Editor: Zach, would you tell our readers about your practice?
Fasman: For more than 40 years, I have had a varied practice in both employment and labor law. I have done both because I am fascinated by the issues in both areas. I have always done a great deal of employment discrimination litigation — large class actions to jury trials of individual claims — but I’m also a traditional labor lawyer. I have handled all kinds of labor-relations issues, including complex labor litigation and negotiations with unions.
Editor: Allan, would you describe your practice?
Bloom: My practice is a litigation and advisory practice. I defend employers in everything from nationwide wage/hour class actions to jury trials of individual claims. The individual claims usually involve discrimination, harassment, breach of contract, wrongful discharge, or workplace torts. For the single plaintiff cases I tend to handle the trickier, more sensitive cases where the facts are not clear-cut and where available law is not exactly on point, or where there is the risk of copycat claims. On the advisory side, I counsel employers about wage-hour matters, audits and major restructurings, key executive moves (both in and out of companies), sensitive situations, policy changes and strategic advice. Like Zach and Erika, for some clients, it’s everything else – just the day-to-day advice they need to deal with their workforce, whether it’s a staff of 20 or a staff of 200,000.
Editor: And Erika?
Collins: My practice focuses exclusively on global labor and employment issues pertaining to U.S.-based multinationals in helping them to navigate and comply with non-U.S. labor and employment laws. My practice is entirely counseling and transactional. I do not litigate although I help partners with litigation matters that involve cross-border issues, such as choice of law for expatriate employees. I do everything from hiring and terminating executives to cross-border M&A transactions, investigations, and multi-country surveys. Sometimes our clients need to understand how they can roll out policies and programs in a hundred countries. In covering 150 countries, I have to say that the issues never get dull, and they are always different.
Editor: What are some of the reasons for the move to Proskauer’s powerhouse labor and employment practice?
Collins: I felt that the prestigious and robust practices in labor and employment as well as executive compensation and benefits, tax, privacy, and immigration position me well in servicing my multinational clients. The quality of the practice and the brand name don’t get any better. There is extremely strong leadership in the firm, and in the labor and employment department, it is nice for me that there is such strong leadership among the women partners here; I really look forward to working with all of them. And I would just add, too, that the firm is so well established in the practice of international labor and employment law that this move made a ton of sense for my practice. It has been terrific to have so much infrastructure already in place within the firm in terms of the international labor and employment practice group. I am delighted to co-chair the group with Dan Ornstein in London, Yasmine Tarasewicz in Paris and Betsy Plevan here in New York.
Fasman: Proskauer has traditionally had the strongest practice in this field by far, especially in traditional labor law, in which I am proud to now participate. I have known so many Proskauer partners over the years that I felt intuitively this was going to be a very comfortable move. The reception we have received from our new partners has truly been heartwarming for all three of us!
Bloom: As a lifelong New Yorker – born and raised here, and practiced here for my entire career – I am proud to be a part of a firm that has such a rich history in this city. For almost 140 years, Proskauer has really been part of the fabric of New York City. It’s a thrill for that reason as well. You really feel as though you are part of an organization that is so well entrenched in the legal market for all the right reasons.
Editor: Zach, what elements of your practice earned you the encomium “Dean of the Labor and Employment Bar?”
Fasman: That is a difficult question to answer because it deals with other people’s perceptions of my practice. I’ve been practicing labor and employment law for 40 years during which time I have handled many significant cases in the courts and before the NLRB and on appeal from the NLRB. I’ve also spoken and written extensively on many topics.
Editor: Your practice is also noteworthy for the number of cases you have taken to state and federal appellate courts, most notably the two cases you argued at the Supreme Court. Would you describe the facts and decisions in those two cases?
Fasman: I’ve argued one case, Golden State Transit Corporation v. the City of Los Angeles, twice in the Supreme Court on different issues. Golden State, the largest taxicab company in Los Angeles whose drivers were represented by the Teamsters Union, had its license to operate come up for renewal (along with those of competitors) by the city counsel. The drivers struck on the eve of renewal. The city council refused to renew Golden State’s operating license unless the company settled with the union. Those are basically the facts in the case.
On the first trip to the Supreme Court, my argument, which we won in an eight-to-one decision, was based on the proposition that the National Labor Relations Act, which protects free collective bargaining without government interference, preempted the city’s decision to condition Golden State’s operating license on settling with the Teamsters. Golden State had the right as a private employer to refuse to settle, a right that the city council refused to recognize. The case was then remanded and we were preparing for trial when the judge in the lower court said that he could not grant damages to us because technically this was a preemption case. We took that second case again to the Supreme Court, which held in the second decision in Golden State that we were entitled to damages even in a preemption case. The case ultimately came back down from the Supreme Court, and we had a nine-week jury trial where we prevailed, obtaining a substantial damage award plus attorneys' fees from the city of Los Angeles. It was a difficult and complex case with many issues.
Editor: Allan, why is the financial services industry particularly vulnerable to litigation, particularly employee litigation?
Bloom: For starters, it’s an industry that employs many people, certainly here in the New York metropolitan area, but also across the country. It also employs people in city centers where there are plenty of plaintiffs’ lawyers, making for a volatile mix. Because of the nature of the business, it is a big target for plaintiffs’ lawyers, because they assume that financial service companies will pay any amount to get rid of a claim, even a frivolous claim. And that’s not true, by the way.
Editor: How do you help clients protect themselves from employee suits?
Bloom: First and foremost, I work with clients to investigate and remediate the underlying issues that could lead to a lawsuit. Sometimes that means, for example, a large wall-to-wall audit of wage/hour practices or HR practices. Sometimes that means an individual set of facts relating to a single employee or a single incident. If you can prevent a lawsuit from happening in the first place by fixing the problem, that’s the best-case scenario. If the employee does file a lawsuit or does make a demand, my job is to resolve the dispute in the way that aligns most closely with the client’s business strategies, and sometimes that means an early settlement, sometimes that means we go to trial.
Editor: Please discuss your work with your clients in the financial services industry in regards to FINRA. What areas of business are most often penalized for violations?
Bloom: There are a number of positions on Wall Street in which employees agree in advance as part of their jobs they will arbitrate claims at FINRA. Everyone who deals with the investment public — traders, salespersons, brokers, financial advisors — agrees to these terms as part of their employment. Many FINRA claims filed by employees relate to bonus compensation. They’re filed after the employee is laid off or quits. This often takes place before bonuses are handed out — at the end of the year or the beginning of the following year. Often the cases have to do with promises or assurances that were allegedly made by people in the recruiting process regarding compensation, and sometimes regarding job responsibilities. For some employees who file FINRA claims, the job just didn’t turn out the way they had expected. They weren’t promoted quickly enough, they weren’t paid what they expected to be paid, or someone else got paid more. For others, it’s just a free ride, because they’ve moved onto a new job. They just file for arbitration at FINRA to see what they can get out of the process. If they do get anything, it is a win-win and doesn’t really take a large time commitment on the part of the employee himself or herself.
Editor: What are some of the minefields that you advise boards of directors about in the area of executive transitions or internal investigations?
Bloom: With an executive transition, I think the key is managing all the moving pieces. When you have an executive transition, you have the negotiations with the executive and often with his or her counsel. You have the internal paperwork on the issue that you want to make sure protects your client, some of which you want privileged and some of which you don’t. There are timing issues — sometimes the transition will take place over the course of months and you want the executive around and cooperating in the transition. Other times, you need the executive out of the building immediately, which has its own issues: how do you physically get someone out of a building? That raises security issues, technology issues, personal property issues. You have the issue of internal communications to employees and external communications to the media, business partners, investors, regulatory disclosures, PR and damage control issues sometimes. After all that, you’ve got the legal documents that actually will frame the parties’ rights and obligations, such as the releases, the restrictive covenants, cooperation clauses, etc. Managing all of that as well as managing all the personalities involved — because these are often emotional transitions for your clients as well as for the person who is leaving — is the biggest challenge.
With internal investigations, having the right process and strategy in place and executing on the strategy is key. In my view, no investigation should start until you know exactly how it’s going to end process-wise, that is, knowing how the process will unfold, both with respect to who is doing what and steps to be taken, what is the privilege protocol, who is or is not going to be involved – you really want to have that completely mapped out before you start. For some employers, especially smaller employers, often somebody just investigates without any plan in place and without proper preparation, which can result in disaster.
Editor: Erika, company downsizing must be a most vulnerable area for companies that you counsel all over the globe. What are some of the stumbling blocks that often cause companies to trip up?
Collins: The biggest stumbling block is that companies often do not realize that our concept of “at will” employment is unique to the United States. Every other country has statutory notice and often statutory severance requirements. One of the biggest challenges is timing. U.S. companies often do not give themselves enough time to plan and execute a mass layoff that involves employees in other countries where there may be not only notice requirements, but also consultation requirements either with employee representatives or works councils. The notice and consultation requirements are a big challenge in that they can slow down the process of executing mass layoffs.
Editor: Do other countries have any legislation similar to the U.S. WARN Act?
Collins: Yes, virtually every country in which I’ve counseled clients on mass layoffs has notice requirements. Certainly for mass layoffs, there are quite often required government notifications, and often the notice periods are quite a bit longer than they are for individual terminations.
Editor: How important is employee training as to their (and the company’s) practice in order to avoid problems with the FCPA, local laws and customs? What kind of training programs do you suggest?
Collins: I recommend training in just about every aspect of the employment relationship. I conduct training on anti-discrimination and harassment around the globe because even where it is not required, because of the nature of global businesses, it is very possible for employees outside the U.S. to create liability and exposure for a U.S. company — just by virtue of a global sales meeting, for example, in Chicago where someone might be harassed. In a situation where the whole business unit has not been trained, the company has no defense. I also conduct training for cross-border investigations and data privacy compliance. Our data privacy laws in this country are so different from the rest of the world that it’s really imperative for HR managers, finance people, and IT professionals to understand the data privacy laws concerning collection, processing and transferring personal data. When a company is conducting a cross-border investigation or engaged in cross-border litigation and where a company has HR documents in Germany that might respond, say, to a DOJ subpoena, how do you actually get those documents? HR managers need to be trained in these issues, and companies need to be compliant with data privacy regulations prior to needing to conduct an investigation or respond to a subpoena.
Fasman: So much of what we do as both labor and employment lawyers both in and outside the U.S. is not intuitively obvious. There are so many technical issues — it makes it imperative to train employees as to what their responsibilities are. Unless you do this, you are going to encounter problems, whether it’s sexual harassment law, FCPA, or what have you. There are many areas where if you’re not training, you’re doing a major disservice in terms of your organization’s responsibility and its ability to avoid problems.
Editor: And how do you advise that training be conducted?
Fasman: It depends on the size of the employer and the complexity of the issues. I have many large clients who have taken to web-training activities. Basically, they have required employees to take training courses on the web where they can monitor how much time they spend on instruction and then require them to answer questions. Importantly, it requires that the employees focus on a particular issue for a particular length of time and have some record that they have done so. Individual training through individual trainers is always possible. There are many ways to do this with no one way better than another as long as the message gets out.
Collins: I have found in-person training, particularly in certain areas like data privacy, to be much better because it affords the opportunity for employees to ask questions. Many of these principles are quite new for U.S. employees and require follow-up.
Editor: What do you think are the top issues or trends that multinational corporations, financial services firms and corporate boards should follow this year?
Fasman: One area is cross-border data protection. The variances in terms of what can be disclosed under EU law and that of other countries and what mandatorily must be disclosed here in response to commercial litigation or subpoenas by an enforcement agency are massively different. If a corporation has not looked at that issue before, I can almost guarantee at some point that it will. Multinationals have to look at these issues and make some decisions on how to navigate this particular minefield. For example, if you have data in Germany that you can’t disclose and the Justice Department is threatening you with criminal contempt for failure to disclose, the time to look at those issues is not when you are negotiating with the Justice Department but well in advance. That’s one issue that I think all multinationals have to look at carefully.
Collins: In addition, companies need to look at their policies and their programs for conducting investigations, inspecting employees’ emails, as well as cross-border transfer of employee data. This issue arises in litigation matters but also in FCPA investigations, which can be severely compromised if a company has not put the proper IT, email usage and social media policies in place or perhaps has not obtained the sometimes required consent from non-U.S. employees. The company may be completely straightjacketed from getting the information it needs in order to properly investigate an FCPA claim. A number of times in the last year, I have experienced this shortcoming in working on an FCPA investigation in China and another one in Spain where the company was absolutely paralyzed because they had never rolled out their IT policy in Spain nor obtained the proper consents from employees or done any training regarding the policy.
Fasman: Another trend: With the exception of one decision by the National Labor Relations Board, the courts in the U.S. have made it clear that employee statutory rights can be enforced in arbitration on an individualized basis as opposed to in the courts on a class or collective basis. That is, it’s possible to include class action waiver in an arbitration policy maintained by the company. For all major companies, it is time to look at whether or not the company would rather arbitrate than litigate, and if so, what kind of rules do you want to govern your particular arbitration protocol.
The pendulum appears to have largely swung in the direction of class action waivers being lawful and permissible, and if that’s the case, it’s time for companies to say: “if arbitration is our preference, how do we want to set this up so that we have an enforceable, useful, fair arbitration program so that we can stay out of large class action litigation in the federal courts?”
Collins: One other topic that companies should be paying attention to is what I would refer to as the binding say-on-pay legislation that is being introduced around the globe. There is CRD4 in Europe that is creating quite a bit of concern affecting many multinational financial institutions’ ability to compensate their executives. So companies need to take a look at where around the globe that type of legislation is being implemented.
And in other countries there is a lot of activity in terms of diversity efforts and legislation throughout Europe requiring a certain percentage of women on boards of public companies. These types of initiatives are completely foreign in the U.S. where typically quotas are quite unpopular, but currently this legislation is gaining momentum in the European countries.
Bloom: Trends and issues that should be top of mind should include wage/hour compliance because in my view, at least domestically, the most expensive problem employers have from their employees is the possibility of a wage/hour class action. Wage/hour lawsuits continue to be filed every single day, especially in a state like New York where there is a six-year statute of limitations.
Whistleblower rights are going to continue to be really crucial for employers to focus on this year. As Dodd-Frank continues to be interpreted by the courts — how broad is it, who does it cover, and what does it cover? Because more and more people are starting to come forward and call themselves whistleblowers, businesses need to be proactive and ready to defend these claims.
I think privacy issues should continue to be top of mind for corporations. The generation that is entering the workforce and the generation that for the last ten years has been entering the workforce has a much different way of sharing personal information than older generations did. Everything is online, everything is on Facebook, Instagram, Twitter. People are very open in a way they were not a generation ago. That has crept into lots of different areas of employment law both in the traditional labor law world as well as just everyday employment litigation – how you go about defending a lawsuit, what kind of information you can get about employees, what kind of information you can get about applicants, what are the rules? What’s fair or not? What can we say about people? What can they say about us?
Lastly, employee movement and restrictive covenant issues are going to continue to be big issues for employers as well this year. As more and more of those cases get litigated, the law changes, the law gets interpreted, and employers are very concerned (as they should be) about the investment that they make in people and the investment they make in trade secrets, in confidential initiatives and proprietary information. They’re always going to be interested in what happens when a key person leaves. The laws around these issues are going to continue to confound and be on everyone’s mind this year.
Fasman: Social media is a key topic. An astute comment by one of my clients illustrates this major area for concern: “Look in your workforce today – you have people who grew up with technology and who have known Facebook, cell phones and personal computing devices from the time they were in grade school; you have others who learned how to use computers and are somewhat conversant with new media; then you have people who have never become comfortable with that technology. With all of those different backgrounds and different attitudes in the workplace, unless you tell people what you expect from them in terms of social media, they’re going to come at it from every different direction.”
You will have people saying, “What’s wrong with going to Facebook and doing X, Y, and Z? Why can’t I complain about my supervisor on Facebook? What are the rules I ought to be following?” Unless you tell them what the rules are, they won’t know what you expect from them. In this day and age with Facebook, LinkedIn and Twitter, it is imperative that a company spell out what it expects you to do, and these are the rules we expect you to follow with regard to social media.
Employers really have to give direction to the workforce. Companies need to think about how they propagate the rules, what the rules should be, not only in social media. Both workforce management and the workforce should have clear definitions of what the company expects. Well-run companies do this routinely.
Collins: In addition to the various generational differences in terms of attitudes towards social media and how it should be used and handled, there are also many differences around the globe about which companies need to be aware. For instance, even rolling out a bring-your-own-device (BYOD) policy globally raises privacy issues. U.S. companies are very interested in BYOD policies but those policies do not necessarily work outside the U.S.