Part One: GENERAL TOPICS

I. Sustainable Innovations for a Changing Global Workforce

A. Introduction

Littler's Global Employer Institute—now in its fifth year—commenced with a high-level overview of technological, economic and demographic trends that will influence workplaces around the globe.1 Our starting point always has been to look at the most recent statistics on Internet use across the world. A fascinating feature of such data is the greatly accelerated curve over the past two years: from 1.97 billion users in 2010 to 2.4 billion users in 2012.2 More than one-third of the world's population is connected by the Internet, and information no longer can be siloed. Be it in Syria, Egypt, or the most remote part of the globe, there is easy access to vast quantities of information. Other data show a dramatic shift in the world's center of economic gravity, from the United States and Europe towards Asia and Latin America. A study by the McKinsey Global Institute looks ahead to the year 2025 and identifies what will be the most dynamic and vibrant cities, with the greatest growth, innovation and economic potential. And of the top 75 cities on this list, 41 are in Asia and eight are in Latin America.3

Below is an overview of six global topics and trends, many of which are covered in greater detail in other sections of this Report.

B. Key Global Topics for Consideration

Changing Face of Latin America—Employment & Labor Law Reform

The Latin American countries are endowed with abundant natural resources that will dictate the region's future. Looking at the region's economic and employment growth, the United States has been a major economic partner during the past several years. Between 1998 and 2009, U.S. trade with Latin America grew by 82%, making Latin America the fastest-growing U.S. regional trade partner. Mexico composed 11.7% of total U.S. trade in 2009 and is the largest Latin American trade partner.4

With respect to the Latin American workforce, a major issue is informal employment.5 In Mexico, for example, almost 60% of economically active people are employed in informal jobs with no contract and few or no benefits. The number of Mexicans working informal jobs reached 29.2 million in 2012.6 So a main economic challenge is how to generate formal jobs.

This challenge is one of the factors that led to Mexico's government enacting, in November 2012, major amendments to the Federal Labor Law (FLL). The debate about whether to amend the FLL centered on whether to be more rigid, or to be more flexible in order to attract more businesses and generate more jobs. The FLL had not been subjected to any substantial modifications since 1970. The reform represents a milestone towards the establishment of a more modern and competitive labor framework. Key aspects of the reform include: adding seasonal employment agreements and initial training agreements as new types of employment contracts; heightening the regulations on outsourcing (subcontracting); adding bullying and sexual harassment as new grounds for termination with cause; simplifying the notice of dismissal requirements; limiting the accumulation of back wages to 12 months; and implementing various changes that will promote union transparency and accountability.7

The debate about flexibility versus rigidity in the labor market extends beyond Mexico and is occurring across the South American continent:

  • Venezuela reformed its labor law in May of 2012. As just one example of the amended provisions, there is now criminal liability in case of noncompliance with labor laws. Prosecutions have occurred in four cases to date—in one case, the company went bankrupt and the company's president received a jail sentence.
  • In Colombia, certain legal provisions prohibit acts against unions, with criminal liability attached.
  • Brazil is a massive developing market, and companies are scrambling to locate there. But it is a very expensive place to terminate employees, because it is not clear whether any statute of limitations applies, or whether rights are voided at the end of the employment relationship even with a release. It has become common place for an employee who leaves a company to file suit, since the statute allows employees to do so. Some companies have as many as 100,000 termination cases pending, and counting. So, litigation costs are increasing all the time.

Latin America is poised as the next region to experience growth on the scale of that seen in China, but companies must understand the various countries' complicated labor laws in order to be profitable and successful. For a more detailed discussion of this topic, see section XII below ("Protecting Your Operations in Latin America: Risks and Opportunities in the Region's Current Legal Landscape").

The Second Time Around: The Obama Administration's Impact on Global Employment and Labor Law

During President Obama's first term in office, Littler tracked the momentous changes that his administration brought about in the U.S. employment landscape, through increased enforcement, rulemaking and other agency activities.8 It is expected that President Obama's second term will have an even greater impact on employment and labor law, both domestically and globally.

First, it is anticipated that Congress will make a real effort in immigration reform9, and with a much higher probability of passing, given the critical role of Hispanics in the 2012 election and the desire to ensure that they are integrated into the political family, not just for the Democrats, but also for the Republicans.

Second, continued expansion of whistleblower protection and enforcement is expected through efforts of the Obama Administration and models that are being set up and followed all over the world. For a more detailed discussion of this topic, see section X below.

Third, is an expected surge in global unionization. Although the United States is seemingly removed from the major influences of organized labor, with union membership at about 7% of the private sector workforce,10 unions are incredibly vibrant at the international level and have strong support from the Obama Administration. The number one financial contributor to Obama's reelection campaign, more than any of the "Super PACs," was the Service Employees International Union,11 and the payback will be in things that might seem completely off the radar screen. For example, as part of the U.S./Colombia free trade agreement that was negotiated recently, the United States mandated that Colombian laws and regulations be revised to make it easier for unions to organize, and that government funding be provided to run advertising to promote unionization.12

In anticipation of hyper-active administrative creation and enforcement of regulations during Obama's second term, employers should consider conducting a global compliance audit as well as unionization vulnerability assessment and training.

Global e-Discovery: a Cross-Border "Catch 22"

It has been estimated that only 1% of the data existing in the world today is in hard copy format. Thus, 99% of it is in an electronic format.

It has also been estimated that, as of 2007, over 295 Exabytes of electronic data existed worldwide. If this amount of data were stored digitally on CDs, the stack of discs would reach beyond the moon.13

In the U.S., there is a very expansive view of discovery that dictates what needs to be produced in litigation. In today's digital world, that means that incredible volumes of electronic data are implicated in cases large and small. For example, in In re Fannie Mae Securities Litigation,14 even though a U.S. federal regulatory agency had hired 50 contract attorneys to review about 80% of the email of the entire agency and spent over $6 million or over 9% of the agency's annual budget to respond to a subpoena, a U.S. Court of Appeals affirmed a trial court finding of contempt against the agency reasoning that its discovery efforts were "too little, too late." In the U.S., in addition to traditional electronic data sources like documents and email, courts also allow discovery of more expansive data sources15 like social media accounts,16 instant messages,17 text messages18 and even GPS data.19 Indeed, the Advisory Committee Note to Federal Rule of Civil Procedure 34, which governs the production of documents and electronically stored information in U.S. litigation, instructs that the rule "is expansive and includes any type of information that is stored electronically ..." and is intended to be flexible enough to encompass "future developments in computer technology."20

The rest of the world takes a dramatically different approach to data production in litigation. In many countries outside of the United States, data privacy is a fundamental human right, and data privacy and blocking statutes prevent the production of data in litigation.21 As one example, in a case where a French company was sued in the U.S., the company filed a motion for a protective order, arguing that French blocking and data privacy statutes prevented production (or disclosure) of data that were located in France. The U.S. judge denied the motion and ordered the company to produce the data within 30 days. In doing so, the court specifically rejected the defendant's argument that it would face criminal prosecution in France, holding that there was a low likelihood of actual prosecution. In response to the U.S. federal court order requiring the defendant to produce the information, a French lawyer who interviewed a witness was arrested, and the French Supreme Court ultimately upheld the criminal conviction and a €10,000 fine imposed on the lawyer.22 Thus, cross-border litigants are oftentimes faced with a classic Catch-2223 conflict in which they, on the one hand, are required by U.S. rules and judges to produce extensive information from a foreign jurisdiction for use in a federal lawsuit on the threat of sanctions,24 but on the other hand, are prohibited by foreign blocking statutes, data privacy regulations and Data Privacy Commissioners from disclosing/producing that same information on the threat of severe civil and criminal penalties. And, this dilemma extends well beyond Europe: for example, if the Chinese government declares certain information to be a protected governmental secret, then the data cannot leave the country.25

A few practical suggestions regarding global e-discovery are:

  • In the context of U.S. litigation, be prepared to educate your adversary and judges, who can be very skeptical when a party states that it cannot produce data because it is located in a foreign country. One great resource for educational purposes is the Sedona Conference, which is the world's leading e Discovery non-profit think tank that has published in-depth White Papers on these issues.26
  • When foreign data are in play in U.S. litigation, start thinking about cross-border discovery issues very early in a case, including by looking for other sources of data located within the U.S. that may be equivalent to the data located outside of the U.S. and by putting procedural protections in place (e.g., a protective order that limits disclosure of data that are subject to foreign data protection laws27) at the outset of the case.
  • Be sure to educate foreign executives about discovery procedures in the U.S. and how they differ from the procedures they are most likely accustomed to. To illustrate the consequences of failing to appreciate the differences between a foreign and the U.S. legal system, one need only look to the recent case of E.I. du Pont de Nemours v. Kolon Industries.28 In that case, the court entered e-Discovery sanctions in the form of an adverse inference instruction against the South Korean defendant-company because it failed to issue timely and proper litigation holds in accordance with U.S. e-Discovery standards. The resulting e-Discovery sanctions contributed to a $919 million dollar verdict against the South Korean defendant company. 29

Disappearing Borders: Global Mobility

The Gallup World Poll,30 which covers 140 countries, measures opinions on topics such as individual well being, government leadership, and perceived corruption. One question included in the poll is whether the respondent wants to relocate from his or her country. Fourteen percent of the world's population wants to move to another country, and the primary reason is to find jobs. About 19 million people are actively making plans to move abroad.31 When respondents are asked where they would like to relocate to, North America and Western Europe are the leading responses.

The migration of highly skilled workers across national borders continues to build momentum. The New York Times recently reported that record numbers of China's highly educated population are migrating to other countries.32 In 2010, 508,000 Chinese left for the 34 developed countries that make up the Organization for Economic Cooperation and Development, which is a 45% increase over 2000.33

It will be fascinating to watch what happens in the global contest to retain and attract highly skilled workers. And, multinational employers should be prepared to adjust their practices to leverage the advantages offered by an increasingly mobile workforce. For a discussion of best practices to keep in mind when structuring global mobility programs, see section III below.

The Whistle Heard Around the World—Retaliation in the Global Workplace

As estimated by the World Bank, bribery is a $1 trillion business.34 Governments are acting to enhance their ability to prosecute those who engage in corrupt activities. Most visibly, the United Kingdom's Bribery Act of 2010, which took effect in July 2011,35 swept away antiquated and piecemeal legislation to create a regime of criminal offenses described by the Director of the Serious Fraud Office as "the toughest bribery legislation in the world."

The crackdown on bribery brings with it some greatly enhanced incentives to report corrupt activity. The Economist designated 2012 the "year of the bounty hunter" and predicted that whistleblowing statutes will be adopted in multiple countries across the world.36 The United States' Dodd-Frank Act provides that whistleblowers in Foreign Corrupt Practices Act (FCPA) and securities fraud claims can claim a 10% to 30% reward in enforcement actions where the penalties exceed $1 million,37 resulting in a dramatic increase in complaints from whistleblowers. Indeed, during fiscal year 2012 the SE C received more than 3,000 whistleblower tips.38 The IRS recently issued a record $104 million bounty to a banker-turned whistleblower who served almost three years in prison for his role in a tax evasion scheme.39

Littler attorneys have experienced such an upsurge in retaliation-based litigation and claims, in that we formed a Whistleblowing and Retaliation practice group, to advise employers on the full range of issues, including conducting investigations and ensuring global compliance with anti-corruption laws. We also partner with NAVEX Global, which provides a comprehensive suite of technology-enabled solutions to manage governance, risk and compliance.40

Two sessions of the 2012 Global Employer Institute addressed corruption, whistleblowing and retaliation issues. For discussion of these topics, see sections IX and X below.

Personal Technology & Robotics in the Global Workplace

Employers face a wide range of challenges as more and more employees use personal devices to perform work, also known as the BYOD (Bring Your Own Device) movement. This challenge is not limited to the United States, and it continues to gain momentum. A worldwide study of 3,000 information workers and business executives in nine countries found that, in just one year (from 2010 to 2011), the percentage of workers using a personally owned device to access their employer's business applications increased from 30% to 40%.41 For some companies, a BYOD policy may be the right response. But the adoption of BYOD policies will increase certain employment

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Footnotes

1 This chapter is based on the opening session of the 2012 Global Employer Institute, presented by Garry Mathiason (Chairman of the Board at Littler Mendelson, resident in the San Francisco office) with special guests Juan Carlos Varela (Office Managing Shareholder of Littler's Caracas office), Oscar De la Vega (Office Managing Shareholder of Littler's Mexico City office), Paul Weiner (Shareholder and National eDiscovery Counsel, resident in Littler's Philadelphia office) and Steve O'Brien (General Counsel, Gallup).

2 Internet World Stats, www.internetworldstats.com

3 Urban world: Cities and the rise of the consuming class, McKinsey Global Institute, June 2012, available at http://www.mckinsey.com/insights/mgi/research/urbanization/urban_world_cities_and_the_rise_of_the_consuming_class .

4 U.S.-Latin America Trade: Recent Trends and Policy Issues (Feb. 8, 2011), Congressional Research Service, available at https://opencrs.com/document/98-840/ .

5 Some of the characteristic features of informal employment are: lack of protection in the event of non-payment of wages; compulsory overtime; layoffs without notice or compensation; and the absence of social benefits such as pensions, sick pay and health insurance. See International Labour Organization website, at http://www.ilo.org/global/topics/employment-promotion/informal-economy/lang—en/index.htm .

6 Mexico: New report finds 2/3 of workforce has informal jobs, The Calgary Herald, Dec. 11, 2012, http://www.calgaryherald.com/health/workforce+informal+jobs/7684433/story.html#ixzz2ExUCUNDB .

7 Mexico Enacts Important Reforms to the Federal Labor Law, Oscar De la Vega, Mónica Schiaffino, Eduardo Arrocha, and Liliana Hernandez (Nov. 30, 2012), Littler ASAP available at http://www.littler.com/publication-press/publication/mexico-enacts-important-reforms-federal-labor-law .

8 E.g., The Coming Regulatory Avalanche: Engineering Practical Employment and Labor Law Compliance Solutions (Apr. 6, 2011), Garry G. Mathiason, Barry A. Hartstein, Ilyse W. Schuman, Littler Report available at http://www.littler.com/publicationpress/publication/coming-regulatory-avalanche-engineeringpractical-employment-and-labor ; see also The Littler Ten: Employment, Labor and Benefit Law Trends for Navigating the New Decade (Sept. 30, 2010), Garry G. Mathiason, Margaret Hart Edwards, Scott D. Rechtschaffen, Paul D. Weiner, Littler Report available at http://www.littler.com/publication-press/publication/littler-ten-employment-labor-and-benefit-law-trends-navigating-new-dec .

9 Michael Lotito & Ilyse Shuman, How Will the 2012 Election Results Impact Labor, Employment and Benefits Policy?, Littler ASAP, Nov. 2012, available at http://www.littler.com/publication-press/publication/how-will-2012-election-results-impact-labor-employment-and-benefits-po .

10 Associated Press, AFL-CIO Launches New Ad Campaign Highlighting Work of Unions, Huffington Post, Jan. 17, 2012, available at http://www.huffingtonpost.com/2012/01/17/afl-cio-ad-campaign-unions_n_1211279.html# .

11 OpenSecrets.org, https://www.opensecrets.org/pres12/indexp_indiv.php?cycle=2012&id=N00009638 .

12 Labor in the U.S.-Colombia Trade Promotion Agreement, Office of the United States Trade Representative, http://www.ustr.gov/uscolombiatpa/labor .

13 Global data storage calculated at 295 exabytes, BBC News (Feb. 11, 2011), available at http://www.bbc.co.uk/news/technology-12419672 .

14 2009 U.S. App. LEXIS 9 (D.C. Cir. Jan. 6, 2009).

15 See generally, Electronic Discovery Special Report: Plaintiffs Have Their Own Duty to Preserve, Paul Weiner, NAT'L L.J., Dec. 19, 2011, available at http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202536136818&slreturn=1 (last accessed Dec. 31, 2012).

16 See, e.g., McMillen v. Hummingbird Speedway, Inc., 2010 Pa. Dist. & Cnty. Dec. LEXIS 270, at *3 (C.C.P. Jefferson County, PA Sep. 9, 2010) (ordering plaintiff to provide his Facebook and MySpace user names and passwords to counsel for defendants, rejecting plaintiff's argument that communications shared among one's "private" friends is somehow protected against disclosure in discovery and instructing "'no social network site privilege' has been adopted by our legislature or appellate courts.").

17 See, e.g., In re: Air Crash Near Clarence Center NY, 2011 U.S. Dist. Lexis 146551 (W.D.N.Y. 2011) (directing plaintiffs to produce relevant electronic communications, including "social media accounts, emails, text messages, and instant messages").

18 See, e.g., Smith v. Café Asia, 246 F.R.D. 19 (D.D.C. 2007) (court ordered plaintiff to preserve text messages stored on cell phone as they might bear on defendant's claim that plaintiff invited the alleged sexual harassment forming the basis for her claims).

19 Morgan v. U.S. Xpress, Inc., 2006 U.S. Dist. LEXIS 36195 (M.D. Ga. June 2, 2006) (holding that defendant had a duty to preserve satellite positioning data maintained on its internal computer system).

20 See, e.g., The Sedona Conference© Framework for the Analysis of Cross-Border Discovery Conflicts: A Practical Guide to Navigating the Competing Currents of International Data Privacy and e-Discovery, Public Comment Version, The Sedona Conference, August 2008, available at https://thesedonaconference.org/publication/Framework%20for%20Analysis%20of%20Cross-Border%20Discovery%20Conflicts .

21 See, e.g., The Sedona Conference© Framework for the Analysis of Cross-Border Discovery Conflicts: A Practical Guide to Navigating the Competing Currents of International Data Privacy and e-Discovery, Public Comment Version, The Sedona Conference, August 2008, available at https://thesedonaconference.org/publication/Framework%20for%20Analysis%20of%20Cross-Border%20Discovery%20Conflicts .

22 In re Advocat "Christopher X", Cour de Cassation, Chambre Criminelle [Criminal Chamber of Supreme Court], Paris, Dec. 12, 2007, No. 07-83228.

23 A "catch-22" is a paradoxical situation in which one cannot or is incapable of avoiding a problem because of contradictory constraints or rules. The term "catch-22" was coined by Joseph Heller in his novel Catch-22, and is based upon the explanation of the character Doc Daneeka as to why any pilot requesting a psych evaluation hoping to be found not sane enough to fly, and thereby escape dangerous missions, would thereby demonstrate his sanity. See http://en.wikipedia.org/wiki/Catch-22_(logic) .

24 See e.g., Lyondell-Citgo Refining, LP v. Petroleos de Venezuela, S.A, 2005 U.S. Dist. LEXIS 7907 (S.D.N.Y. May 2, 2005) (upholding adverse inference instruction against defendant/national oil company of Venezuela that declined to produce board minutes in response to a U.S. discovery order based upon an assertion that doing so would violate Venezuelan law that prohibited disclosure of Board of Director minutes).

25 See e.g., Richmark Corp. v. Timber Falling Consultants, 959 F.2d 1468 (9th Cir. 1992) (upholding contempt sanction against defendant that asserted that the People's Republic of China (PRC) secrecy laws prevented it from complying with a U.S. discovery order and that it would be subject to criminal prosecution if it disclosed such information, noting that even though the court explicitly accepted that defendant's contention that the PRC State Secrets Act barred disclosure of the information in question, "a foreign-law prohibition will not always excuse compliance with a [U.S.] discovery order" as the "PRC's admitted interest in secrecy must be balanced against the interest of the United States and the plaintiffs in obtaining the information.").

26 See e.g., The Sedona Conference International Principles on Discovery, Disclosure & Data Protection: Best Practices, Recommendations & Principles for Addressing the Preservation Discovery of Protected Data in U.S. Litigation, European Union Edition Public Comment Version, December 2011, availableat https://thesedonaconference.org/publication/The%20Sedona%20Conference%C2%AE%20International%20Principles%20on%20Discovery%2C%20Disclosure%20%2526%20Data%20Protection (hereinafter "The Sedona Conference International Principles").

27 The Sedona Conference International Principles contains a "Model Protected Data Protective Order," that covers, inter alia:

  • Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data, 1995 O.J. (L281/31) (European Union personal information);
  • Data Protection Act 1998 (c. 29) (United Kingdom personal information);
  • The German Federal Data Protection Act (Germany personal information);
  • The Belgium Law of December 8, 1992 on Privacy Protection in relation to the Processing of Personal Data (Belgium personal information);
  • Personal Information and Electronic Documents Act (PIPED A), S.C. 2000, c. 5 (Canada personal information);
  • The Federal Law on Protection of Personal Data held by Private Parties (July 5, 2010) (Mexico personal information); and
  • The Personal Information Protection Act (Law No. 57 of 2003) (Japan personal information).

28 803 F. Supp. 2d 469 (E.D. Va. July 2012).

29 See e.g., Breaking News: $919 Million Verdict for DuPont in Trade Secret Theft and e-Discovery Sanctions Case, e-Discovery 2.0, Sept. 15, 2011 available at http://www.clearwellsystems.com/e-discovery-blog/2011/09/15/breaking-news-919-million-verdict-for-dupont-in-trade-secret-theft-and-ediscoverysanctions-case/ (last accessed Dec. 17, 2012).

30 http://www.gallup.com/poll/world.aspx?ref=logo .

31 Nearly 50 Million Worldwide Planning to Migrate Soon, Gallup World Poll (Feb. 24, 2012), http://www.gallup.com/poll/152951/nearly-million-worldwideplanning

32 Wary of Future, Professionals Leave China in Record Numbers, The New York Times (Oct. 31, 2012), http://www.nytimes.com/2012/11/01/world/asia/wary-offuture-many-professionals-leave-china.html?nl=todaysheadlines&emc=edit_th_20121101&_r=0 .

33 Id.

34 Six Questions on the Cost of Corruption with World Bank Institute Global Governance Director Daniel Kaufmann, available at http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20190295~menuPK:34457~pagePK:34370~piPK:34424~theSitePK:4607,00.html .

35 See, e.g., U.K. Bribery Act "On-Line" as of July 1 – U.S. Employer Impact, Philip Berkowitz, David Goldman, and Ellen Temperton (Aug. 11, 2011), Littler Insight available at http://www.littler.com/publication-press/publication/uk-bribery-act-line-july-1-%E2%80%93-us-employer-impact .

36 Year of the bounty hunter: Whistleblowing will become a global industry (Nov. 17, 2011), from "The World In 2012" print edition of The Economist, available at http://www.economist.com/node/21537931 .

37 See, e.g., Dodd-Frank and The SEC Final Rule: From Protected Employee to Bounty Hunter (July 1, 2011), John S. Adler, Edward T. Ellis, Barbara E. Hoey, Gregory C. Keating, Kevin M. Kraham, Amy E. Mendenhall, Kenneth R. O'Brien, Carole F. Wilder, Littler Report available at http://www.littler.com/publicationpress/publication/dodd-frank-and-sec-final-rule-protected-employee-bounty-hunter .

38 SEC Receives More Than 3,000 Whistleblower Tips in FY2012, SE C Press Release (Nov. 15, 2012), available at http://www.sec.gov/news/press/2012/2012-229.htm .

39 UBS whistleblower gets $104M from IRS for helping in Swiss bank probe, The Washington Post (Sept. 11, 2012), http://articles.washingtonpost.com/2012-09-11/business/35494823_1_ubs-whistleblower-bradley-birkenfeld-report-tax-fraud .

40 http://www.navexglobal.com/ .

41 Frank Gens, Danielle Levitas, and Rebecca Segal, 2011 Consumerization of IT Study: Closing the "Consumerization Gap", July 2011.

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