Expat Assignments and Globally Mobile Workers: Best Practices for U.S. Based Employers

Transcription

1 Expat Assignments and Globally Mobile Workers: Best Practices for U.S. Based Employers Session #506 ACC 2014 Annual Meeting New Orleans, Louisiana Presented By: Erin Heller, Assistant General Counsel Western Digital Corporation Sandra McLelland, Senior Counsel Under Armour Nolan Lim, Corporate Counsel TrueBlue, Inc. Connie Reeve, Partner Blake, Cassels & Graydon LLP 0

2 Session Agenda Introduction to the Panelists General global mobility issues Considerations for employees entering the U.S. Strategy for expat assignments Use of foreign partners overseas Application of U.S. law overseas Country specific lessons Immigration and employment law issues in Canada 1

3 Global Mobility Issues Immigration Benefits Tax Import/Export Employment Law Compliance 2

4 Global Mobility Issues Need a global approach with common touch points Establish communication between the stakeholders Establish a process owner Periodically evaluate process for adherence and improvement 3

5 Global Mobility Issues What is the business need? What is the cost? What visas may be necessary? How long can they stay? What can they do when they are there? Who will be the employer? Which laws will apply? What are the tax consequences? 4

6 Tracking Business Travelers Where are your employees? Have an accounting of who is on-site Working remotely from other sites The stealth assignee Business travelers Trip extensions 5

7 Immigration Concerns Threshold questions: Length of time? Type of work EE will be doing? Which entity can make payments under various visas? Local laws? 6

8 Immigration Concerns Bringing Foreign Workers to the U.S.: Short Term Visitors - B Visas J-1 Exchange Visitor Visa H-3 Trainee Visa L-1 Intercompany Transfer Visa H1-B Specialty Occupation Visa 7

9 Immigration Concerns 1. B Visas a. Scope: Business visitor only. No active employment. Meetings are typically ok. b. Length of Stay: Up to 6 months with the possibility of an extension for another 6 months. Cost must be borne by home site. c. Dependents: Accompanying spouse and minor children can come under B-2 tourist visa. 2. J-1 Exchange Visitor Visa a. Scope: Training that is not available in home country and will facilitate career when he/she returns. Detailed training program is required. Must be administrated by a State Department authorized program; training can be done by sponsoring U.S. company. b. Length of stay: 10 months. c. Dependents: Spouse and children can be issued J-2 visa. 3. H-3 Trainee Visa a. Scope: For training only. No productive employment. b. Length of Stay: Two year limit. c. Dependents: Spouse and children on H L-1 Intercompany Transfer Visa (L1A & L1B) a. Scope: Used to temporarily transfer foreign employees for assignments to U.S. operations. Need one year of employment outside U.S. prior to use. b. Timing: Up to three years with the possibility of extension up to 5/7 years (depending on type of work). c. Dependents: L-2 for spouse and child. 8

10 H-1B Specialty Occupation Visa Scope: Position must be in a specialty occupation, need at least a bachelors degree. Permitted length of stay: 3 years with extension up to 6 years. Limits: Limited number awarded each year, subject to lottery. Wage Considerations: Wages must be same/similar to U.S. DOL position is that the employer must pay the prevailing wage. 9

11 Special Considerations for H1B Visas: Careful in job offers not to change at will nature of job. Don t bind company to permanent residency sponsorship. What to do if H-1B application is denied? 10

12 A Cautionary Tale Department of Justice/Infosys Corporation Settlement $34 million dollar negotiated settlement for allegations of systemic visa fraud and abuse of immigration processes Brought by an internal whistleblower Allegations included misuse of H-1B and B visa process. False statement made in invitation letters to U.S. Consular Officials and coached visa holders to make false statements to officials. Additional allegations of failure to maintain I-9 records. Tag along discrimination lawsuits 11

13 Immigration Concerns Permanent Residency Process Timing Prevailing Wage Considerations Testing labor market 12

14 Audits USCIS has increased its anti-fraud auditing staff and will conduct surprise on-site visits to companies that sponsor foreign workers on H-1B and L-1 visas. Designate a lead employee for audits Inform reception staff who to direct audit inquiries to Maintain immigration documentation in a manner that leaves the materials easily accessible in the event of a site visit 13

15 Employment Law Concerns U.S./CA specific issues: State and Federal wage and hour laws FLSA: Overtime Exempt Recordkeeping obligations State laws may pose additional requirements Misclassification concerns 14

16 Employment Law Concerns Discrimination claims: IRCA makes it an unfair immigration-related practice for an employer or other entity to discriminate against any individual because of their citizenship. 8 USCA Sec. 1324b(a)(1) DOJ is enforcing this and hears complaints regularly through the Office of the Chief Administrative Hearing Officer. 15

17 Import/Export Issues Deemed export rule: Any technology disclosed to a person in the U.S. on a non-immigrant visa is deemed an export of that technology to his/her home country Consider whether a license is required Where is the person from? How sensitive is the technology? Expect Audits and Follow Up 16

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19 Lessons Learned Going Global What is the Strategy? What is the business objective/purpose of assignment? What is the length of the assignment? Are you a business visitor or an expat? How are employees selected for global assignments? Identifying the corporate entity that will employ the expat 18

20 Types of Assignments 1. Home-country entity employed and paid (full secondment) 2. Home-country entity employed/host-country entity paid (partial secondment) 3. Localized/Transfer 4. Localized with hibernating home-country entity agreement 5. Dual employment contract 19

21 Outbound Immigration Concerns for Business and Expats Level set expectations of business on time needed to obtain proper work and residency permits Any issues with obtaining required visa for employee that will prohibit or delay start of the assignment? Business reason for why an expat is needed instead of a local hire Job description Any local recruiting effort? Impact of previous visas % of expats to local employees 20

22 Common Documents Needed by Immigration Outside of the US Passport current and prior Resume Job description Previous visas Business registration documents for entity sponsoring visa (articles of incorporation, business license, and other official documents) Employment Contract and/or Assignment Letter 21

23 Possible Documents Needed by Immigration Outside of the US Birth certificate Marriage certificate Evidence of health insurance Evidence of recent health exam Education records diplomas, certificates 22

24 Payroll, Compensation & Benefits Considerations Remain on home country payroll or move to local payroll? What is structure for expat compensation? Replicate home-country package Put on host-country package Align expat packages globally How will compensation be determined? Mirror existing comp ( keep whole ) Hardship allowance Currency exchange Impact of foreign expat salary in comparison with similarly situated local employees Cost of living adjustments ( COLA ) Housing in host country and leaving behind in U.S. Moving expenses Travel home visits Vacation home or host country standard? Holidays home or host country standard? Education for dependents Transportation Vehicle Allowance or Driver? Health benefits Workers comp Expat orientation, cultural training, language training Emergencies (public, personal, death) 23

25 Dependents/Family Accompanying Expat on Assignment What constitutes family? What is a dependent? Education for dependents typically grades K-12 24

26 Tax, Social Security & Pension How will taxes be handled? What is company responsible for versus employee? Tax equalization, tax gross-up, tax credits, tax treaties, tax preparation? Tax considerations when approaching 5 years abroad What local plans will expat be eligible to participate in/receive? Can expat continue to participate in home-country plans? Social security mandatory social security contributions in host country; compensation for loss of home-country contributions Pension continuation; 401k plans 25

27 Considerations for Documenting Length of assignment Expat Assignments Who will pay immigration costs Who will pay for tax preparation/assistance Choice of law Reaffirm or establish policies (FCPA, ethics, noncompete, confidentiality, IP, handbook) Repatriation/end of assignment 26

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29 I. Partnering With Third Parties to Employ Workers Oversees Most Common Issues to Consider When Employing Workers Abroad A. Use of Independent Contractor B. Used of leased employees through a staffing company C. Common Risks Applicable to Independent Contractor or Leased Employees 28

30 Independent Contractors Independent Contractor Relationship Formation: In most jurisdictions, substance over contract prevails Be aware of special jurisdictional rules for contract Consider adding indemnification clauses Business to Business contracts mitigate de-facto employee risk 29

31 Consequences of Independent Contractors Being Held De Facto Employee Tax, SS, Unemployment Compensations, Overtime, Benefits, Interest and Penalties Holiday Pay, Back Mandatory Benefits Fines 30

32 Leased Employees Structure of a leased employee relationship Domestic Principal Contracts with Foreign Staffing Company to Payroll Employee Substantially eliminates potential misclassification risks Creates joint employment risks Principal could be joint and severally liable for employees misconduct 31

33 Common Risks Associated With Third Parties Overseas Permanent Establishment When am I doing business? Local Independent Contractor Regulations Subcontractor to Independent Contractor Risks Contractor Pay Reporting 32

34 US Law Application Overseas Discussion of Title VII liability applied to workers oversees Criminal law applications When do US Criminal Laws Apply to Conduct Abroad 33

35 Employment Law Applications Overseas Title VII Does Not Apply to Workers Employed by Independent Foreign Entities Courts will look to the degree of control the US entity exercised over the foreign entity Friendship, Commerce, and Navigation (FCN) Treaties Application in the US 34

36 Extraterritorial Application of American Criminal Law Presumption against extra-territoriality US criminal code applies in special maritime and territorial jurisdictions Private Military and Security Contractors are Potentially Subject to the US Criminal Code Workers that commit crimes on US territory are potentially subject to US criminal liability 35

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38 Immigration Issues Work without a work permit Business visitors NAFTA business visitor criteria Intra-Company Trainers and Trainees After sales service Other miscellaneous categories 37

39 Immigration Issues Work permits: Labour Market Opinion required New challenges to obtaining work these permits Changing regulatory requirements Increase in lead time to establish reasonable efforts to recruit Canadians 38

40 Immigration Issues Work permits exempt from LMO requirement Inter-Company transferees Executive, senior managerial or specialized knowledge capacity New guidelines regarding specialized knowledge category: - Proprietary knowledge and advanced expertise Continuous employment for one year with transferring employer 39

41 Employment Law Issues When will Canadian/Provincial law apply? Local laws apply to work performed in the jurisdiction Includes human rights and minimum standards laws 40

42 Employment Law Issues Choice of law and jurisdiction? Real and substantial connection Employment contracts treated differently than commercial agreements 41

43 Employment Law Issues No recognition of at will employment At will clauses if applicable to employment in Canada will be struck Reasonable notice requirement fills the gap 42

44 Employment Law Issues Just cause standard for termination Wilful misconduct Wilful neglect of duty Requirement for contextual approach 43

45 Employment Law Issues Enforcing restrictive covenants prima facie against the public interest Covenants must be reasonable Careful drafting required No blue penciling by Canadian courts 44

46 Offer/Transfer Letters Practical Issues Should address minimum protections under provincial laws 45

47 Practical Issues Waiting periods for Canadian healthcare coverage Bridge coverage should be considered 46

48 Costs of tax equalization Practical Issues Higher tax rates 47

49 Final thoughts on country specific issues 48

50 Questions? 49