Category: Employment

Employment / Tax

New Proposed U.S. Excise Tax on Certain U.S. “Outsourcing” Payments

In September, a new bill was introduced in the U.S. Senate entitled the “Halting International Relocation of Employment Act” or “HIRE Act” (the “Bill”). Generally, the Bill proposes a 25% excise tax on certain outsourcing payments made by U.S. persons or entities to non-U.S. persons or entities. The Bill, if enacted, could have a significant impact on Canadian companies that are currently engaged in certain cross-border arrangements with U.S. companies, including subsidiaries or affiliates. In general, the Bill would impose a 25% excise tax on any premium, fee, royalty, service charge, or other payment made in the course of a trade or business by a U.S. person to any non-U.S. person if the...

Employment

Top U.S. Employment Law “Gotchas” for Canadian Companies

As a U.S. employment lawyer who advises numerous Canadian companies, I’ve seen several traps that Canadian companies frequently fall into. The first step in avoiding these traps is to identify them. At-Will Employment is Trap. One of the biggest differences between Canadian and U.S. Employment law is so called “at-will” employment. Theoretically, employers in the U.S. can fire employees without cause and not have to pay severance. But as I like to tell my clients, this means that you can fire employees in the U.S. for any reason you want … except for the 1.7 million reasons you can’t. If an employee is in a protected class (e.g. on the basis of age,...

Employment / Securities

Companies Subject to U.S. Jurisdiction Should not Restrict Personnel from Being SEC Whistleblowers, or Receiving SEC Whistleblower Awards

SEC rules prohibit taking “any action” to impede an individual from communicating directly with the SEC about a possible securities law violation, including by enforcing, or threatening to enforce, a confidentiality agreement. Previously, the SEC has brought enforcement actions against, and secured large monetary settlements from, companies whose internal agreements and policies included broad confidentiality provisions that would restrict an employee from voluntarily being a whistleblower to the SEC. This month, the SEC announced a new round of settlements with seven different U.S. listed companies, who agreed to pay the SEC penalties totaling $3 million for violating these rules. What is notable about this new round of enforcement is that in each case,...

Employment

The U.S. Federal Trade Commission Votes to Ban Non-Compete Agreements, But the Issue is Far From Settled

Early last year, the U.S. Federal Trade Commission (“FTC”) proposed a rule banning non-compete agreements nationwide. Yesterday, the FTC voted 3 to 2 in favor of adopting this rule. The FTC’s newly adopted rule bars for-profit employers from entering into new non-compete agreements with employees, including highly compensated and executive employees. Existing non-compete agreements with senior executives are still enforceable under the new rule, but employers must, by the rule’s effective date, notify all other employees with non-compete agreements that those agreements are unenforceable. The rule defines a “senior executive” as a worker who was in a policy-making position and earns at least $151,164 per year. The rule does not apply to agreements...

Employment

Don’t Let a Tight Labor Market Get Your Guard Down

In wrongful termination cases in the U.S., the primary source of liability for employers is an employee’s alleged lost wages. Under U.S. law, an employee who is terminated for a discriminatory or a retaliatory reason is entitled to recover the amount of wages the employee would have earned had the employee not been wrongfully terminated. In a normal labor market, an employee might be able to argue that it will take him or her six months or even a year to find a new job, and the employer, therefore, should pay the employee six months’ to a year’s worth of lost wages. In a tight labor market, however, it is much harder for...

Employment

Noncompete Agreements are Slowly Going Extinct in the U.S.

Companies utilizing noncompete agreements in the U.S. in the employment context should reevaluate their practices in light of recent changes to law and a rapidly changing legal landscape that is growing increasingly hostile to noncompete agreements. Early this year, the Federal Trade Commission (“FTC”) proposed a rule that would ban noncompete clauses nation-wide in the U.S. However, there is a long road ahead for the FTC’s proposed noncompete ban, and the proposed ban may very well be struck down by U.S. courts even if it is ultimately adopted. The FTC will not vote on the proposed ban until next April, and while 18 states’ attorneys general submitted a joint public comment letter in...

Employment

The U.S. Equal Employment Opportunity Commission Has Confirmed That Employers Face Potential Liability If They Use AI Tools To Screen Applicants. Employers Should Listen.

The U.S. Equal Employment Opportunity Commission (“EEOC”) has released guidance confirming that employers face potential liability if they use AI tools to screen applicants in a way that disproportionately impacts employees on the basis of a protected class such as race, color, religion, sex, or national origin. While ChatGPT and its competitors are new, the legal framework used to assess other applicant screening tools has been around for quite some time.  Employers and the legal system have struggled for years over whether and to what extent employers should be allowed to take a person’s credit scores or even their criminal record into account when making hiring decisions. Indeed, the system by which a...

Employment

U.S. National Labor Relations Board Restricts Confidentiality and Non-Disparagement Terms for Separation and Release Agreements

Employers have frequently included confidentiality and non-disparagement terms in their separation and release agreements. Confidentiality terms help ensure that employees won’t brag to coworkers about large payouts and encourage them to seek similar payouts. Such payouts can also give the impression that a company is looking to avoid exposure for wrongdoing, and confidentiality terms can help maintain the privacy of such payouts. Non-disparagement terms can help companies deter departing employee from publically trashing their former employers on their way out the door. Employees don’t always leave on good terms and non-disparagement terms can help incent employees to keep their negative opinions to themselves. U.S. employers, however, must re-evaluate their use of confidentiality and...

Employment / Litigation

U.S. Equal Pay and Pay Transparency Laws Are Getting More Complex

Several U.S. states have been adopting more complex pay transparency laws and stricter equal pay statutes that prohibit employers from paying two employees differently to perform the same role based on factors such as race or gender. While these two types of laws are different, they go hand in hand since pay transparency laws require employers to disclose the very information that tips off employees (and plaintiffs’ attorneys) to the facts necessary to bring equal pay claims. Companies looking to hire in the U.S. must become familiar with these laws or face substantial statutory penalties and civil liability. Equal Pay Laws Most U.S. states have some form of equal pay law. Many U.S....

Employment

Form I-9 and Remote Workers: Is the Flexibility Almost Over?

As most Canadian employers are aware, the Immigration Reform and Control Act of 1986 requires employers to verify the identity and employment authorization of each of their employees inside the United States. This process is documented through the completion of the United States Citizenship and Immigration Service (USCIS) Form I-9, Employment Eligibility Verification, for each employee at or shortly after their hiring date for work in the United States. The Form I-9 has two Sections. Section 1 is for the employee to complete and asks basic personal questions such as name, address, and date of birth with further optional information such as Social Security number, email address, and telephone number. Section 2 is...