American employers often require their U.S. domestic staff to execute—that is, to wet-ink sign or to computer mouse-click—acknowledgements that say, in essence, “I have received, and I agree to comply with” an employee handbook, code of conduct, HR policy, work rule, restrictive covenant or compensation/bonus/benefit/equity plan. The purpose of an employee-executed acknowledgement is to reduce the chance some worker somewhere might someday claim ignorance of some employer policy. An acknowledgement can be vital, for example, when an employer needs to discipline someone for violating a rule—or needs to enforce a provision in a benefit plan—that an employee seeks to sidestep.
Locally in the United States, employee-signed acknowledgements have become routine, and collecting them under America’s employment-at-will regime is fairly straightforward. Meanwhile, multinationals increasingly seek to collect employee acknowledgements overseas. But the mechanics for collecting acknowledgements from overseas staff raises challenges, and gets surprisingly complex. Here we discuss the need for, the legal/logistical challenges to, and the compliance strategies for international employee acknowledgements.
The Need for Acknowledgements
U.S.-headquartered multinationals increasingly promulgate global HR initiatives like global codes of conduct/ethics and international HR policies or rules addressing bribery, antitrust, insider-trading, conflicts of interests, discrimination/harassment, workplace safety and other topics. Other global HR initiatives include staff cross-border handbooks, whistleblower hotlines, data privacy notices, restrictive covenants and intellectual property assignments, employment-contract amendments and compensation/benefit/bonus/equity plans.
Of course, a multinational cannot afford to “soft open” a global HR initiative, slipping it onto a company intranet site and expecting affiliate employees worldwide somehow to find, read, understand and comply with it. Later, when the employer needs to enforce its global HR initiative, it may bear a burden to prove it had duly communicated relevant provisions to whatever employee may have violated it and is now challenging it. Being able to produce an employee-executed acknowledgement can therefore be vital.
For example, no employer trying to enforce its anti-bribery policy wants to face an employee claiming something to the effect of: What? I just made a huge sale to the government, and you’re firing me? OK, maybe my client-entertainment expenses ran a bit high—but I was just doing my job. I didn’t know about this so-called policy on entertaining government customers. Was it buried somewhere on the company intranet? I never agreed to follow this absurd rule that would prevent me from making sales!
For that matter, employee-executed acknowledgements could actually be required. A multinational might interpret the U.S. Foreign Corrupt Practices Act, Sarbanes-Oxley, Dodd-Frank and U.S. federal sentencing guidelines as requiring organizations not only to communicate compliance policies to employees worldwide, but also to get employee “buy-in.” And law and best practices in some jurisdictions (for example, Austria, Czech Republic, Finland) all but require employee-signed acknowledgements when an employer changes or adds new workplace rules. Other jurisdictions (for example, Australia, Belgium, Canada, England, Ireland, Germany, Norway) look to whether a workplace code, policy, rule or benefit is “contractual”—these jurisdictions elevate certain workplace initiatives to the level of employment contracts that employees must sign or acknowledge.
The upshot is that many multinationals feel they need to be able to produce duly-executed employee acknowledgements of certain global HR initiatives.
Legal and Logistical Challenges
When considering whether to implement any employee-acknowledgement process outside the United States as to a global (or overseas-local) HR initiative, confront the problem that the mechanics of staff acknowledgements abroad get difficult. Specifically, four legal and logistical challenges complicate collecting employee-executed acknowledgements abroad: (1) presumptive coercion, (2) ineffective employment contract amendment, (3) non-signers and (4) proof problems.
Presumptive coercion. Overseas, employers cannot necessarily insist all employees execute some HR document. Courts in much of Northern Continental Europe and in some countries beyond deem employee-signed agreements, including staff acknowledgments, void as presumptively coerced. The issue is the inherent inequality of bargaining power between an employer and staff—almost like a contract with a minor or someone adjudicated mentally incompetent.
Some countries actually presume workers have no free choice when their boss orders them to sign a boilerplate form; law presumes the subtext to an employee acknowledgement request is “sign—or you’re fired!,” even if management did not state the request quite so bluntly. According to one European Union agency: “Employees are almost never in a position to freely give, refuse or revoke consent, given the dependency that results from the employer/employee relationship. Given the imbalance of power, employees can only give free consent in exceptional circumstances, when no consequences at all are connected to acceptance or rejection of an offer.” EU Article 29 Working Party Opinion 2/2017 on Data Processing at Work, WP 249, 6/8/2017, at §6.2. In these jurisdictions, staff acknowledgements may be worthless, deemed void as presumptively coerced.
Ineffective employment contract amendment. We mentioned that some common law and civil law jurisdictions treat certain employer initiatives as “contractual” and see an employee acknowledgement as amending the employment agreement. In these situations, a properly executed employee acknowledgement may indeed make an HR initiative enforceable as “contractual”—but an overly-casual acknowledgement, including one electronically executed, may prove unenforceable if it falls short of local employment-contract-execution strictures. So check out and comply with local contract-execution strictures. Where an employee acknowledgement is deemed “contractual,” draft and execute it as a full-blown contractual amendment. Some countries even require government filings here.
A related issue is the U.S. employer that tries to have it both ways, collecting up staff acknowledgements but sticking into them (or into the underlying HR initiative documents themselves) an “employment-at-will” or “this-is-not-a-contract” disclaimer. These disclaimers are endemic to the United States, creatures of U.S. employment-at-will—and are almost always inappropriate in other countries. Outside the U.S., these disclaimers can serve as escape clauses, freeing staff from having to comply with an initiative precisely because it is “not a contract.” An excellent example is the Canadian provincial supreme court case Oliver v. Sure Grip Controls, holding an American employer’s employment-at-will disclaimer rendered a severance pay cap unenforceable. The judge in that case said: “I cannot conclude the plaintiff’s [severance] damages should be limited to those based in the Handbook. The Handbook…made it clear that the Handbook ‘is not a contract of employment … .’” Sup. Ct. British Columbia, 2014 BCSC 321 (2/28/14), at ¶ 48.
Outside the United States, an employer might consider embracing the contractual nature of its HR initiatives, affirmatively declaring the initiative and acknowledgement to be overtly “contractual.”
Non-signers. When a multinational insists on collecting staff acknowledgments to a global HR initiative, headquarters far removed from “the field” may assume that, ultimately, all employees worldwide will sign on. But a 100% return rate on staff acknowledgements is all but impossible across big global employee populations. Where overseas staff prove skeptical or hostile to the underlying global HR initiative—particularly where employee representative bodies resist it—some stray employees may openly refuse to sign acknowledgements. Others may passive-aggressively neglect to return their acknowledgements, even after repeated reminders from the hapless local HR team, which may be all but powerless to force employees—especially powerful executives and labor representatives—to sign or click “I accept.”
Local HR has little leverage here: Outside employment-at-will, an employer does not have good cause to discipline a worker just for refusing or neglecting to acknowledge something. In one case, for example, a Beijing court reinstated a chief guard who had been fired for refusing to acknowledge a handbook-update. Hou case, Beijing Intermediate People’s Ct. no. 4, 11/26/09.
Non-signers of an employee acknowledgement raise a serious “Achilles’ heel” problem. A non-signer who later violates the policy or rule, or who later seeks to escape a restrictive benefit-plan term, might argue he is exempt precisely because he never signed. Invoking co-workers’ executed acknowledgements in his own favor, the recalcitrant non-signer may argue the policy, rule or plan reaches only those of his colleagues who signed on and agreed to it. At that point the multinational realizes—too late—it would have been better off not collecting signed acknowledgements at all. (The non-signer would not have this particular argument without the employee acknowledgement process in the first place.)
Proof problems. In-house human resources teams may have spotty records retaining and tracking employee acknowledgements over time. Three common proof problems are sloppy recordkeeping, sloppy follow-through and sloppy computer verification:
• Sloppy recordkeeping: Years after employees across far-flung offices were thought to have signed or mouse-clicked some dimly-remembered staff acknowledgement, it can prove maddeningly difficult for HR to dig out that one specific executed form of the one particular employee who now needs to be held accountable for complying with a provision he claims never to have seen. (“Surely Pranav must have executed this acknowledgement at some point … but where is it now?”)
• Sloppy follow-through: New-hires who “onboard” after a cross-border code or HR policy launch may never get asked to sign acknowledgements. Even where the acknowledgement-collection process was fastidious in its first round, the organization may fail to follow through and collect acknowledgements going forward.
• Sloppy computer verification: Mouse-click acknowledgements are notoriously hard to verify after the fact when a dispute later ends up in court. Meeting the employer burden to prove a given employee actually clicked “I accept” one day long ago can be all but impossible years later, under inflexible and antiquated evidence rules in foreign courts with changing electronic-signature proof requirements. The I.T. team might insist: “Eva must have acknowledged it—or else she couldn’t have logged onto our system!” Do not expect that statement to be admissible court evidence of an electronic signature.
Never insist on collecting employee acknowledgements to an HR initiative outside the United States without a proactive strategy that accounts for each of the four logistical challenges. One strategy is to time the employee acknowledgement process to coincide with some significant discretionary bonus payment, stock award or pay raise—confer the bonus, award or raise only in exchange for executed acknowledgements.
Where collecting staff acknowledgements worldwide is not feasible, consider alternatives. One alternative is seeking collective buy-in from employee representatives, rather than individual employee acknowledgements, in jurisdictions where employees are represented. A second alternative is sending the relevant documents to employees by certified mail, scrupulously retaining postal receipts. A third alternative is having local HR teams distribute relevant documents personally to each employee (maybe handing them out during a training session); HR representatives then create and sign forms or log sheets memorializing the date and circumstances under which each named employee received the package.
Donald C. Dowling Jr. is a shareholder at Littler Mendelson.
Reprinted with permission from the November 3, 2017 edition of the New York Law Journal©
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