P S t r a t e g i e s REVENTIVE EMPLOYMENT, LABOR, BENEFITS AND IMMIGRATION LAW FOR EMPLOYERS C o n ti n u e d Volume 37, Number 4 | Fourth Quarter 2014 FEATURE COVERAGE 1 - 4 DEVELOPING LAW OF THE WORKPLACE 4 - 6 JACKSON LEWIS NEWS 6 – 8 www.jacksonlewis.com ® Foreign Corrupt Practices Act: Transnational Enforcement by U.S. Regulators Revs Up A search for the “Foreign Corrupt Practices Act” on the 2014 “News” pages at the U.S. Department of Justice website will net such headlines as “Company X Agrees to Plead Guilty to Foreign Bribery and Pay $223 Million in Fines and Forfeiture” and “Company Y Resolves Foreign Corrupt Practices Act Investigation and Agrees to Pay $14.35 Million Penalty.” Substantial penalties and fines are not limited to corporate entities, as, for example, “Former Chief Executive Officer of Oil Services Company Pleads Guilty to Foreign Bribery Charges” demonstrates. Working in tandem with the U.S. Securities and Exchange Commission in these and many more cases, the DOJ negotiated settlements in FCPA cases of more than $500 million in the first half of 2014 alone. Why is the U.S. Department of Justice conducting investigations in places far from U.S. borders? As Assistant Attorney General Leslie R. Caldwell told an audience at Duke University School of Law in October, “International corruption inhibits the ability of American companies to compete overseas on a level playing field. Once bribery and corruption take hold, fair and competitive business practices are eliminated. Nobody but the corrupt official benefits from bribery. For all of these reasons, fighting foreign corruption is not a service we provide to the global community, but rather a necessary enforcement action to protect our own national security interests and the ability of our U.S. companies to compete on a global scale.”2 EDITORIAL BOARD Roger S. Kaplan Mei Fung So Margaret R. Bryant This bulletin is published for clients of the firm to inform them of labor and employment developments. Space limitations prevent exhaustive treatment of matters highlighted. We will be pleased to provide additional details upon request and discuss with clients the effect of these matters on their specific situations. | Copyright: © 2014 Jackson Lewis P.C. Reproduction in whole or in part by any means whatsoever is strictly prohibited without the advance written permission of Jackson Lewis. | This Bulletin may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome. PREVENTIVE STRATEGIES | Fourth Quarter 2014 Jackson Lewis P.C. SIGN UP for Jackson Lewis E-Alerts Register online at www.jacksonlewis.com, click on the Sign-Up link at the top of the page. Under the accounting provisions, companies may be criminally and civilly liable regardless of whether the international or interstate elements of the anti-bribery provisions are met. How broad is the reach of the FCPA’s anti-bribery provisions? The Foreign Corrupt Practices Act of 1977, as amended, prohibits public and private U.S. companies, individuals, foreign subsidiaries of U.S companies, and others, including the officers, directors, employees, agents and shareholders of U.S. companies (or foreign companies doing business in the United States), from bribing foreign officials in return for business. Specifically, the FCPA prohibits the offer or authorization of anything of value, directly or indirectly, with a corrupt intent, to a foreign official, political party or candidate, knowing that some or all of the payment or value will go to the foreign official for the purpose of influencing any official act or to obtain or retain business. One of the challenges facing employers engaging in cross-border business transactions is doing what some foreign companies might regard as business as usual. As Assistant Attorney General John Carlin reminded participants at a June global competition review conference, U.S. employers assessing any deal must consider how a transaction might trigger applicability of the FCPA, and, in turn, how to ensure compliance with it. Any foreign enterprise doing business in the U.S. also must ensure compliance—or face serious consequences. The FCPA’s anti-bribery provisions apply to conduct inside and outside the U.S., and prosecution by the DOJ may result from a bribe provided through the use of mail, telephone, email, text, fax, or any communication that touches interstate commerce. Companies or their agents may be prosecuted under the FCPA if they engage in any act in furtherance of a corrupt payment, regardless of whether the agent was in the U.S. As an example, guidance issued by the DOJ explains that FCPA liability attaches to both a U.S. company that provides payments and its European intermediary that funnels such funds to a foreign country official for the purpose of advancing the U.S. company’s ability to procure a contract. This is an FCPA violation for both, notwithstanding that the intermediary never set foot in the United States. Do other FCPA provisions render employers vulnerable? In addition to the anti-bribery provisions, the FCPA requires companies whose securities are listed in the U.S. to meet the statute’s accounting provisions, which are often used as the basis for enforcement actions by the SEC, even in the absence of traditional FCPA issues. These provisions also cover foreign corporations that trade on U.S. exchanges through American Depository Receipts. The DOJ and SEC take the position that these provisions extend to subsidiaries or affiliates under the control of the public corporation, including joint venture partners and foreign subsidiaries. Designed to operate in tandem with the anti-bribery provisions, the accounting provisions require covered corporations: a) to make and keep books and records that accurately and fairly reflect the transactions of the corporation and disposition of its assets, and b) to devise and maintain an adequate system of internal accounting controls sufficient to provide reasonable assurances that (i) “transactions are executed in accordance with management’s general or specific authorization,” (ii) “access to assets is permitted only in accordance with management’s general or specific authorization,” and (iii) “transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles.” Importantly, there is no “materiality threshold” under the accounting provisions, and companies (and potentially their executives) may be criminally or civilly liable regardless of whether the international or interstate elements of the anti-bribery provisions are met. Indeed, it is easier for DOJ and SEC to prove violations of the FCPA’s requirements pertaining to internal controls or books and records than the anti-bribery provisions. Jackson Lewis P.C. PREVENTIVE STRATEGIES | Fourth Quarter 2014 3 Conducting due diligence on potential business partners and maintaining control over interactions involving employees, subsidiaries, and their agents are essential for employers to minimize the risk of FCPA violations. Have enforcement actions of government regulators been upheld by U.S. courts? Sharpening the enforcement tools for U.S. regulators, DOJ and SEC actions based on a broad interpretation of the FCPA’s reach have been upheld. In 2014, the U.S. Court of Appeals for the Eleventh Circuit, in Atlanta, held, “An ‘instrumentality’ under…the FCPA is an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.” The Court fashioned a two-part test for determining whether an entity is state controlled: 1) whether there is government control; and 2) whether a state-owned entity performs a public function. Applying the two-part test and examining the relevant factors, the Eleventh Circuit affirmed the FCPA convictions of two defendants for bribing officials of the sole provider of landline telephone service in Haiti. Although the service provider was not designated by statute or any law as a government entity, its nearly exclusive ownership by a Haitian government-owned bank rendered it an instrumentality covered by the FCPA. This opinion illustrates the risk involved even with non-governmental entities. Conducting due diligence on potential business partners and maintaining control over interactions involving employees, subsidiaries, and their agents are essential for employers to minimize the risk of FCPA violations, especially in high-risk regions of the world. United States v. Esquenazi, 752 F.3d 912 (11th Cir. 2014), cert. denied, 190 L.Ed.2d 141 (2014). This and other recent FCPA cases illustrate the following law enforcement trends: n Corruption prosecutions are now global in scope, with U.S. regulators gaining greater and more expeditious cooperation from their foreign counterparts; n Industry-wide investigations remain the norm, U.S. regulators recognizing that if one company in a particular industry is paying bribes, their competitors may be as well; n There is a continuing and renewed focus (in view of the Eleventh Circuit opinion) on bribes paid by companies or their agents and third-parties to state-owned enterprises, which is construed broadly; and n With increasing frequency, regulators are holding parent companies responsible for bribes paid by their foreign subsidiaries (even where no parent company employee participated in or had knowledge of the corrupt acts), where the parent company lacks adequate internal controls to detect the bribes and prevent their occurrence. What should employers do to minimize the risk of an FCPA enforcement action? The most effective preventive strategy to minimize the likelihood and intensity of an FCPA enforcement action is a strong organizational compliance program. Recent aggressive and successful enforcement actions signal that government regulators are holding organizations accountable to the advice and standards contained in the joint DOJ/SEC 2012 publication, A Resource Guide to the U.S. Foreign Corrupt Practices Act. The Resource Guide explains that, in the wake of an established FCPA violation and a pending determination of whether to take action against the organization, the DOJ and SEC take a “common-sense and pragmatic approach” to evaluating an organization’s compliance program by asking three simple but broad questions: n Is the company’s compliance program well-designed? n Is it being applied in good faith? n Does it work? In November 2013, the World Bank and its partners released the Anti-Corruption Ethics and Compliance Handbook for Business, which was developed “by companies for companies” to address the concern that “a myriad of existing international principles for business can be confusing, especially for small and medium-sized enterprises with limited resources.” The Handbook attempts to define, from the perspective of companies, best practices in anti-corruption compliance. PREVENTIVE STRATEGIES | Fourth Quarter 2014 Jackson Lewis P.C. 4 An organization’s compliance program is a key factor for government regulators in determining whether to prosecute or impose regulatory fines. While each case, transaction, and resolution has its own set of circumstances, both the Resource Guide and the Handbook make clear that the strength of an organization’s compliance program D e v e l o p i n g L a w of the Workplace Global companies have been put on notice of what is an adequate compliance program, what are the regulatory expectations in the context of an internal investigation, and how an organization should implement corrective action with self-reporting. Organizations that adhere to regulatory expectations and industry best practices, as illustrated by the DOJ/SEC Resource Guide and the World Bank Handbook, can minimize risk and likely will avoid serious consequences should an issue arise involving corrupt conduct. Conversely, companies that do not take steps to implement an effective compliance program face significant risk of a government investigation, penalties, bad publicity, and potential litigation by third-parties, including whistleblower claims and shareholder derivative lawsuits. Attorneys in the Jackson Lewis Corporate Governance and Internal Investigations Practice and the White Collar and Government Enforcement Practice have substantive experience handling FCPA matters from inception through final conclusion. Our teams include FCPA compliance practitioners with prior Fortune 100 company experience, former federal prosecutors and white collar crime practitioners, experienced trial attorneys, and international employment law practitioners. The FCPA Team has prepared two comprehensive Special Reports on the FCPA, the DOJ/SEC Resource Guide, and the World Bank Handbook. Both reports are available at Jackson Lewis online. is a key factor in determining whether to prosecute or impose regulatory fines, or whether the organization will be shielded from responsibility for unlawful acts of its employees and agents. n n NEW EEOC PREGNANCY DISCRIMINATION GUIDANCE GOES BEYOND PROTECTIONS OF ANTI-BIAS LAWS, OPPONENTS SAY n n When Congress enacted the Pregnancy Discrimination Act in 1978, it sought to make clear that “[p]regnant women who are able to work must be permitted to work on the same conditions as other employees; and when they are not able to work for medical reasons, they must be accorded the same rights, leave privileges and other benefits, as other workers who are disabled from working.”The PDA legislated away several U.S. Supreme Court decisions finding the denial of disability benefits and sick leave to women with pregnancyrelated disabilities did not violate Title VII of the Civil Rights Act of 1964, unless such denial was a pretext for sex discrimination. In so doing, the PDA made clear that discrimination based on pregnancy, childbirth, or related medical conditions is a form of sex discrimination prohibited by Title VII: in short, pregnant employees must be treated the same as non-pregnant employees who are similar in their ability or inability to work. The Equal Employment Opportunity Commission’s new Enforcement Guidance on Pregnancy Discrimination and Related Issues describes the agency’s latest view of prohibitions on discrimination against pregnant workers. The new Guidance also addresses the agency’s stance on how other employment laws enacted in the past 30 years, such as the 1990 Americans with Disabilities Act, the 1993 Family and Medical Leave Act, and the 2008 ADA Amendments Act, apply to these workers. The Guidance is the first comprehensive update on pregnancy Jackson Lewis P.C. PREVENTIVE STRATEGIES | Fourth Quarter 2014 discrimination since 1983 and supersedes earlier guidance. In conjunction with the Guidance, the agency also released Questions and Answers about the EEOC’s Enforcement Guidance on Pregnancy Discrimination and Related Issues and Fact Sheet for Small Businesses: Pregnancy Discrimination. The PDA, the EEOC advises, prohibits discrimination based on current pregnancy, past pregnancy, potential or intended pregnancy, and medical conditions related to pregnancy or childbirth. The Guidance discusses issues related to all these aspects of coverage, including hiring, firing, promotion, health insurance benefits, and treatment in comparison with non-pregnant persons similar in their ability or inability to work, and provides examples of typical workplace situations that may trigger PDA considerations. The Guidance is in the form of a four-part discussion concerning: 1) the prohibitions under Title VII, as clarified by the PDA; 2) the application of the ADA Amendments Act to accommodation and nondiscrimination requirements and the definition of disability as applied to pregnancy-related impairments; 3) other legal requirements affecting pregnant workers, including the FMLA; and 4) “Best Practices” for employers. In 2013, the EEOC received 3,500 new charges of pregnancy discrimination. As noted in the Guidance, the issues most commonly alleged in pregnancy discrimination charges have remained relatively consistent over the past decade: discharge, disparate terms and conditions of employment, suspensions pending receipt of medical releases, medical examinations that are not job-related or consistent with business necessity, and forced leave. Dissent and Controversy The Guidance garnered the votes of only three of the Commission’s five members. In separate statements, Commissioners Constance S. Barker and Victoria A. Lipnic dissented Delaware and Illinois have joined a growing number of states, including New York, California, and Maryland, that have enacted laws requiring employers, when feasible, to provide an accommodation to pregnant employees. The Pregnant Workers Fairness Act requires employers in Delaware to make reasonable accommodations for the known limitations of pregnant employees, as long as the accommodation does not constitute an undue hardship for the employer. This is a significant expansion of the job protection afforded by the Pregnancy Discrimination Act in that it adopts the reasonable accommodation requirement of the Americans with Disabilities Act and applies it to pregnant employees. Employers in Delaware must now make available to pregnant workers the same accommodations or benefits that are available to employees with injuries or disabilities. The new Illinois law amends the existing Illinois Human Rights Act. Effective January 1, 2015, the new law requires employers to provide reasonable accommodations to employees (and job applicants) for any medical or common condition related to pregnancy or childbirth and makes it unlawful to fail to hire or otherwise retaliate against an employee or applicant for requesting such accommodations. If an employer demonstrates the accommodation would impose an undue hardship on the “ordinary operation of the business of the employer,” it need not provide the requested accommodation. The new law defines reasonable accommodations as modifications or adjustments to the job application process, work environment, or circumstances under which a position is customarily performed. Under the enactment, an employer must post in a conspicuous location, and include in any employee handbook that the employer maintains, a notice that will be prepared or approved by the Illinois Department of Human Rights summarizing the requirements of the new law and providing information relating to the filing of a charge with the Department, including the right to be free from discrimination and the right to certain reasonable accommodations. In addition to these various state laws expanding PDA-like requirements for employers, the U.S. Supreme Court has heard arguments in a case to determine whether an employer that provides work accommodations to non-pregnant employees with work limitations must provide work accommodations to pregnant employees who are “similar in their ability or inability to work.” Are Pregnant Employees Eligible for Reasonable Accommodation? from the adoption of the Guidance. Both contended the substance of the Guidance overstepped legal precedents and was a dramatic departure from existing law and the agency’s previous guidance. They criticized the agency for not making the Guidance available for public review and comment before the Commissioners had to vote, noting the move signaled a lack of transparency.6 PREVENTIVE STRATEGIES | Fourth Quarter 2014 Jackson Lewis P.C. Pregnant workers may have impairments related to pregnancy that qualify as disabilities under the ADAAA. Among the Guidance’s controversial positions are the following: 1) an employer policy of providing light duty only to employees with on-the-job injuries violates the PDA; 2) an employer must provide accommodations to an employee with a normal and otherwise healthy pregnancy; 3) certain employer inquiries, comments, or discussions regarding an employee’s pregnancy or potential pregnancy are indicative of discrimination; and 4) an employer health insurance plan must cover prescription contraceptives on the same basis as prescription medications that prevent medical conditions other than pregnancy. Guidance Addresses EEOC’s Position on ADA Issues Related to Pregnancy Prior to the enactment of the ADA Amendments Act of 2008, some courts held that medical conditions related to pregnancy generally were not impairments within the meaning of the ADA, and so could not be disabilities. The Guidance notes that pregnancy itself is not an impairment within the meaning of the ADA and is never, on its own, a disability; however, some pregnant workers may have impairments related to their pregnancies that qualify as disabilities under the expanded scope of the ADAAA. An impairment’s cause is not relevant in determining whether the impairment is a disability. Moreover, under the ADAAA, it is likely that a number of pregnancy-related impairments that impose work-related restrictions will be substantially limiting, even though they are only temporary. The Guidance states the EEOC’s position that pregnant employees may be entitled to reasonable accommodation under the ADA for limitations resulting from pregnancy-related conditions that constitute a disability or from the interaction of the pregnancy with an underlying impairment. Examples in the Guidance of reasonable accommodations that may be necessary for a disability caused by pregnancy-related impairments include the following: n Redistributing marginal functions that the employee is unable to perform due to the disability; n Altering how an essential or marginal job function is performed (e.g., modifying standing, climbing, lifting, or bending requirements); n Modifying workplace policies; n Purchasing or modifying equipment and devices; n Modifying work schedules; n Granting leave (which may be unpaid if the employee does not have accrued paid leave) in addition to what an employer normally would provide under a sick leave policy for reasons related to the disability; and n Temporary assignment to a light duty position. The EEOC stated that the Guidance’s suggested “Best Practices,” while designed to “decrease complaints of unlawful discrimination and enhance employee productivity,” also “go beyond federal non-discrimination requirements.” They include: n implementing a strong policy against pregnancy discrimination; n training managers; n responding to complaints promptly and effectively; n evaluating restrictive leave policies for any disproportionate impact on pregnant workers; n consulting with pregnant workers to develop a plan for covering job duties during anticipated absences; and n stating explicitly that reasonable accommodation procedures are available to employees with pregnancy-related impairments. For details about the Guidance, go to EEOC Releases Demanding New Pregnancy Guidance. Employers should review their pregnancy, discrimination, leave, and disability accommodation-related policies and practices in light of the Guidance and supporting documents. Jackson Lewis attorneys are available to consult with employers and in-house employment counsel to determine whether and how the EEOC Guidance may affect their organizations. Jackson Lewis P.C. has again been recognized for excellence and ranked in the First Tier nationally in Employment Law – Management; Labor Law – Management; and Litigation – Labor & Employment in the U.S. News — Best Lawyers® 2015 “Best Law Firms” report. In addition, 70 percent of the Firm’s regional locations were recognized for excellence in Tiers 1 and 2 of the Metropolitan Rankings in various labor and employment categories. Jackson Lewis P.C. PREVENTIVE STRATEGIES | Fourth Quarter 2014 7 VERYONE AT JACKSON LEWIS HAS A BILL KRUPMAN STORY: sometimes funny, sometimes poignant, but always straight from the heart. Clients, too, came to know the Bill Krupman “style” of representation, no matter with which attorney or office they work. His insight, intuition, inventiveness, and ingenuity became hallmarks of the Firm, like Bill himself. Always smart, to the point, and available to anyone with enough interest and curiosity to ask a question, Bill made friends from California to New York, Michigan to Texas, and everywhere Jackson Lewis represents clients, educates employers, and raises the bar for superior legal services. “Connect the dots.” One of Bill’s favorite sayings typified his approach to bringing together people and services, businesses and ideas, meetings and plans. Always the reader, always the editor, always the critic, being on the receiving end of Bill’s dreaded “Ugh!” often felt like a reprimand, but the revision was always a lesson and an improvement. Likewise, his toughness on behalf of clients earned them favorable labor relations outcomes, and earned Bill the admiration of his peers and respect of his adversaries. During Bill’s 48-year tenure – as associate, partner, and Managing Partner from 1975 to 2006, the Firm prospered and multiplied in size, talent, quality, and innovation. For all that, and so much more, all of us at Jackson Lewis thank him from the bottom of our hearts. His insight, intuition, inventiveness, and ingenuity became hallmarks of the Firm, like Bill himself. I n R e m e m b r a n c e a n d A p p r e c i a t i o n o f 1 9 3 6 - 2 0 1 4 WilliamA. Krupman E Jackson Lewis News Jackson Lewis – the Firm and Its Professionals – Receives Top Honors The Jackson Lewis “Best Law Firms” rankings follow the August release of 2015 Best Lawyers in America, in which 119 Jackson Lewis attorneys were recognized. Inclusion on both lists is determined by receiving consistently impressive ratings by clients and peers. Achieving a ranking signals a unique combination of quality law practice and breadth of legal expertise. Congratulations to Jackson Lewis and all “Best Lawyers”! www.jacksonlewis.com Albany, NY Albuquerque, NM Atlanta, GA Austin, TX Baltimore, MD Birmingham, AL Boston, MA Chicago, IL Cincinnati, OH Cleveland, OH Dallas, TX Dayton, OH Denver, CO Detroit, MI Grand Rapids, MI Greenville, SC Hartford, CT Houston, TX Indianapolis, IN Jacksonville, FL Kansas City Region, KS Las Vegas, NV Long Island, NY Los Angeles, CA Memphis, TN Miami, FL Milwaukee, WI Minneapolis, MN Morristown, NJ New Orleans, LA New York, NY Norfolk, VA Omaha, NE Orange County, CA Orlando, FL Philadelphia, PA Phoenix, AZ Pittsburgh, PA Portland, OR Portsmouth, NH Providence, RI Raleigh-Durham, NC Rapid City, SD Richmond, VA Sacramento, CA San Diego, CA San Francisco, CA San Juan, Puerto Rico Seattle, WA St. Louis, MO Stamford, CT Tampa, FL Washington DC Region White Plains, NY Complexities of the Workplace Critical Issues – Creative Solutions April 23 - 24, 2015 JW Marriott • New Orleans S P E C I A L E V E N T : Join us for the Opening of 2015 Jazz Fest T H E 2 0 1 5 J A C K S O N L E W I S C O R P O R A T E C O U N S E L C O N F E R E N C E JAZZ UP YOUR WORKPLACE LAW ACUMEN when you attend the Jackson Lewis Corporate Counsel Conference in New Orleans on the eve of Jazz Fest. a Join Jackson Lewis in its hospitality tent at the Fairgrounds for a very special Jazz Fest Opening event for conference participants and guests. a Up to 10 hours of CLE credits are available through attending this relevant and densely-packed educational experience focused solely on Workplace Law. For further information, please contact: Regan Harrison • Jackson Lewis P.C. email@example.com • 703.483.8339 ✧✵✺❋❦❧❀a%µ´Æç˚© If you attend just one workplace law conference in 2015, make it this one!