – Tax Issues
PART IV. Going Global: A Review of Critical Issues of Executive Mobility – Employee Benefits and Executive Compensation Issues

The American Immigration Lawyers Association today posted a practice advisory as a result of comments made this morning by Charles Oppenheim, Chief of the Visa Control and Reporting Division at the U.S. Department of State. According to AILA, Oppenheim projects that in either May or June the EB2 employment based visa categories will retrogress almost three years from the May 2010 date listed in the April Visa bulletin just released this past Monday to “around” August 2007. This would not be good news for either petitioners or their employer sponsors.  Those with existing H visa approvals who were hoping for continuing improvement in the EB2 categories would find themselves falling further behind in the wait for the ability to adjust to permanent residents. Those affected by such retrogression are by and large already here in the U.S. working as productive and highly valued members of the U.S. workforce.

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Increasingly, companies are realizing that having the appropriate talent at the right place is essential to the success of a globally-focused enterprise.  To that end, the movement of executives globally has accelerated in recent years, whether involving a short-term visit, a temporary assignment, or a long-term foreign transfer of employment.  Careful analysis of the legal issues involved is a critical first step to successfully managing the executive’s employment transition. This series of posts will discuss the major issues involved with the development and coordination of a Global Executive Mobility Strategy, and suggests a Best Practice Approach to optimize the cohesiveness of a global workforce.

Generally, the major issues that a Global Executive Mobility Strategy needs to consider include structure of the employment relationship and other labor and employment issues, immigration, tax, and employee benefits and executive compensation.  As a starting point, it may make sense to formalize the working arrangements of the assignment, whether by entering into a new or amended employment agreement or simply a Letter of Understanding, which sets out the terms and conditions of the expatriate assignment.  Whatever the form chosen, this document should include a clarification of the employing entity (whether it would continue to be the home country employer, a local or host country affiliate, dual employers, or even an international holding affiliate), specific duties and responsibilities related to the assignment; title; compensation and benefit arrangements; any tax equalization arrangements; any negotiated or “special” agreements that are particular to the assignment for that executive (such as mobilty premiums, cost of living adjustments, housing allowances, and home Leave arrangements); relocation and repatriation arrangements; a clear beginning and ending of the term of foreign assignment; termination provisions; a dispute resolution process; and consideration of available confidentiality and intellectual property protections.

There are a multitude of issues that need to be considered in connection with the development of a Global Executive Mobility Strategy and a whole host of legal, tax, accounting and immigration law implications.  This series of posts will highlight major issues to consider and suggests several potential Best Practices.  However, it is by no means exhaustive, comprehensive, nor complete.  I strongly urges anyone involved with these issues to consult with qualified legal and tax counsel before committing to any course of action.

In the next post in the series, we will discuss immigration issues.  Please subscribe to the blog to get email notifications for future posts.

UPDATE:
PART II. Going Global: A Review of Critical Issues of Executive Mobility – Immigration
PART III. Going Global: A Review of Critical Issues of Executive Mobility – Tax Issues
PART IV. Going Global: A Review of Critical Issues of Executive Mobility – Employee Benefits and Executive Compensation Issues

• The Los Angeles Times in its coverage of Wal-mart Stores, Inc. v. Dukes, Betty, et al., 10-277, ”Supreme Court hears arguments in Wal-Mart sex discrimination case,” calls the Supreme Court “skeptical.”
• Meanwhile, The New York Times in its story, “Justices Take Up Class-Action Issue in Wal-Mart Bias Suit,” says the Supreme Court “appeared closely divided on Tuesday during arguments over the theory put forth by the plaintiffs.”
• Bloomberg sees an emerging gender gap on the Supreme Court bench, “Wal-Mart Discrimination Case Reveals Gender Gap at High Court.”

The United States Supreme Court heard oral arguments today in a case that could have an enormous impact on business in the United States.  In Wal-mart Stores, Inc. v. Dukes, Betty, et al., 10-277, plaintiffs seek to affirm certification of a “nationwide class action consisting of all current and former female employees of Wal-Mart Stores, Inc., estimated at the time to comprise at least 1.5 million women.”  Petition for a Writ of Certiorari, 2010 WL 3355820, *1 (U.S. 2010). “The millions of class members collectively seek billions of dollars in monetary relief under Title VII of the Civil Rights Act of 1964, claiming that tens of thousands of Wal-Mart managers inflicted monetary injury on each and every individual class member in the same manner by intentionally discriminating against them because of their sex, in violation of the company’s express anti-discrimination policy.” Id. at 3355820.  The lower courts certified and affirmed the enormous class.  Id.at *1.

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