Welcome to the latest edition of the McDermott Will & Emery Global Employment Law Update. The purpose of this publication is to provide you with concise summaries of many of the laws and court decisions from 2020 that significantly affect employers and employees all over the world. No publication has ever captured all new employment law developments from every single country. However, our effort to create the most comprehensive global employment update ever assembled has resulted in updates from 53 countries.
Many of the updates presented in this publication describe changes in the law that are well known to lawyers and human resources professionals from those countries, but are lesser known in other parts of the world. Our aim is to provide you and your colleagues with a useful reference guide to significant changes in employment law all across the globe. Furthermore, we hope this guide—and other specially designed products we create for our clients—will serve as a tool to assist multi-national businesses in their ongoing struggle to maintain a consistent global corporate culture amidst an ever-changing landscape of local employment laws.
Local employment lawyers from each country, who are either McDermott lawyers or part of McDermott’s Global Employment Law Network, prepared these updates. We select each law firm participating in our network based on their outstanding local reputation and, in most cases, our prior experiences in working with them. Participants in the network work closely with McDermott lawyers on client projects, article writing, seminar and webinar presentations as well as signature client events.
We hope you find this update informative and useful. We welcome your comments and suggestions for future publications.
Dismissal Because of Absenteeism Repealed
Royal Decree-Law 4/2020, of February 18, repealed article 52.d) of the Spanish Workers’ Statute, which regulates termination of employment contracts because of employee absences from work, even if justified, provided that these absences were intermittent and reached specific percentages. As a result, effective February 2020, employers are prohibited from terminating employment relationships based on employee absenteeism. (More information available here.)
Royal Decree-Law 28/2020, of September 22, on remote work is applicable to employees who render services from home or at the place chosen by them for at least 30% of their working time within a three-month reference period. Among other things, the law requires the execution of a written agreement between employer and employee that sets forth the rights and obligations of both parties (employment conditions, professional training, working time, etc.). (More information available here.)
Equality Plans, Transparency and Equal Pay
Royal Decree 901/2020, of October 13, on equality plans and their registration, provides that all companies with 50 or more employees must have an equality plan, following a negotiation procedure. Royal Decree 902/2020, of October 13, on equal pay between women and men provides mechanisms for ensuring pay transparency is effective, including payroll records and equal pay audits. (More information available here and here.)
RELEVANT DOCTRINE AND CASE LAW OF 2020
Judgment of the Labour Chamber of the Supreme Court, of January 29, 2020
If a company delivers a dismissal letter to an employee by means of a certified mail (burofax), the 20-day statute of limitation to file a lawsuit against the company for unfair (or null and void) dismissal starts when the employee collects the certified email from the post office. Therefore, the 20-day time period to challenge the dismissal begins when the employee first has the opportunity to read the contents of the dismissal letter. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of January 29, 2020
The backpay salary awarded after a successful claim for unfair dismissal brought by an employee must be paid by the company to employee through the date of notice of the judgment declaring the dismissal null and void. Thus, if the dismissal was initially declared fair/valid and, afterwards, on appeal, it is declared null and void, the backpay salary must be paid through the date of notice of the appellate court judgment. (More information available here.)
Judgment of the Labour Chamber of Supreme Court, of February 4, 2020
If an employee’s dismissal is determined to be unfair (i.e., without cause), the employer must specifically elect either to pay severance compensation or to reinstate the employee. If the employer does not specifically elect to pay severance, the employer must reinstate the employee in their previous job position. Thus, the mere deposit of the severance compensation in the court’s bank account does not itself constitute a valid election to terminate the employment relationship. (More information available here.)
Judgment of the Labour Chamber of the National High Court, of February 10, 2020
Security companies have no authority to require their newly hired employees (security guards) to produce their prior criminal records since it was not deemed necessary for signing the employment contract. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of February 12, 2020
An employee hired through a handover contract (fixed-term employment contract to replace employees who retire partially) was entitled to a severance compensation equivalent to 11 days’ salary per year of service when their contract is terminated because of the total retirement of the replaced employee. (More information available here.)
Judgment of the Labour Chamber of the High Court of Justice of Catalonia, of February 21, 2020
The High Court ruled that app-based food delivery workers are common employees and not self-employed workers. Therefore, termination of such a worker must be considered an unfair dismissal. (More information available here.)
Judgment of the Labour Chamber of the National High Court, of April 17, 2020
The National High Court found a collective dismissal null and void because the company (a) did not negotiate the conditions of the collective dismissal with the employees’ legal representatives; (b) failed to deliver the relevant documentation to the employees’ legal representatives; and (c) did not meet the formal requirements of notice of its decision to the employees. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of June 11, 2020
The Supreme Court found that the collective bargaining agreement applicable to the employees of a company that provides different services for clients should be determined by the “real activity” carried out by the employees in accordance with the services rendered to the client. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of June 18, 2020
The Supreme Court ruled in favor of three employees who were entitled to terminate their employment relationships according to article 50.1.c) of the Workers’ Statute and, therefore, to receive the statutory severance compensation. The company committed a serious breach of its obligations (not paying the relevant contributions to the social security system) because it paid part of the employees’ salary in cash directly to the employees rather than reflecting this salary in their monthly payslips. (More information available here.)
Judgment of the Court of Justice of the European Union, of June 25, 2020
The Court of Justice of the European Union found that employees who are reinstated after an unfair/null and void dismissal are entitled to take their paid annual leave (holidays) that should have accrued from their dismissal through the date of their reinstatement. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of September 4, 2020
If a senior executive employment contract is terminated by virtue of the company’s withdrawal, the senior executive is entitled at least to the statutory severance compensation: seven days of salary in cash per year of service, capped at six months’ pay. According to the Supreme Court, this severance compensation is exempt from the employees’ personal income tax. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of September 15, 2020
The Supreme Court ruled in favor of a company that dismissed an employee who used the company car during her sick leave and annual paid leave. The Court rejected the employee’s arguments that the installation of a GPS in company car violated her right to privacy and data protection rights. The employee was previously informed of the installation and the conditions of use of the company car. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of October 22, 2020
A clause that provides the payment of a bonus under the condition that the employee must be an employee of the company until the end of the period of accrual is valid. Therefore, if the employee voluntarily terminates their employment relationship during the period of accrual of the bonus, they will be not entitled to it. (More information available here.)
Judgment of the Court of Justice of the European Union, of November 11, 2020
The Court of Justice of the European Union construed the reference periods provided in Article 1(1)(a)(i) and (ii) of Council Directive 98/59/EC related to collective redundancies. Employers are required to look both backward and forward from an individual dismissal (over the relevant 30 or 90 days) to determine whether the threshold number of redundancies is met over the reference period. (More information available here.)
Judgment of the Labour Chamber of the Supreme Court, of December 29, 2020
The Supreme Court declared that an employment contract for a specific task or service could not be of a temporary nature when the employee’s functions are not independent and self-contained from the company’s activity. In this case, the Court held that companies providing services to third parties (clients) could not enter into fixed-term employment contracts whose term is the same as the services provider agreement between the company and the client. (More information available here.)
SWISS COURT DECISIONS
Supreme Court Decision 4A_395/2018: Termination of a Contract during Initial Minimum Term
A permanent employment contract with an initial minimum term, in this case fixed 12 months, is to be treated like a temporary employment contract until the end of that minimum term. Therefore, it cannot be terminated ordinarily, but for good cause according to Article 337 of the Swiss Code of Obligations. Irrespective of the rightfulness of such an extraordinary termination, the employment contract ends effective immediately.
The Supreme Court held that even though the employer has not terminated the employment contract without notice, but with a shortened notice period until end of a month, the termination is still to be considered as an extraordinary termination and not a faulty, ordinary one, but can still lead to damage compensation.
Supreme Court Decision 4A_59/2020: Paid Leave/Vacation Includes Entitlement to Commission
A car dealer with a monthly fixed basic salary plus entitlement to commission had four weeks paid leave/vacation. During the paid leave, the car dealer did not receive any commissions. Upon termination of his employment contract, the car dealer requested payment for missed commissions during vacation for the last five years, the maximum that the statute of limitations allowed. The car dealer’s claim was denied in the court of first instance.
However, the Supreme Court laid out prior rulings on entitlement to commission during paid leave vacation regarding real estate agents and sales representatives. It was found that neither prior case can be directly applied to a car dealer, and that the decisive question is whether the major part of the deals that lead to employee’s commissions were steerable, i.e., could have been closed before or after his vacation. Since the employer did not prove that most of the employee’s deals were steerable, the Supreme Court held that the employee was being placed in a worse position during vacation. Therefore, the employee was entitled to generalized commissions during paid leave / vacation since those commissions were part of his salary. (More information available here.)
Supreme Court Decision 2C_316/2020: Home Office Leads to Compensation of Necessary Expenses Which Are
The Supreme Court confirmed its ruling 4A_533/2018 of last year concerning necessary expenses incurred in working from home. If the employer does not permanently offer a suitable workplace to the employee, even if the agreement does not provide for such an arrangement, the employer must reimburse the employee for all expenses necessarily incurred. This ruling is especially relevant during times of a pandemic. Furthermore, the Supreme Court confirmed that such expenses are to be considered personnel expenditures and are therefore deductible if these expenditures can be characterized as compensatory. (More information available here.)
However, this is not to be confused with a government work from home order. For example, since the Federal Council ordered working from home temporarily on Wednesday, January 13, 2021, employers won’t need to compensate employees for the cost of electricity, rent or Wi-Fi for employees who usually do not work from home.
Supreme Court Decision 4A_241/2020: Non-Competition Clauses Are Only Binding If the Employee’s Insights Might Cause the Employer Substantial Harm
An employment contract between a coffee roastery and its marketing assistant contained a non-competition clause with a contractual penalty. Immediately after the termination of the employment relationship, the employee started working for a coffee trading and services company. The employer therefore claimed for the contractual penalty, but the employee argued that the non-competition clause was not binding.
The Supreme Court reaffirmed that a non-competition clause is only binding where the employment relationship allowed the employee to obtain knowledge of the employer’s clientele, manufacturing and/or trade secrets, and where the use of such knowledge might cause the employer substantial harm (Article 340 Paragraph 2 of the Swiss Code of Obligation). Substantial harm may be found if the employee obtained knowledge of specific technical, organizational or financial information that the employer wants to keep secret. Knowledge that can be acquired in every company of the same industry would therefore not suffice. While the marketing assistant’s technical, organizational or financial knowledge could not prohibit her from using her skills for a competitor, her knowledge of the employer’s clientele might. In holding the non-competition clause binding, the Supreme Court concluded that since the employee had knowledge of the employer’s clientele and was in direct contact with customers, the use of such knowledge for the benefit of the new employer could cause the employer substantial harm.
Amendment of the Swiss Code of Obligation: Rules on Gender Representation
The Swiss Federal Council has put parts of the Amendment of the Swiss Code of Obligation in place early. Beginning in 2021, companies listed on the stock exchange have to either meet Gender Representation Rules on their Boards of Directors and Executive Committees or need to explain both why gender is not represented accordingly and their efforts on the promotion of the lesser represented gender. The quotas of representation are 30% for the board members and 20% for the Executive Committee members of listed companies.
These Gender Representation Rules have now come into effect especially for the commodities sector.
EASING OF ENTRY RESTRICTIONS ON FOREIGN WORKERS DURING THE COVID-19 OUTBREAK
The Ministry of Interior (MOI) issued a notification (Notification re: Exceptions to Restrictions for Foreign Workers from Certain Nations to Enter and Stay in Thailand Specifically for Work, according to the Memorandum of Understanding on Labour Cooperation in Relation to the Circumstances Caused by the COVID-19 Pandemic) dated November 18, 2020, lifting some restrictions for foreign workers from Cambodia, Laos and Myanmar, as of November 1, 2020. The foreign workers will be allowed to enter Thailand for work, provided they qualify as a “foreigner” as defined in this notification. A “foreigner” is defined as a foreign worker with Cambodian, Lao or Myanmar nationality, who is permitted to work in Thailand for a period of four years, under the Memorandum of Understanding on Labour Cooperation dated March 1, 2006, and whose passport is still valid. Furthermore, qualified foreign workers who complete a four-year employment contract between November 1, 2020, and December 31, 2021, will be allowed to stay in Thailand for another two years. However, they will be required to submit a request to work with the Department of Employment after completing their first year of employment in order to stay in Thailand for another year.
NEW MINIMUM WAGE
At the end of each year, the National Wage Committee of Thailand’s Ministry of Labour announces a new minimum daily wage to take effect on January 1 of the next year. However, as of December 2020, there had been no such announcement for 2021.
PERSONAL DATA PROTECTION
The enforcement of some sections of the Personal Data Protection Act (PDPA), which was enacted in 2019 and had been scheduled to take effect in May 2020, has been postponed through May 31, 2021. Though they were granted this extension, all companies that collect, use or disclose (“process”) personal data of data subjects (e.g., candidates, employees, customers or suppliers) must be prepared for the enforcement of the PDPA when it becomes fully effective on June 1, 2021.
The COVID-19 pandemic had a significant effect on employment law and important amendments have been made to the Turkish Labor Code no. 4857 (TLC). Two of these amendments had a significant impact on employment relationships: (a) the prohibition of termination by employers; and (b) the right of employers to implement unpaid leave without the consent of employees.
According to Provisional Article 10 added to TLC with the Law No 7244 published in the Official Gazette dated April 17, 2020, and numbered 31102, employment and service agreements could not be terminated by the employer for a period of three months starting from April 17, 2020, except for cases which do not comply with ethics and good faith principles and other similar reasons set forth under subparagraph (II) of paragraph 1 of Article 25 of TLC. The president is entitled to extend such period up to six months. On the other hand, during the abovementioned period, employers are entitled to implement unilateral unpaid leave without the consent of the employees.
With the Presidential Decree No 2707 published in the Official Gazette dated June 30, 2020, and numbered 31171, the periods mentioned above were extended by 1 (one) month until August 17, 2020. According to the latest Presidential Decree dated December 30, 2020, the periods of the termination prohibition and the right of the employer to implement unilateral unpaid leave have been extended until March 17, 2021. The Law No 7252 published in the Official Gazette dated July 28, 2020, and numbered 31199 authorized the president to extend the periods of termination prohibition and the unpaid leave in up to three-month increments, until June 30, 2021. The same law added the following to the exceptions to the termination prohibition:
Expiration of the term in employment or service agreements with definite term
Closure of the business for any reason and cease of its activity
All kinds of service purchases made according to the relevant legislation and cease of work in construction works
THE UK SUPREME COURT CONFIRMS TEST FOR VICARIOUS LIABILITY FOR EMPLOYERS
In the case of Wm Morrison Supermarkets Plc v. Various Claimants,  UKSC 12, the UK Supreme Court considered the degree of connection that needs to be established between the employment relationship and alleged wrongdoing for an employer to be held vicariously liable for an employee’s actions.
In the case at hand, the employee in question was an internal IT auditor with a grudge against his employer (albeit unbeknown to the employer). The employer had asked him to provide payroll data for its whole workforce to external auditors. However, the employee also posted the data on the internet and sent it to various newspapers, giving rise to claims against the employer for misuse of private information, breach of confidence and breach of statutory data protection law.
The Supreme Court confirmed that the correct UK legal test is that the wrongful conduct must be “so closely connected with acts the partner or employee was authorised to do that, for the purpose of the liability of the firm or the employer to third parties, the wrongful conduct may fairly and properly be regarded as done by the [employee] while acting in the ordinary course of the firm’s business or the employee’s employment.”
Both the High Court and Court of Appeal had previously decided that the employer was vicariously liable in these circumstances, essentially because the employee was entrusted with payroll data as part of the role assigned to him.
However, the Supreme Court decided that the employee’s conduct was not so closely connected with acts he was authorized to do that it could fairly and properly be regarded as done by him in the ordinary course of his employment. The fact his role provided him the opportunity to commit the data breach was not enough for there to be vicarious liability. Nor was the close temporal link to an authorized act.
While this decision provides some comfort for UK employers that they will not necessarily always be liable for the actions of rogue employees, such claims will nevertheless remain highly fact sensitive. UK employers should continue to implement as many safeguards as practicable against such risks, particularly in the context of data protection. (More information available here.)
PROTECTION OF WORKERS FROM HEALTH AND SAFETY-RELATED DETRIMENT
In addition to employees and independent contractors, UK law recognizes an intermediate category of employment status: workers.
Under UK law, a worker is a person who has entered into or works under a contract of employment or “any other contract [pursuant to which] the individual undertakes to do or perform personally any work or services for another party [and] whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.”
Workers benefit from more employment rights than independent contractors, but less than employees.
In R (Independent Workers’ Union of Great Britain) v. Secretary of State for Work and Pensions and another, the UK High Court declared that, by limiting certain health and safety rights to “employees,” the United Kingdom had failed to properly implement aspects of the EU Health and Safety Framework Directive (89/391/EC) and the EU Council Directive on the minimum health and safety requirements for the use by workers of personal protective equipment (PPE) at the workplace (89/656/EC) (the PPE Directive) with regard to workers.
The High Court’s decision indicates that workers should: (a) receive the same protection as employees against suffering adverse action if they take steps to protect themselves by refusing to work when faced with serious and imminent danger to their safety (for instance, in respect of COVID-19); and (b) be provided with necessary PPE, in appropriate circumstances.
The IWGB (which brought the case on behalf of its members, who are predominantly gig-economy workers) has urged the UK government to amend UK employment legislation to address the decision. At the time of writing, a formal UK governmental response is still pending. (More information available here.)
CONFIDENTIALITY CLAUSES IN EMPLOYMENT SETTLEMENT AGREEMENTS
When an employer settles an actual or potential employment claim, it often wants to keep the fact that it has done so confidential, to the extent permitted by legal and regulatory obligations. That may well be because the employer is concerned about being seen as culpable or a soft target for other employees.
Therefore, it is fairly standard practice in the United Kingdom for employers to include a confidentiality clause in a settlement agreement, obliging the employee to keep its contents (and, even, the fact that it exists) confidential.
The case of Duchy Farm Kennels Limited v. Steel, the UK High Court, however, made clear that including a confidentiality clause in a settlement agreement will not necessarily be enough to enable the employer to take action if the employee breaches confidentiality. In Duchy, the claimant asserted that because the respondent had breached the confidentiality provision of a settlement agreement, it was no longer required to pay outstanding settlement amounts per the agreement. The lower court found that even though the respondent had breached the confidentiality provision, the confidentiality clause was not a condition of the agreement giving the claimant a right to unilaterally terminate its contractual obligations. On appeal, the UK High Court agreed, noting that the parties could have stipulated that the confidentiality provision was a condition necessary to enforce the contract and could have specified consequences for such a breach. The High Court further ruled that the breach was not fundamental to the settlement agreement and did not exempt the claimant from paying amounts owed to respondent under the agreement.
Thus, confidentiality provisions should expressly state that compliance with the term(s) of such provision is a condition of the agreement. If the employer wants to be able to withhold the settlement sums in the event of breach, the drafting needs to spell that out.
The principle in this case will not only apply to confidentiality provisions, and also to the other protective provisions that are often included in settlement agreements and COT3s, for example, that the parties may not make derogatory comments about each other. (More information available here.)
TAXATION OF INDEPENDENT CONTRACTORS
New “off-payroll working” tax rules (commonly known as IR35) will apply to the UK private sector as of April 6, 2021. Equivalent rules have applied in the UK public sector since 2017. The new rules had originally been due to take effect as of April 6, 2020, but their implementation was delayed in March 2020 on account of the COVID-19 pandemic. The move will shift responsibility for determining the tax status of individuals who personally provide services through an intermediary “loan out”/personal service company (PSC) from that PSC to the end user client. Each PSC relationship will need to be assessed using “reasonable care,” and a “status determination statement” will need to be issued. Where employment is found, the “fee-payer” (i.e., the end user client, or where there is an intermediary agency, the agency) will be responsible for tax and social security withholdings, together with employer social security contributions at a rate of up to 13.8%. (More information available here.)
In addition to fast-paced legislation and rules and regulations related to the COVID-19 pandemic, there were a number of federal law changes and dozens of new state and local laws addressing employment law. Here, we highlight: (1) what we believe to be the most important federal law changes; (2) a brief overview of the latest government approaches to addressing COVID-19 vaccines in the workplace; (3) important decisions by the United States Supreme Court and (4) state legislative trends.
The COVID-19 pandemic affected almost every aspect of the employment relationship and required new laws and guidance on a myriad of topics. The most notable federal developments were the passage of two new laws: the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
The FFCRA provided paid leave benefits to employees for absences related to the coronavirus. The law was limited in scope, applying only to employers with more than 500 employees. Although the mandatory paid sick leave requirement expired on December 31, 2020, employers who chose to provide FFCRA sick time and family leave benefits remained eligible for the tax credit through March 31, 2021.
The CARES Act greatly expanded unemployment benefits for those unemployed as a result of COVID-19 by limiting certain eligibility requirements, increasing the unemployment benefit and increasing the length of unemployment availability. The CARES Act also provided an “employee retention” tax credit for employers who kept employees on payroll despite loss of revenues or business suspension due to COVID-19.
COVID-19: VACCINES IN THE WORKPLACE
The COVID-19 pandemic put unprecedented strain on employers of all sizes across all industries. With the COVID-19 vaccination process underway, employers must navigate various workplace issues, including whether they can (and should) mandate vaccination.
The US Equal Employment Opportunity Commission (EEOC), a federal agency established to administer and enforce civil rights laws against workplace discrimination, issued guidance in December 2020 for employers considering a vaccine program. According to the guidance, employers should conduct an individualized assessment in determining whether unvaccinated employees would pose a direct threat at the worksite (e.g., would expose others to COVID-19 at the worksite); employers can adopt a hybrid approach if they implement a voluntary vaccine program but require unvaccinated employees to continue to work remotely.
Further, employers should be careful not to disclose employees’ immunization histories; those histories may be protected from disclosure under state statutory or common law. In addition, employers should be wary of running afoul of issues under federal laws, including Title VII of the Civil Rights Act of 1964 (religious accommodation) and the Americans with Disabilities Act (ADA) (disability accommodation), as well as parallel state and local laws.
SUPREME COURT OF THE UNITED STATES AND OTHER SIGNIFICANT COURT DECISIONS
Supreme Court’s Decision in Bostock v. Clayton County, Georgia, 140 S. Ct. 1731 (2020)
Title VII of the Civil Rights Act of 1964 is a federal law that protects employees against discrimination based on certain characteristics: race, color, national origin, sex and religion. In a landmark decision on June 15, 2020, the Supreme Court expanded the protections afforded by Title VII, ruling that workplace discrimination because of an individual’s sexual orientation or gender identity — including being transgender — is unlawful discrimination “because of sex.” Justice Gorsuch, writing for the majority, concluded that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”
Supreme Court’s Decision in DHS v. Regents of the University of California, 140 S. Ct. 1891 (2020)
In 2012, under the Obama administration, the US Department of Homeland Security (DHS) adopted a program known as the Deferred Action for Childhood Arrivals (DACA) to postpone the deportation of undocumented immigrants who had been brought to the United States as children. The program also provided eligible immigrants with work permits, allowing them to obtain social security numbers and pay taxes. In 2017, the Trump administration initiated plans to phase out DACA, triggering multiple lawsuits. On June 18, 2020, the Supreme Court ruled that the Trump administration did not provide adequate and appropriate justification to terminate the DACA program. The Supreme Court’s ruling preserved the ability of about 700,000 individuals, referred to colloquially as “Dreamers,” to remain in the United States and be allowed to work.
Supreme Court’s Decision in Little Sisters of the Poor v. Pennsylvania, 140 S. Ct. 2367 (2020)
The Women’s Health Amendment to the Affordable Care Act (ACA) requires that women’s health insurance include coverage for preventive health care, including contraception. The Amendment provided that a nonprofit religious employer who objects to providing contraceptive services may file an accommodation form requesting an exemption to the requirement, thereby avoiding paying for—or otherwise participating in—the provision of contraception to its employees.
The Supreme Court addressed the question of whether the federal government lawfully exempted religious objectors from the regulatory requirement to provide health plans that include contraceptive coverage. The Court found that the federal agencies tasked with promulgating religious and moral exemptions under the ACA had been granted the requisite authority to do so and had, in fact, done so appropriately. This ruling thereby entrenched broad exemptions from the contraceptive mandate for both for-profit and nonprofit employers with sincerely held religious beliefs or moral objections from offering contraception coverage in their group health plans.
US District Court for the Northern District of Illinois’s Decision in Martin v. CareerBuilder, LLC
The Employee Retirement Income Security Act (ERISA) of 1974 requires plan fiduciaries to act prudently and loyally when making decisions about an employee investment plan. In July 2020, in Martin v CareerBuilder, LLC, the US District Court for the Northern District of Illinois, a federal district court, held that the plaintiff’s allegations about expensive record-keeping costs and imprudent investment options failed to give rise to an inference that the defendants had violated their ERISA obligations.
The plaintiff, a former CareerBuilder employee, sued the company’s 401(k) plan fiduciaries for allegedly permitting unreasonable record-keeping fees and imprudent investment options. Among other things, the complaint alleged that 40% of the more expensive funds had remained in the plan for five years before being removed.
The court dismissed the complaint without prejudice, explaining that courts are dissuaded from paternalistically interfering with plan fiduciaries’ fund selections. Even if cheaper or better-performing funds might exist, ERISA does not require fiduciaries to scour the market to find the cheapest funds or select index funds instead of other fund types. Further, ERISA protects fiduciaries whose process of reviewing an investment was prudent even if the investment then failed to meet expectations. The CareerBuilder menu offered a mix of 23 options, with expense ratios ranging from 0.04% to 1.06%. The court observed that the defendants had removed some funds and modified the majority of the funds over five years. Such action did not suggest imprudence in managing the options for participants. The court also held that the complaint did not allege objectively unreasonable record-keeping fees in view of similar amounts at issue in other cases. The dismissal was without prejudice, meaning that the plaintiff was given the chance to replead the claims.
TRENDS IN STATE LEGISLATION
Expansion of Paid Sick Leave
Following on the heels of the FFCRA and CARES Act, a number of states passed legislation in 2020 codifying paid sick leave requirements born out of pandemic-era leave legislation. For example, in Colorado, as of January 1, 2021, employers with at least 16 employees must provide earned paid sick leave; employees can use the leave for numerous reasons, including a public health emergency in which a public official has ordered the closure of either the employee’s place of business or the school or place of care of the employee’s child. The legislation allows the employee to be absent from work to care for the child.
Maine, Nevada and New York also passed mandatory paid sick leave laws.
California and Illinois passed legislation addressing consumer and employee data. The California Consumer Privacy Act (CCPA) requires companies meeting certain requirements to take various steps to protect and disclose consumer data. Employers are exempt from some requirements relating to information obtained in the normal scope of the employment process, but this exemption expired at the end of 2020. In Illinois, the Artificial Intelligence Video Interview Act imposes new notification and consent requirements when employers use AI intelligence to evaluate applicant-submitted videos. Employers are also barred from sharing applicant videos, except as necessary to evaluate candidates.
NEW LABOR CODE TAKES EFFECT
Vietnam’s new Labor Code, passed by the National Assembly in November 2019, finally took effect on January 1, 2021, replacing the Labor Code of 2012. Some of the notable changes include an additional national holiday; an increase in permitted overtime hours; an increase in the retirement age to 60 for women and 62 for men; and a clearer definition of “sexual harassment.”
As is common practice in Vietnam, the Labor Code was issued with certain provisions not fully fleshed out, with the idea that they would “be detailed later” in subsequent guiding legislation. As of the end of 2020, three government decrees had been issued in this respect. Decree No. 135/2020/ND-CP, dated November 18, 2020, details the phased-in implementation of the new retirement ages, including a grandfather clause. Decree No. 145/2020/ND-CP, dated December 14, 2020, with a hefty 115 articles, guides numerous topics related to working conditions and labor relations. Finally, Decree No. 152/2020/ND-CP, dated December 30, 2020, provides guidance on foreign workers and foreign employers in Vietnam. A wide range of subordinate legislation remains in the legislative queue and is expected to be issued in 2021.
MINIMUM WAGE INCREASE ON HOLD
The region-based minimum wages for non-state employees, which typically see an increase at the beginning of each year, will be unchanged from 2020 to 2021, due to difficulties caused by the COVID-19 pandemic. As of January 2020, there remains a possibility that the minimum wages will be raised mid-year. The current monthly minimum wages range from VND 3,070,000 ($131 USD) in rural provinces to VND 4,420,000 ($191 USD) in Hanoi and Ho Chi Minh City.