In a case that will undoubtedly affect thousands of workers statewide, the California Supreme Court issued its ruling today in Brinker v. Superior Court, a wage and hour class action filed by employees of Brinker International, Inc., the parent company of Chili’s restaurant. This is the first in a series of articles by Call & Jensen discussing the Brinker decision and its impact on employers.

MEAL PERIODS – No Duty To “Ensure” Employees Take Meal Periods

The lawsuit largely centered on the language of Labor Code section 512 that states: “An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes.”

Before today, the unresolved issue before the California Supreme Court was the meaning of the word “providing.” Does an employer have to ensure that an employee has to take a meal period? Or does the employer meet its obligation if the employer makes the meal period available to the employee?

The California Supreme Court concluded that “an employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work.” The Supreme Court reversed and remanded for consideration of whether class certification is appropriate.

REST BREAKS – Common Questions Predominate If Employer Has A Uniform Policy That Fails To Authorize All Permitted Rest Breaks

The Supreme Court held that the trial court did not abuse its discretion in certifying a rest period subclass because Plaintiffs had presented substantial evidence of “a uniform rest break policy authorizing breaks only for each full four hours worked.”

Brinker’s uniform policy did not authorize and permit a second rest break for employees working shifts longer than six, but shorter than eight hours. The Supreme Court rejected the reasoning of the Court of Appeal that because rest breaks may be waived proof of violations must be based on individualized proof. The Supreme Court held that: “No issue of waiver ever arises for a rest break that was required by law but never authorized; if a break is not authorized, an employee has no opportunity to decline to take it.”

Per the Supreme Court, “employees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.”

TIMING – No Rolling 5-Hour Rule

Another critical issue before the Supreme Court was the timing of meal periods, specifically whether the wage orders require that a meal period be provided after five consecutive hours of work. In other words, does the statute prohibit the practice of “early lunches” – that is, requiring an employee to take his or her lunch break early in the shift and/or start the clock running on a second 5 hour period? With regard to these issues, the California Supreme Court ruled as follows:

• A first meal period must start no later than after 5 hours of work.
• A second meal period must be provided after no more than 10 hours of work in a day, i.e., no later than what would be the start of the 11th hour of work, absent waiver.
• There is no “rolling 5 hour rule.” Other than the above requirements set forth in Labor Code section 512 and the wage orders, there are no additional timing requirements.

OFF-THE-CLOCK – No Substantial Evidence That Common Questions Predominated

Finally, the Supreme Court held certification was not proper for an off-the-clock subclass. Plaintiffs had contended Brinker required employees to perform work while clocked out, or that their work periods were interrupted. Unlike the rest break claims, however, Plaintiffs did not proffer a common policy alleged to be inconsistent with the Labor Code. In fact, the only policy at Brinker expressly prohibited off-the-clock work – as do most company policies. Moreover, there was no evidence of a systemic policy to pressure employees to work off-the-clock. Notably, the Supreme Court also stated that when employees are clocked out “there is a presumption they are doing no work.”

Please look for further updates from Call & Jensen on the impact of the Brinker decision.FOR MORE INFO CONTACT GINA MILLER

Social media policies continue to receive scrutiny from the National Labor Relations Board (“NLRB”), which issued its third “Report on Social Media” on Wednesday, May 30, 2012. As in the previous two reports, the NLRB discusses several recent cases and sets forth its conclusions about the lawfulness of various employers’ social media policies under the National Labor Relations Act (“NLRA”). Once again, the NLRB found that employee postings on social media websites may be considered protected concerted activity under the NLRA. However, what is particularly important about this third report is the inclusion of a sample social media policy that the NLRB has concluded is entirely lawful.

The inclusion of a sample lawful policy provides additional guidance for employers on the appropriate language to include in their social media policies. In addition, attorneys in Call & Jensen’s Employment Law Group are also readily available to further discuss these issues and assist in the drafting or revision of your social media policy.

“Do’s and Don’ts” of Social Media Policies:

• Do: Prohibit employees from posting “discriminatory remarks,” “threats of violence,” comments that constitute harassment or bullying, posts meant to “intentionally harm someone’s reputation,” or posts that “could contribute to a hostile work environment on the basis of race, sex, disability, religion, or any other status protected by law or company policy.”
  • Don’t: Prohibit employees from making “disparaging” or “inappropriate” remarks. This terminology is too ambiguous and has been found to be facially overbroad and unlawful.
• Do: Include instructions that employees “never post any information or rumors that you know to be false about the employer, fellow associates, members, customers, suppliers, people working on behalf of the employer, or competitors.”
  • Don’t: Require employee posts to be “completely accurate and not misleading” because this could encompass posts that unintentionally contain inaccurate information.
• Do: Include a general statement that any online conduct that adversely impacts an employee’s job performance may result in disciplinary action up to and including termination.
• Do: Preclude employees from posting anything on the internet “on behalf of” or “in the name of” the employer without prior authorization. Employers can require their employees to expressly state that their postings are “my own and do not represent the employer’s positions or opinions.”
  • Don’t: Prohibit employees from identifying themselves as Company employees.
  • Don’t: Prohibit employees from using company logos or trademarks in social media postings as this may be construed as prohibiting non-commercial uses by employees such as discussing the terms and conditions of their employment.
  • Don’t: Instruct your employees that they may not comment on legal matters involving their employer.
• Do: Include a policy on confidential and trade secret information that states: “Maintain the confidentiality of employer’s trade secrets and private or confidential information. Trade secrets may include information regarding the development of systems, processes, products, know-how and technology. Do not post internal reports.”
  • Don’t: Fail to properly define the terms “trade secrets” or “confidential information,” as that may render the policy facially overbroad and unlawful.
  • Don’t: Prohibit employees from discussing employee compensation.
• Do: Urge employees to respect copyright and intellectual property laws.
  • Don’t: Require prior authorization before an employee reuses someone else’s content or image as it would interfere with employees’ protected right to take and post photos of, for example, employees working in unsafe conditions.
• Do: Suggest that employees try to work out concerns over working conditions through internal procedures before taking to the internet.
  • Don’t: Require internal resolution attempts or that employees “report any unusual or inappropriate internal social media activity.”
• Do: Include policies instructing employees to “respect financial disclosure laws,” and reminding employees that it is illegal to give a “tip” on inside information to others so that they may buy or sell stocks or securities.
  • Don’t: Broadly prohibit employees from posting information that could be deemed “material non-public information” or “confidential or proprietary” without further definition of those terms.
• Do: Prohibit employees from using social media “while on work time or on equipment the employer provides, unless it is work-related as authorized by your manager or consistent with the employer’s equipment policies.”

Finally, if you do need to revise your social media policy, consider distributing via email and including a return receipt on the message for employees to acknowledge that they have read and understood the communication.

THE ABSOLUTE POLLUTION EXCLUSION: NAVIGATING PATHWAYS AROUND TOTAL CONFUSION

“Rarely has any issue spawned as many, and as variant in rationales and results, court decisions as has the pollution-exclusion clause.” ¹

While the pronouncement of the Supreme Court of Alabama may have been a little extreme, the fact remains that a decade later, courts are still citing it as accurate. The pollution exclusion remains in many jurisdictions as uncertain as ever, due to inconsistent, fragmented, factually-specific, and overly broad judicial precedent. As a result of this discord, parties lack certainty in determining when a pollution exclusion may be applicable to their case. This article addresses the history of the exclusion, problems and issues in interpretation, arguments for and against a narrow reading of the clause, and a recent case study from California’s evolving case law. Some take-home lessons are also provided for addressing this exclusion pre- and post-claim.

The Development And Evolution Of The Pollution Exclusion

The pollution exclusion is a standard form endorsement to the CGL policy. Its evolution is the product of decades of tension between, on one hand, judicial interpretation confirming defense and indemnity coverage for environmental pollution, and, on the other hand, attempts by the insurance industry to exclude such coverage for a broad array of pollution related injuries from their standard policies.

CGL policies are typically designed to provide coverage for “sums that the policyholder becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage.’” Prior to 1966, the standard-form CGL policy provided coverage for bodily injury or property damage caused by an “accident,” but failed to provide a definition for the term “accident,” leading to many judicial decisions that extended CGL coverage to pollution-related injuries or damages.²

During the 1960s, however, the insurance industry’s concern regarding the costs of insuring such incidents was dramatically heightened by the birth of sweeping federal statutes such as the Clean Air Act that expanded the expenses and obligations associated with the cleanup of environmental hazards, as well as the notoriety of several large-scale and expensive environmental catastrophes.³

In 1966, the insurance industry responded to these developments with a revised standard CGL policy, changing the term “accident” to “occurrence,” and specifically defining the term “occurrence” to be “an accident, including injurious exposure to conditions, which results, during the policy period, in bodily injury and property damage that was neither expected nor intended from the standpoint of the insured.”⁴

Yet, despite the insurance industry’s efforts, the courts continued to apply revised CGL policies to cover accidents caused by environmental pollution, so insurers in 1970 modified the policy again to draft a “qualified pollution exclusion,” which was developed as a standard form exclusion (f).⁵ This exclusion provided, in relevant part:

This policy shall not apply to bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.⁶

But the industry’s revisions again led to diverging judicial viewpoints on coverage, this time centering around the meaning of the term “sudden and accidental.”⁷ Additionally, the 1980s ushered in the passage of even more statutes expanding liability for environmental remediation, such as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).⁸

Insurers again went back to the drawing board, and in 1985 began promulgating a new “absolute pollution exclusion,” eliminating the term “sudden and accidental” and the requirement that the pollutant be discharged “not or upon land, the atmosphere or any watercourse or body of water.”⁹ The absolute pollution exclusion is a standard exclusion (f) Insurance Services Office (“ISO”) Form CG 00 01.¹⁰ However, in practice, insurers often make variations to the language of this exclusion.

A “total pollution exclusion” has also been in widespread use since the mid-1980s. Generally, the total pollution exclusion is less qualified and more extensive, often containing no express exception to the exclusion for damage by “hostile fire.”¹¹ However, the term has been applied to a number of variations on the “absolute pollution exclusion,” some of which are fairly identical.¹²

Ambiguity And Jurisdictional Splits In Interpretation

In the past three decades, the standard-form CGL pollution exclusion has not changed, but courts have continued to apply it unevenly across the nation, and inconsistently from case to case within a single jurisdiction.¹³ Given the scale of the expenses at issue in defending and indemnifying claims of “property damage” and “bodily injury,” it is no surprise that the scope of the pollution exclusion has emerged as “one of the most hotly litigated insurance coverage questions to arise over the past three decades.”¹⁴ Over 200 decisions from more than 36 states have analyzed the exclusion, on issues ranging from what substances qualify as a “irritant” or “contaminant,” to what constitutes a “discharge, dispersal, release or escape,” to what types of negligent acts can be categorized as pollution for purposes of the exclusion.¹⁵

Disputes over the application of the exclusion center around its meaning, often applying the insurance policy interpretation doctrines of plain meaning, ambiguity, and whether the exclusion is conspicuous, plain and clear.

For simplicity, we roughly divide jurisdictions into two camps regarding the application of the “pollution exclusion” to acts of negligence: (1) One camp, conscious of the historical development of the exclusion, as well as the reasonable expectations of a policyholder, applies the exclusion narrowly only to what is viewed as “traditional environmental pollution”; (2) The other camp sees the exclusion as an unambiguous contract provision, reading it broadly to preclude coverage for all claims that involve toxic substances, regardless of whether they result from conventional types of pollution to the soil, land, air, or water, or from acts of negligence in the usual course of business that happen to involve harmful substances.¹⁶ The first favors policyholders and the second favors insurers, and their advocates generally divide along those lines.

But the fragmentation of authority does not end there. Still other courts have noted that “[a] term which is clear in one context may be ambiguous in another,” allowing arguments to begin anew with each new set of facts.¹⁷ Even the split of authority is itself viewed differently by different courts: some decisions have cited to the existence of conflicting judicial interpretations of policy terms as evidence of ambiguity, whereas other courts have found the conflict not to be determinative of ambiguity.¹⁸

Moreover, while many lawsuits have been filed involving some aspect of the absolute pollution exclusion, a number of jurisdictions still have a surprising dearth of authority regarding its application. For example, the California Supreme Court did not issue an opinion rejecting the insurance industry’s broad interpretation until 2003, when it held in MacKinnon v. Truck Insurance Exchange, 31 Cal. 4th 635 (2003) that it would apply the exclusion to exclude only “injuries arising from events commonly thought of as pollution, i.e., environmental pollution,” as opposed to mere “ordinary acts of negligence involving toxic chemicals” resulting in bodily injury. The New Jersey Supreme Court took up the issue two years later and came to a similar conclusion.¹⁹ The Supreme Courts of Alaska and Georgia did not analyze whether the absolute pollution exclusion was ambiguous until 2008; both found that it was not and applied the exclusion literally.²⁰

Even more recently, federal courts in a handful of jurisdictions have been handed the job of determining whether the total pollution exclusion was ambiguous or limited to environmental pollution only, without any clear and controlling state precedent, and have certified the question to their state’s highest courts.²¹

Thus, decades after its most recent iteration has been released into the world, it would seem that whether the total pollution exclusion is plain or ambiguous, or is applied narrowly or broadly, is in many ways an unsettled issue.

Navigating A Path Between Extremes

Is the Exclusion: (1) Clear and Unambiguous Resulting in a Literal Interpretation or; (2) is the Exclusion Ambiguous or so Overbroad that it Violates the Insured’s Reasonable Expectations of Coverage?

Courts interpreting the exclusion narrowly in favor of finding coverage have relied on insurers’ motivation in drafting the exclusion, and have argued that to expansively apply the scope of the exclusion beyond the insurers’ stated objective of avoiding expense and exposure resulting from environmental litigation, to situations not remotely resembling traditional environmental pollution, would give the insurers a undeserved windfall.²²

As a second rationale for narrow interpretation of the exclusion, some courts have argued that interpreting the term “pollutant” in the exclusion literally to mean any possible “contaminant or irritant” would have absurd or otherwise unacceptable results, overextending the reach of the “total pollution exclusion” to everyday events that simply happen to involve something that could be characterized as a substance that is an irritant – for example, a slip and fall on a puddle of spilled swimming pool chlorine, or application of iodine to someone who has an unexpected allergic reaction.²³

Third, many courts have cited to the doctrine of interpreting the policy according to the reasonable expectations of the policyholder that the exclusion is a term of art limited to environmental pollution.²⁴ These courts have refused to broadly apply the exclusion to factual scenarios that fall so far adrift of expectations of what is meant by a “total pollution exclusion” that a reasonable insured would not be plainly and clearly alerted that a claim would not be covered.²⁵ These courts have noted that interpreting the exclusion broadly effectively eviscerates CGL coverage for “bodily injury” or “property damage” for policyholders in certain industries,²⁶ As proffered by the Wisconsin Supreme Court, “[t]he reach of the pollution exclusion clause must be circumscribed by reasonableness, lest the contractual promise of coverage be reduced to a dead letter.”²⁷

Additionally, some courts have mulled over the meaning of the terms “discharge, dispersal, release or escape” in the total pollution exclusion, maintaining that these terms signify some type of freedom from containment, over a substantial area. These courts have found the application of the total pollution exclusion to be inappropriate in factual scenarios where, for example, the claim resulted from the negligent handling of chemicals to be otherwise intentionally applied or directed locally in the course of business.²⁸

In contrast, courts to apply the exclusion broadly have found, more simply, that the exclusion clearly and unambiguously excludes all “bodily injury” or “property damage” coverage, whenever a cause of injury can be characterized as a pollutant, broadly defined, notwithstanding the policyholder’s reasonable expectations of coverage.²⁹

A Case Study From California

Particularly in jurisdictions taking a narrow reading of the exclusion, policyholders and insurers have continued to hotly dispute coverage in cases where a pollution exclusion is present, and especially so where the court has based its narrow reading on the holding that the exclusion was ambiguous when applied to the facts of the case.

For example, in California, the MacKinnon opinion sought to provide clarity to litigants. However, since virtually all claims over which the application of the total pollution exclusion is debated will involve some act of negligence (or typically be subject to other policy exclusions), parties have simply taken the language of MacKinnon and battled over the question of what constitutes a “traditional environmental pollution,” as opposed to an act of negligence that merely happens to involve toxic substances.³⁰ Moreover, MacKinnon’s finding that the exclusion was ambiguous as applied to the facts therein, and thus the exclusion susceptible to the interpretations of both the policyholder and the carrier, may have caused carriers to reserve rights and litigate more frequently than in other jurisdictions where courts have stated on the record that the exclusion unambiguously does not apply in cases that do not involve traditional environmental pollution.³¹

As a result, in many cases, a judicial determination that is too specific or too vague means that the question is simply reopened for a renewed debate each time it is asserted. Ultimately, this uncertainty increases expenses for both carriers and policyholders, and can lead to unfair results.

In an attempt to provide more clarity to one jurisdiction’s narrow reading of the total pollution exclusion, a recent opinion from the Central District of California sets forth a more specific test in Great American Assurance Co. v. M.S. Industrial Sheet Metal, Inc., Case No. 8:11cv00754 (C.D.Cal.2012) (Docket No. 67). In that case, policyholder and contractor M.S. Industrial Sheet Metal tendered to its CGL carrier a personal injury/negligence claim in which two plaintiffs claimed that M.S. Industrial’s installation and/or recommendation of a workplace ventilation system for a commercial printer caused them to be exposed to harmful printer exhaust while working within a warehouse.

The carrier, Great American Assurance Company, filed a declaratory relief action regarding its duty to defend M.S. Industrial in light of a total pollution exclusion endorsement. Both parties filed cross-motions for summary judgment on the issue of whether a duty to defend was owed. The carrier argued for a literal “but-for” application of the exclusion since the personal injury plaintiffs alleged that they were harmed as a result of chemicals in the air, and further tried to compare the industrial setting of the claim to prior precedent to argue that the exclusion should apply. The court disagreed and held that the total pollution exclusion did not apply to preclude the duty to defend for the claim.

The court reasoned, pursuant to MacKinnon, that the claim clearly presented a case of ordinary negligence that happened to involve toxic substances, as opposed to traditional environmental pollution. The court set forth a new two-part test: the total pollution exclusion applies to preclude insurance coverage in California only if the exposure is (1) from a toxic environmental pollution or accident that is a persistent by-product of the insured’s business as opposed to a “localized toxic accident”; and (2) if the facts of the exposure fall within the insurance industry’s historical objective of avoiding liabilities for environmental catastrophes related to industrial pollution.

Thus, while maintaining MacKinnon’s narrow approach, the court also added clarity to theMacKinnon decision.

Conclusion and Take-Home Lessons

Uncertainty regarding the total pollution exclusion is likely to last for some time. How can you best protect your client from uncertainty and expense related to the total pollution exclusion?

Even before a claim is filed, when selecting or renewing CGL policies, companies should closely review any provisions regarding “pollution,” and evaluate their potential liability under a variety of factual scenarios. In jurisdictions broadly interpreting the scope of the total pollution exclusion, policyholders should purchase additional pollution coverage.

If a dispute regarding coverage arises, policyholder counsel can look to some of the above arguments, as most jurisdictions apply some variation of the rule that insurance policy provisions must be interpreted broadly and in favor of coverage. Contrary precedent may very well be distinguishable based upon the facts of the case and may even render the exclusion ambiguous. Prior decisions and rationales set forth by courts in the policyholder’s jurisdiction are likely to be inconsistent and often lead to conflicting results when applied to the facts of your client’s case. If so, resort to well established principles of policy interpretation to establish the insurer’s obligation to provide policy benefits. You may be able to properly frame the coverage determination in favor of finding coverage.

Don’t limit yourself. If your jurisdiction’s case law is not well-developed, it may be that that your best arguments come from other states, or that the issue needs to be reviewed by a higher court. Even if your jurisdiction has set forth a standard, your case may present a need to update that standard to make it more specific or general. Lastly, stay aware of how your arguments in the coverage case may impact your client in handling the underlying claim; in some jurisdictions, you may have grounds for a stay of the coverage dispute while the underlying action is pending.

* Eric Little is the managing partner of Little Reid & Karzai LLP in Irvine, California. And solely represents policyholders. Jacqueline Beaumont is an associate at Call & Jensen in Newport Beach, California, and was counsel for the policyholder in Great American v. M.S. Industrial, Inc.

1 Porterfield v. Audubon Indem. Co., 856 So. 2d 789, 800 (Ala. 2002).

2 The development of the pollution exclusion clause is relatively uncontroverted and has been extensively discussed by the courts; among the most comprehensive treatments are in Belt Painting Corp. v. TIG Ins. Co., 100 N.Y.2d 377, 384-87 (N.Y. 2003); Am. States Ins. Co. v. Koloms, 177 Ill. 2d 473, 489-492 (Ill. 1997).

3 See id.

4 See id.

5 See id.

6 See id.

7 See id.

8 See id.

9 See id.; see also discussion in Porterfield, 856 So. 2d at 796 (Ala. 2002); MacKinnon v. Truck Ins. Exch., 31 Cal. 4th 635, 650 (Cal. 2003).

10 The absolute pollution exclusion in ISO Form CG 00 01 12 07 states in relevant part that the policy shall not apply to ““Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants” ….” Pollutant is defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

11 This carve back to the pollution exclusion typically states that the pollution exclusion does not apply to personal injury and property damage “caused by heat, smoke or fumes from a hostile fire” … which is defined as one that “is uncontrollable or breaks out from where it was intended to be.” Maffei v. Northern Ins. Co. of N.Y. 12 F3d 892, 895 (9th Cir. [Cal.] 1993).

12 Stempel on Insurance Contracts, 3d. Ed., 14-166 (14.11[C]) (2007).

13 See discussion in Porterfield, 856 So. 2d at 800-806 (Ala. 2002).

14 Apana v. TIG Ins. Co., 574 F.3d 679, 680 (9th Cir. [Haw.] 2009) (internal quotations omitted).

15 See Porterfield, 856 So. 2d at 801 (Ala. 2002) (discussing cases and history of exclusion).

16 Many cases and articles have extensively cited the two camps and representative decisions.See, e.g., Apana, 574 F.3d at 682-683 (9th Cir. [Haw.] 2009), MacKinnon, 31 Cal. 4th 635, 650 (Cal. 2003).

17 Sullins v. Allstate Ins. Co., 340 Md. 503, 508 (Md. 1995).

18 Id. at 517-518.

19 Nav-Its, Inc. v. Selective Ins. Co. of Am., 183 N.J. 110 (N. J. 2005).

20 Whittier Properties, Inc. v. Alaska Nat. Ins. Co., 185 P.3d 84, 90 (Alaska 2008); Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 288 (2008).

21 See Century Sur. Co. v. Casino W., Inc., 677 F.3d 903 (9th Cir. 2012)(certifying question to Nevada Supreme Court); Nationwide Mut. Ins. Co. v. Overlook, LLC, 785 F. Supp. 2d 502, 511 (E.D. Va. 2011)(discussing prior certification of question of law, which Supreme Court of Virginia “declined to accept,” and resolving issue); Apana v. TIG Ins. Co., 574 F.3d 679, 684 (9th Cir. 2009)(certifying question to Hawai’i Supreme Court); City of Chesapeake v. States Self-Insurers Risk Retention Group, Inc., 271 Va. 574 (2006)(answering prior certified question regarding application of exclusion in Virginia); see also Eott Energy Pipeline Ltd. P’ship v. Hattiesburg Speedway, Inc., 303 F. Supp. 2d 819, 821, 824 (S.D. Miss. 2004) (noting in diversity case that “the Mississippi Supreme Court has yet to decide a case involving a pollution exclusion of any kind in an insurance policy” and that “if this Court had the power to do so, it would certify this issue to the Mississippi Supreme Court.”);Bituminous Cas. Corp. v. Cowen Const., Inc., 55 P.3d 1030 (Okla. 2002)(answering certified question regarding scope of pollution exclusion).

22 See, e.g., Am. States Ins. Co. v. Koloms, 177 Ill. 2d at 493-493 (Ill. 1997); Doerr v. Mobil Oil Corp., 774 So. 2d 119, 126 (La. 2000) opinion corrected on reh’g, 782 So. 2d 573 (La. 2001); Andersen v. Highland House Co., 93 Ohio St. 3d 547, 551 (Ohio 2001); Gainsco Ins. Co. v. Amoco Prod. Co., 53 P.3d 1051, 1066 (Wyo. 2002).

23 See MacKinnon, 31 Cal. 4th at 650 (Cal. 2003) and cases cited therein.

24 See, e.g., Sullins, 340 Md. At 515-516 (Md. 1995); Andersen, 93 Ohio St. 3d 547 (Ohio 2001).

25 See Regional Bank of Colorado v. St. Paul Fire and Marine Ins. Co. 35 F.3d 494, 498 (10th Cir. [Colo.] 1994).

26 See discussion in Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 948-49 (Ind. 1996) (exclusion was in garage policy issued to gas station); Ayersman v. W. Virginia Div. of Enviromental Protection, 208 W. Va. 544, 546 (W. Va. 2000) (skeptical of applying exclusion to “p[rimary function” of insured state department of environmental cleanup and protection.”

27 Donaldson v. Urban Land Interests, Inc., 211 Wis. 2d 224, 233 (Wis. 1997).

28 See MacKinnon, 31 Cal. 4th at 650 (Cal. 2003) and cases cited therein.

29 See, e.g., Nautilus Ins. Co. v. Country Oaks Apartments Ltd., 566 F.3d 452, 458 (5th Cir. [Tex.] 2009); see also Heyman Associates No. 1 v. Ins. Co. of State of Pa., 231 Conn. 756, 776 (1995).

30 See Cold Creek Compost, Inc. v. State Farm Fire & Cas. Co., 156 Cal. App. 4th 1469, 1480-1486 (Cal. App. 2007); Cas. Co. of Reading, PA v. Miller, 159 Cal. App. 4th 501, 514-516 (Cal. App. 2008); and cases discussed therein.

31 Compare the decision of the Illinois Supreme Court in American States Insurance Company v. Koloms, 177 Ill. 2d 473 (1997); MacKinnon has been cited in approximately three times more pollution exclusion cases in its own federal and state jurisdictions for the number of years the decision has been on the books.FOR MORE INFO CONTACT JACQUELINE BEAUMONT

Social media is a powerful tool to link businesses with potential customers. Mastering the initial business aspects of growing a social media presence is only the first step; it is equally critical to recognize and address the significant legal risks that go along with it. If you are a business executive, HR professional, or in-house counsel, the odds are that your inbox is cluttered with emails about the latest social media issue. This article cuts through the chaos and covers the top areas of legal risk that you need to understand and control.

1. PROTECT AGAINST DISCLOSURE OF TRADE SECRETS AND CONFIDENTIAL INFORMATION.

In recent years, the spread of social media has posed even greater challenges to the confidentiality of corporate information. Knowingly or not, employees now have the opportunity to disclose confidential information on social media websites, in blogs and even anonymous comments. California courts have long held that widespread, anonymous disclosure of company information over the Internet may destroy its status as a trade secret. To keep valuable company information confidential, and avoid losing intellectual property rights, (1) clearly identify and mark company confidential information, (2) provide clear guidance to employees regarding maintaining confidentiality, especially in social media and (3) restrict disclosure of such information to a need-to-know basis.

2. TRAIN SUPERVISORS ON THE MANY HR ISSUES RAISED BY SOCIAL MEDIA.

Social media raises a host of human resources issues when “Myspace” clashes with “my work space.” Employers commonly scour the Internet for a more candid glimpse of job applicants and social media now provides instant answers to those “donʼt ask” questions (marital status, religion, etc.). If you would not ask it in an interview, do not base an employment decision on the same information gleaned from a Facebook page. More importantly, implement a thorough hiring and screening process to help later prove that hiring decisions were not based on illegal criteria. Harassment, discrimination, retaliation and privacy claims are also impacted by employeesʼ access to personal details about coworkers in social media: “Can I, should I, ʻfriendʼ my boss?” “What if I was ʻtaggedʼ in a photo from the office party?” While it may be a tempting solution to monitor all employeesʼ social media content, as of 2013 a new law, California Labor Code § 980, prohibits employers from asking employees for access to social media passwords, with limited exceptions. Instead, instruct supervisors that conduct in cyberspace can be the basis for employment claims. As courts are increasingly turning to the Internet for evidence of discriminatory intent, train employees not to post information that could contribute to a hostile work environment.
3. ENSURE COMPLIANCE WITH SECURITIES LAWS.

Social media poses particular risks for publicly-traded companies. The line between private and public life has blurred, particularly for executives privy to earnings data and forecasts. Shareholders increasingly demand up-to-the-minute information, and potential investors “follow” corporate thought leaders through a variety of outlets. In 2008, the SEC published guidance about when disclosure of information on a company website might be deemed “public” under Regulation Fair Disclosure (“Reg FD”). Last year, the SEC issued its first Wells Notice to Netflix for potential violations based on a Facebook post by its CEO. The SEC has also investigated Whole Foods and threatened to block its purchase of competitor Wild Oats after its CEO was caught using a pseudonym to make critical statements online to lower Wild Oatsʼ stock price. Even the FBI has used social media to investigate possible insider trading and securities fraud. All publicly-traded companies must understand and communicate clear rules regarding what is and is not appropriate, legally, to post about the companyʼs business. Do not let an errant “tweet” turn into a full-blown SEC investigation.
4. INTERACT WITH COMPETITORS APPROPRIATELY.

Develop a strong company policy against making comments in social media about competitors to avoid legal claims, including disparagement, defamation and interference with business. Respect the intellectual property of others. Sidestep legal disputes by avoiding use of competitorʼs names (e.g. “betterthanacme.com”). In addition, guard against the risk of an antitrust investigation or claim by instructing employees not to share information via association-sponsored social networking that could be construed as a violation of antitrust laws. Employees should understand that encouraging anticompetitive practices is illegal whether via social media or any other format.
5. PROTECT TRADEMARKS AND PATENTS.

Social media communications are often informal, and response times quick. Nevertheless, always use full and consistent company trademarks and trade names. Continuous and consistent company use is vital to retaining legal protection of the trademarks. Protect against impersonation and “cybersquatting” by others by promptly issuing cease-and-desist demands, and pursue legal action if needed under the Anticybersquatting Consumer Protection Act and other channels.
6. COMPLY WITH TRUTH AND ACCURACY LAWS IN ADVERTISING, ENDORSEMENTS AND CONTESTS.

A host of federal and state laws require truth in advertising. When posting about the features of a product, be certain that your comments are not misleading. The Federal Trade Commission has issued new rules specific to the disclosure of endorsements in social media, such as when a blogger is paid to post about a product. Employees who truly love your companyʼs product should disclose their relationship whenever posting a favorable review. Also, be aware that numerous state laws and regulations govern online contests, lotteries, prizes, reward practices and sweepstakes. Consult legal counsel before providing any incentives online.
7. USE LEGAL PRIVACY AND DATA COLLECTION PRACTICES.

Certain laws, such as HIPAA, govern the collection of personal information. Privacy considerations also apply to social networking sites. For example, websites that collect information from children under the age of 13, such as on a “fan” page, are required to comply with the federal Childrenʼs Online Privacy Protection Act. If personal data collection is anticipated, post a privacy notice describing data collection and use practices. In addition, the federal CAN-SPAM Act and state laws establish requirements for commercial messages sent via email. Thoroughly vet your companyʼs online interactions with legal counsel for compliance with data collection and privacy rules.

8. ENSURE THAT YOUR COMPANY, NOT YOUR EMPLOYEES, OWN SOCIAL MEDIA ACCOUNTS.

Be clear with your employees that social media and blogging accounts that they register, author or contribute to for company business – and any accounts or pages that contain the company name, product names or trademarks – are company property. The best practice is to register the account in the companyʼs name, and use the company name in the handle. Do not give a single employee exclusive knowledge of all credentials, and ensure that policies and new hire agreements clarify that accounts and log-in credentials belong to the company. Conduct exit interviews and ensure that accounts are transitioned and passwords changed when an employee leaves.

9. UNDERSTAND THAT SOCIAL MEDIA CAN BE REQUESTED IN DISCOVERY AND USED AS EVIDENCE.

Social media is permanent. Even if it is “deleted,” written over, or password-protected, content may be retrieved through search engines, archives, web-crawlers, dated print-outs, forensic retrieval, or an ISP or services provider/host. Even anonymous blog postings may be traceable through IP addresses.

Social media may also be used in court as evidence. Companies are increasingly dealing with specific requests for social media in electronic discovery, and many broad legal requests will encompass online content. Ensure good custodial practices by updating your electronic document retention policies to encompass company social media. Without clear guidance, employers run the risk that their default procedure will write over Internet data, potentially subjecting them to legal sanctions for destroying relevant evidence.

When put on notice of a potential legal claim, you should immediately issue a “litigation hold order,” instructing pertinent employees to preserve evidence (including relevant personal devices, non-company emails or social media accounts). Fulbrightʼs 2013 Annual Litigation Trends Survey Report shows an increasing number of U.S. companies have had to preserve or collect data from an employeeʼs personal social media account (20 percent), or mobile device (41 percent), in connection with a dispute or investigation.

10. PROACTIVE COMPANIES MUST CREATE A SOCIAL MEDIA POLICY FOR EMPLOYEES.

To help mitigate risk and avoid PR disasters, it is critical to develop a clear social media policy that sets boundaries while balancing employee rights, including the right to criticize the company or complain about working conditions. Your policy can and should encourage professionalism and civility, prevent employees from wasting work time, prohibit harassment and discrimination, protect confidential information and trade secrets, and avoid unauthorized statements on behalf of the company. On the other hand, your policy should not prohibit employees from making disparaging comments, posting photographs, or discussing wages or working conditions. Over the past year, the NLRB has aggressively attacked social media policies that could chill concerted activity. Although the NLRBʼs authority may now be in question (a court recently found President Obamaʼs recess appointments to the NLRB to be “constitutionally invalid”), it is important to harmonize your social media policy with your employeesʼ protected rights. A good company policy should be simple, yet complete, establishing clear boundaries and proactively addressing issues of confidentiality, responsibility for social media comments, and other legal issues.

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Call & Jensen was recently honored in receiving the 2013 Corporate LiveWire Global Award for California Labour & Employment Law Firm of the Year. The Global Awards identify the successes of businesses, finance firms and individuals who have led the way in every sector over the past twelve months. They are compiled by Corporate LiveWire, a resource for professionalsin the global corporate and business community, to honor those who standout as consistently showing best practice and innovation in their work. Call & Jensen is honored to receive this award alongside fellow law firm awardees including Gibson Dunn, Littler, Latham & Watkins, DLA Piper, and Davis Polk & Wardwell.

Call & Jensen is a full service civil litigation boutique that handles high stakes employment litigation and business matters throughout California and the country. Founded in 1981 with lawyers from the nation’s best law schools and the world’s most well respected firms, the firm’s clients include a list of some of the largest companies in the world. Call & Jensen litigates with excellence and dedication to its clients’ objectives. In addition to countless defense verdicts and judgments, Call & Jensen has also obtained seven and eight figure verdicts, judgments, and settlements when representing its corporate clients as plaintiffs.

Attorneys of the firm practice at all trial and appellate levels, and represent clients in responding to federal and state agencies. The firm handles issues for its clients in all key areas including employment and labor, intellectual property, trade secrets, commercial litigation, complex class actions, real estate, false advertising and unfair competition, and product liability. Located near federal and state courts in all seven Southern California counties, Call & Jensen attorneys are also regularly tapped to serve as pro hac vice or admitted counsel for cases across the country.

Call & Jensen offers its clients a team of attorneys with extensive expertise in all aspects of employment and labor law. Call & Jensen attorneys have extensive experience in litigating discrimination, harassment and retaliation cases under Title VII and California’s Fair Employment & Housing Act. Some of the firm’s most notable results have included employer judgments and dismissals in wage and hour class actions, claims for misappropriation of trade secrets, and employment-related tort claims.

In addition, Call & Jensen attorneys regularly provide advising regarding reductions in force, the WARN Act, employee investigations and terminations, drafting and implementing workplace policies and employee handbooks, employee compensation and bonuses, workplace privacy matters, social media and internet issues, and issues relating to competition and solicitation of employees. As experts in the field, Call & Jensen attorneys are frequently invited to speak at conferences, and regularly publish articles on hot topics and emerging issues.

Complex cases often contain multiple disciplines. All of the attorneys who practice employment law at Call & Jensen have also litigated contract disputes and business tort claims, and represent companies in commercial negotiations and mediation. This diversity of practice ensures that each of Call & Jensen’s litigators have a broad business knowledge and capabilities. The firm is thus able to take a two-pronged approach to incoming employment lawsuits and potential issues, combining deep employment law knowledge with the ability to skillfully and strategically litigate at the highest level of practice in court.

Beyond the tangible metrics of success, Call & Jensen is devoted to specific principles and values, born of its client-centered approach. These principles and values are what make the Firm not only successful but unique.
Contact Jacqueline Beaumont or Julie Trotter for more info.

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A sea change in the U.S. workforce is swelling.  Over the past 10 years, companies looking for alternatives to the traditional employee work model have increasingly turned to contingent arrangements.  Recent data suggests that 30-40% of American workers hold part-time, temporary, or contract positions.  According to a Randstad Workforce360 Study, two out of three U.S. companies are already using contingent workers.  Moreover, while U.S. companies lead the world in using temporary workers as a core part of their business strategy, surveys show the rest of the world is not far behind in the quest for new work paradigms as the economic issues contributing to this shift become globalised.  Business executives, in-house counsel, and HR professionals must strategically analyse legal issues surrounding the contingent workforce to stay ahead.  This article addresses the key issues you need to understand.

GROWTH OF CONTINGENT STRATEGIES

The U.S. Bureau of Labor Statistics defines contingent employees as “those who do not have an implicit or explicit contract for ongoing employment.”  While there are many possible contingent work relationships, the most common are workers leased through temporary agencies, independent contractors with a defined scope and duration of work, and interns.  The most recent U.S. Department of Labor survey found that roughly 30 percent of the American workforce (or 42.6 million people) are in contingent positions, and the Bureau of Labor Statistics estimates that this figure has increased by at least 30 percent since the last survey in 2006.  In its latest report on trends shaping the next decade, tax preparation software company Intuit estimated that by 2020, 40 percent of U.S. workers will be in contingent positions.

BENEFITS OF USING A CONTINGENT WORKFORCE

Companies can derive a number of benefits from using a contingent workforce.  Temporary hires and contractors are less expensive than traditional employees because companies generally do not pay them benefits like health insurance, vacations and holidays.  Employers can also avoid social security and Medicare taxes, and do not make unemployment contributions for leased workers.  Using an agency to prescreen workers and manage employment issues also reduces administrative and human resources burdens.  Temporary workers are particularly popular in times of economic instability because they tend to increase efficiencies and flexibility as companies can reduce or increase contingent workers during periods of low or high demand/production.  A temp-to-hire method of screening employees may lead to better and more lasting permanent hire decisions.  High-talent consultants typically unaffordable to a company for a permanent position may be hired for short periods on specific projects.

RISKS OF USING AGENCY EMPLOYEES AND CONTRACTORS

While there are many benefits to a contingent workforce, companies must also be aware of the risks.  Widespread use of temporary workers to perform job functions similar to full-time employees may lead to worker tensions and a decreased sense of security.  High turnover can increase training costs, add inefficiencies, and create knowledge gaps – for instance, if a temporary worker is put in charge of a segment of work and the assignment ends without an effective transition.

One of the most significant risks is the possibility of misclassification lawsuits alleging that workers should have been classified as “employees,” and are now owed benefits and other back pay.  Microsoft’s landmark settlement of $97 million with its “permatemps” in 2000 still serves as a cautionary tale, and there has been a recent rise of internship class action lawsuits.  Moreover, governments at both the federal and state level are focusing on this hotbed issue.  The IRS recently conducted a three-year project that included 2000 employee audits per year on worker classification and other issues.  Over a dozen states have introduced model professional employer organisation legislation.  California recently introduced stiff new penalties of $5,000 to $25,000 per violation for willfully misclassifying a worker as an independent contractor.  The U.S. Congress is also expected to reintroduce a bill that would limit “safe harbour” relief under Section 530 of the Revenue Act for misclassifying independent contractors.

REDUCING LEGAL RISKS

The popularity of the contingent workforce model suggests that companies view the benefits as outweighing the risks, and the following guidelines can help reduce those risks:

1. CENTRALISE DECISIONS ON CONTINGENT WORKFORCE STRATEGY AND CONTRACTS. 

Companies are vulnerable when different managers make decisions regarding worker classification, whether to hire interns or temps, and which agencies to use. Decentralised planning can lead to redundant or undesirable contracts, inefficiencies, additional expenses, and mixed messaging about how the company views employees.  Moreover, hiring global contingent workers presents its own set of issues with respect to visas, international laws, state laws, contract issues, and tax risk. Centralise decisions over long-term strategy, contracts, and temporary worker allowances to ensure the right direction for your company.

2. PROVIDE GUIDANCE TO MANAGEMENT ON WORKER CLASSIFICATION.

State and federal definitions of employee, interns and independent contractors vary; therefore companies must ensure that their employees are properly classified federally and in every state to avoid claims.  In general, the amount of direction and control you exert over the individual is critical in determining whether the worker is an employee or independent contractor.  Interns must meet a six factor test under the U.S. Department of Labor regulations to avoid wage and hour liability.  Further, even if employed by a professional employer organisation, a temporary worker could claim joint employment by both the agency and the client if the worker meets the “employee” definition.  In this regard, it is prudent to carefully scrutinise liability terms and indemnity provisions in temp agency contracts.  Since managers, and not company executives, interact with the workforce on a daily basis, managers also need to be apprised of the legal tests to ensure that workers’ duties do not stray into an area that would create an employment relationship and lead to company exposure.

3. REGULARLY AUDIT WORKER CLASSIFICATION.

Regular audits as to whether temporary workers, contractors and interns are properly classified can reduce exposure to claims of joint employment and misclassification.  Audits also provide an opportunity to ensure that the use of temporary workers is consistent with long-term objectives, and analyse whether workers can be realigned or reclassified.

4. LIMIT THE LEVEL OF DISCRETION AND ACCESS TO COMPANY INFORMATION AS APPROPRIATE.

Temporary workers may not be as loyal to the company, particularly when it comes to keeping business information confidential.  Moreover, with the higher turnover rate of contractors and temps, managers need to be instructed to carefully consider whether to put sensitive projects or pieces of company information under the sole management of a contractor.

5. MANAGE

Job search company CareerBuilder reported that 42 percent of surveyed employers using outside temp workers plan to hire temps in 2013.  When converting temporary workers to employees, you should ensure that they are properly classified in their new roles.  The scope of the workers’ job duties may change, as well as the salary basis, which should trigger a review to confirm that workers are being properly classified as exempt or non-exempt from federal and state wage-and-hour laws.

CONCLUSION

By keeping up to date on the changing federal and state landscape, conducting regular audits, thinking strategically about long-term goals and contracts, and providing proper guidance to managers, you can ensure that your company’s contingent workforce is delivering an overall value to your company.  
Contact Jacqueline Beaumont or Julie Trotter for more info.

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Cross-border employment relationships provide valuable growth opportunities for employees while giving companies access to unique talent, skill sets, and points of view. Employees may seek expatriate opportunities for personal reasons or professional development.  According to a recent Mercer survey, 70% of companies expected to increase their short-term expat assignments.  Employers large or small, however, need to be aware that easy mobility raises complex legal issues.  In addition to tax and jurisdictional consequences, employers need to consider litigation risks and what happens when the relationship ends.

Establishing the Employment Relationship

Many articles examine the tax ramifications of expat assignments, but from a litigation perspective the “who” and the “what” are equally important.  Who is the employer?  And is an employment relationship even necessary?  Companies should consider whether they can use distributors, subsidiaries or other entities such as third-party agencies to shield the parent from having a presence in the foreign country.  Other times companies desire to shield the host-country entity, and instead designate the home-country entity as the employer.

Secondments, dual employment, and localization have benefits and drawbacks.  As experienced litigators know, however, it is not the label alone that matters. Companies need to be consistent.  For instance, if the home-country entity is to be the sole employer, ensure the employment offer comes from the home country, the home country is actively involved in monitoring the assignment (i.e. fielding questions from the employee, guiding the employee through personnel actions like reviews, PIP’s etc.), the employee has a resource at the home-country entity, and the home country makes essential personnel decisions.  If, instead, the home country desires to avoid jurisdiction or a presence in the host country, it should take a back seat and let the host-country entity control the employment relationship.  Absent clear demarcation, the employee could be entitled to the protections and benefits of both countries.

A related consideration is whether the company structured its compensation package in a way that could artificially inflate a potential damages award.  Companies that attempt to neutralize tax consequences for expats by inflating their base salary may be surprised when this inflated number is used to calculate damages.

Hoping to avoid legal and financial consequences of a foreign employment relationship, many companies turn to independent contractors. However, countries around the world closely scrutinise these arrangements and have different or more extensive requirements than the U.S.

Legal Landmines for Independent Contractors

As in the U.S., the main factor for determining independent contractor status in many countries is the control the employer retains regarding how tasks are performed, hours, location, business risk, payment terms, and other aspects of the relationship.  A written agreement is just the starting point.

Some countries presume an employer/employee relationship exists (e.g. Mexico, Panama, Costa Rica, Venezuela, Chile, Peru, Portugal, South Africa, the Netherlands).  In many, economic dependence is a critical factor.  In Spain, for example, individuals who derive at least 75% of income from a single client are entitled to vacation, severance and other benefits.

1. Rules for Independent Contractor Agreements

In some countries, independent contractor agreements should contain special provisions.  In India, for instance, the agreement should accurately state the contractor has a “permanent tax account number” and withholds and pays his own taxes. Reference to the Turkish Code of Obligations is required in Turkey, and in Indonesia the agreement should expressly invoke the Indonesian Civil Code.  Various countries have specific registration requirements for independent contractors, (e.g. Russia, Israel), and the agreement must reference them.

Consequences for misclassifying expats can be severe, including government or agency actions for failure to withhold taxes and social charges leading to civil and criminal penalties and/or an action by the “contractor” for vacation, termination rights and other employee benefits.

2. Potential Liability for Misclassification

Companies on the losing side of a misclassification analysis face financial and operational consequences.  In the U.S., liability usually consists of six categories:

1. Taxes
2. Social security
3. State unemployment/workers compensation insurance
4. Overtime
5. Employer plan benefits
6. Interest/penalties

Abroad, a misclassified contractor may trigger the above, plus additional liabilities:
7. vacation, back holidays
8. mandatory benefits (i.e. profit sharing, thirteenth-month pay, mandatory  bonus, payments to state housing and unemployment funds)
9. Severance pay, notice pay and liability for unfair dismissal
10. Fines, percentages of unpaid withholdings, penalties for severe violations

Independent contractors who are improperly classified must be paid like employees (taxes, social benefits, paid childbirth leave, etc.).  Misclassification may also result in an entity being deemed to have a presence in the foreign country, leading to severe tax and other consequences.

Handling Real and Perceived Cultural Differences and Discrimination

Regardless of whether an individual is deemed an employee or an independent contractor, companies with a global workforce face increased legal risks when expat employees are thrust into new environments.  Real or perceived cultural differences and work habits can lead to discrimination or harassment claims.  A good training program and dedicated HR specially trained to handle expats can help avoid misunderstandings.

Title VII and the ADA apply extra-jurisdictionally to protect U.S. citizens working abroad for American companies. Most other countries also have laws prohibiting discrimination and harassment in the workplace, and many countries have more expansive protections than the U.S., like prohibiting bullying or moral harassment.

In the U.S., employers may not discriminate based on national origin.  Thus, employers may face liability if expat employees are treated differently because they are from a certain country or display the physical, cultural or linguistic characteristics of a particular national group.  29 C.F.R. §§ 1606.1.  On the other hand, expats are not entitled to protections based on their citizenship status alone.

Joint Employment and Jurisdictional Concerns

Companies often confront litigation in one or more countries, against multiple corporate entities.  Commonly, both the host and home entities are named as joint employers. For instance, where the home country is set up as the employer and payor, but the host country supervises the day-to-day workplace activities both companies would likely be named in the lawsuit. If avoiding foreign jurisdiction is of paramount concern, the home entity should minimise its oversight of the assignment.  This goal must be balanced against the possibility the employee will be deemed an employee of the host entity, subject to the full protections afforded in the host country.

The broader implications of the company’s position on the “who” aspect of the employer relationship should also be considered.  What jurisdictional challenges exist, and will they be undermined by the way the company has designated the employing entity?  Have all the technicalities of the Hague Convention been satisfied, or does the host country afford similar protections and opportunities to the claimant such that the home entity can mount a challenge based on forum non conveniens?  Also, can an arrangement be reached with opposing counsel to avoid costly legal challenges with potentially far-reaching ramifications on jurisdiction and entity status?

Conclusion

Expat assignments can be rewarding for both the employee and company, but it is important to consider what happens if things go wrong.  Considering litigation risks and challenges unique to cross-border employees can help companies make the best choices when structuring the “who” and “what” of the relationship.

Call & Jensen is a full service civil litigation boutique that handles high stakes employment litigation and business matters throughout California and the country.  Founded in 1981 with lawyers from the nation’s best law schools and the world’s most well respected firms, the firm’s clients include some of the largest companies in the world.  Call & Jensen litigates with excellence and dedication to its clients’ objectives.  In addition to countless defence verdicts and judgments, Call & Jensen has also obtained seven and eight figure verdicts, judgments, and settlements when representing its corporate clients as plaintiffs.

Attorneys of the firm practice at all trial and appellate levels, and represent clients in responding to federal and state agencies.  The firm handles issues in all key areas including employment and labour, intellectual property, commercial litigation, complex class actions, real estate, false advertising and unfair competition, and product liability.  Located near federal and state courts in all seven Southern California counties, Call & Jensen attorneys are regularly tapped to serve as counsel for cases across the country.

Call & Jensen offers its clients a team of attorneys with extensive expertise in all aspects of employment and labour law, including litigating discrimination, harassment and retaliation cases under Title VII and California’s Fair Employment & Housing Act.  Some of the firm’s most notable results have included employer judgments and dismissals in wage and hour class actions, trade secrets cases, and employment-related tort claims.  In addition, Call & Jensen attorneys regularly provide workplace and employment law advising.  

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Call & Jensen is a full service civil litigation boutique that handles high stakes employment litigation and business matters throughout California and the country. Founded in 1981 with lawyers from the nation’s best law schools and the world’s most well respected firms, the firm’s clients include a list of some of the largest companies in the world. Call & Jensen litigates with excellence and dedication to its clients’ objectives. In addition to countless defense verdicts and judgments, Call & Jensen has also obtained seven and eight figure verdicts, judgments, and settlements when representing its corporate clients as plaintiffs.

Attorneys of the firm practice at all trial and appellate levels, and represent clients in responding to federal and state agencies. The firm handles issues for its clients in all key areas including employment and labor, intellectual property, trade secrets, commercial litigation, complex class actions, real estate, false advertising and unfair competition, and product liability. Located near federal and state courts in all seven Southern California counties, Call & Jensen attorneys are also regularly tapped as counsel for cases across the country.

Call & Jensen offers its clients a team of attorneys with extensive expertise in all aspects of employment and labor law, including litigating discrimination, harassment and retaliation cases under Title VII and California’s Fair Employment & Housing Act.  Some of the firm’s most notable results have included employer judgments and dismissals in wage and hour class actions, trade secrets cases, and employment-related tort claims.  In addition, Call & Jensen attorneys regularly provide workplace and employment law advising.

Contact Jacqueline Beaumont or Julie Trotter for more info.
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Call & Jensen Shareholder Scott Shaw provided his insights into consumer goods and retail trends in a recent Roundtable published in the Los Angeles Business Journal. Participating in a dialogue that included other experts from UPS and Marcum, Mr. Shaw weighed in on issues ranging from the Sharing Economy to legal challenges facing retailers and manufacturers of consumer goods.

Mr. Shaw represents retailers and businesses in the areas of intellectual property, business and employment litigation, with an emphasis in fashion law and action sports. 

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