UK Unveils Regulation Compelling Large Firms to Disclose, Explain Pay Ratios

UK Unveils Regulation Compelling Large Firms to Disclose, Explain Pay Ratios

Amid growing public and investor concern about major British companies potentially overpaying their top executives, the UK government has been kicking around the idea of instituting a pay ratio reporting rule since last year. The government hinted in April that it would propose the regulation soon, and now it is here. The proposal, which Business Secretary Greg Clark is presenting to Parliament today, will require all companies with more than 250 employees to disclose the ratio between the pay of their CEO and their average or median employee, as well as to explain this difference, the BBC reports:

The new rules, as well as introducing the publication of pay ratios, will also require listed companies to show what effect an increase in share prices will have on executive pay, in order to inform shareholders when voting on long-term incentive plans. … Mr Clark said: “Most of the UK’s largest companies get their business practices right, but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.”

The plans were welcomed by the Investment Association – that represents UK investment managers – as well as business lobby group the CBI and think tank the High Pay Centre. Chris Cummings, chief executive of the Investment Association, said investors wanted greater director accountability and more transparency over executive remuneration.

That investors are leading the charge for transparency on executive compensation is unsurprising; activist investors were also key proponents of the pay ratio reporting rule that came into effect in the US earlier this year. Shareholders are voicing greater interest in exercising their “say on pay” prerogatives, particularly after recent scandals in the UK over executives receiving massive bonuses, in some cases without company performance justifying them.

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NLRB to Propose New Joint Employer Rules This Summer

NLRB to Propose New Joint Employer Rules This Summer

The US National Labor Relations Board intends to take the first step toward creating a new regulation regarding the definition of “joint employers” for federal regulatory purposes by the end of this summer, NLRB Chairman John F. Ring wrote in a letter to three Senators this week. The letter to Democrats Elizabeth Warren and Kirsten Gillibrand, and Independent Senator Bernie Sanders, was in response to a letter the legislators had sent to the board chairman expressing their concerns about the board’s intent to introduce a new joint employer standard through the federal rulemaking process.

“A majority of the Board is committed to engage in rulemaking,” Ring wrote in the letter dated June 5, “and the NLRB will do so. Internal preparations are underway, and we are working toward issuance of a Notice of Proposed Rulemaking (NPRM) as soon as possible, but certainly by this summer.”

The joint employer standard, which refers to an organization’s liability for the work conditions of individuals employed by its contractors or subcontractors, was expanded considerably during the Obama administration, when the NLRB ruled in a 2015 case called Browning-Ferris that a company was to be considered a joint employer if it had “indirect” control over the subcontractor’s terms and conditions of employment or “reserved authority” to exercise such control. The board reversed that decision in the Hy-Brand case decided late last year, but vacated its Hy-Brand ruling in February after one member of the board who participated in that decision, William Emanuel, was found to have a conflict of interest.

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Careful Who You Trust for GDPR Advice

Careful Who You Trust for GDPR Advice

The EU’s General Data Protection Regulation, which went into effect on May 25, imposes new data privacy obligations on all organizations that process the data of EU citizens, whether or not they are based in Europe themselves. The maximum penalties for noncompliance are hefty, so it is essential for businesses to ensure that their practices are GDPR-compliant if they haven’t already.

According to a survey on the eve of the regulation coming into effect, however, most organizations have not yet finished making the required changes, while many do not expect to be fully compliant by the end of this year. Much work still remains to be done to bring organizations into initial compliance with the regulation, and still more work to re-develop data collection, storage, and analytics programs in a compliant manner.

With every organization doing a huge amount of work for the first time and trying to get right with the GDPR as quickly as possible, this makes for a fertile environment for bad information to circulate and for opportunists to take advantage of organizations’ unfamiliarity with the new regulatory terrain. Organizational leaders need to be vigilant about which “experts” to trust for guidance on GDPR compliance, take advantage of the information provided directly by the European Commission, and bear in mind that different functions, particularly HR, face unique compliance challenges.

Step 1: Beware of Charlatans

The proliferation of bad advice and information is a simple matter of supply and demand. Demand for advice is high, both because of the global impact of the GDPR and because so many organizations were not proactive in planning for compliance are now scrambling to catch up. The supply of that advice is scarce and of uneven quality, with no historical track record of performance. Over the past few months, many companies have been assembling data protection functions and hiring data protection officers (DPOs), causing a run on the thin supply of qualified talent for these roles.

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Uber to Provide European Drivers with Paid Leave, Injury Insurance

Uber to Provide European Drivers with Paid Leave, Injury Insurance

Uber is rolling out new benefits for drivers working through its platform in Europe, including sick pay, paid parental and bereavement leave, and compensation for work-related injuries, the BBC reported this week:

The insurance and compensation package will be available to all Uber drivers and Uber Eats delivery couriers across Europe. However, unions have questioned whether the package is new. In April 2017, Uber announced illness and injury insurance cover for its drivers. Uber drivers who wanted to join the scheme were required to pay £2 a week. …

Uber will provide drivers with a range of insurance coverage and compensation resulting from accidents or injuries that occur while they are working, as well as protection for “major life events” that happen whether the driver is on a shift or not. … Drivers are not going to get the kind of benefits they would enjoy as employees but there will be a little something to help them deal with life’s ups and downs.

The announcement comes just a month before an appeals hearing in a London court regarding Transport for London’s decision last September to revoke Uber’s license to operate as a private car hire operator in the city, on the basis that its “approach and conduct demonstrate a lack of corporate responsibility.” Uber has been allowed to continue operating in London while it appeals the decision, as it is scheduled to do at Westminster Magistrates Court on June 25, the BBC notes.

The battle with Transport for London is just one of several Uber is fighting in the UK and continental Europe. Last November, the company lost an appeal against a ruling by a British employment tribunal that its drivers were misclassified as independent contractors and are in fact entitled to certain rights as employees, including paid leave, overtime, and a minimum wage. Uber contends that classifying its drivers as employees would fatally disturb its business model and prevent it from offering the flexibility in terms of work hours and location that most of its drivers consider a benefit. Critics contend that this is a false choice and that Uber could maintain that flexibility while offering drivers a fuller range of rights and protections. Uber is pursuing further appeals in that case.

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Labor Department May Ease up on Federal Contractor Pay Discrimination Investigations

Labor Department May Ease up on Federal Contractor Pay Discrimination Investigations

Last month, Bloomberg BNA’s Ben Penn and Porter Wells reported that the US Department of Labor was planning to relax a policy put in place by the Obama administration to vigorously enforce regulations prohibiting gender pay discrimination by organizations that contract with the federal government. The department was said to be issuing new guidance to supplant a 2013 directive that had given the Office of Federal Contract Compliance a mandate to audit federal contractors for salary bias and make its own determinations as to whether workers were employed in identical or comparable roles for that purpose.

The OFCCP had used that directive to force substantial settlements from several large employers over alleged pay discrimination, and it has been at the center of the ongoing dispute between the Labor Department and Google over pay discrepancies the office has said indicate widespread discrimination (Google vigorously denies this and claims to have no statistically significant gender pay gap at all).

The new guidance, Penn and Wells explained, would “allow businesses to shape the random Labor Department audits by determining which workers investigators should be comparing for possible pay bias” instead. This change would be in keeping with Labor Secretary Alexander Acosta’s approach of assuming good faith on the part of businesses and allowing them to admit and correct compliance issues without fault rather than pursuing investigations and lawsuits. After these plans came to light, however, the department may be backtracking, Allen Smith reports at SHRM. Mickey Silberman, an attorney with Fortney & Scott in Denver, tells Smith that the OFCCP, Labor Department, and various stakeholders are now discussing the proposed changes.

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US Labor Department to Propose New Overtime Rule Early Next Year

US Labor Department to Propose New Overtime Rule Early Next Year

In its latest regulatory agenda, the US Department of Labor announced its intent to issue a Notice of Proposed Rulemaking for a new overtime salary threshold sometime next January. The Trump administration had first signaled its interest in rewriting the overtime rule last July, when the Justice Department expressed that intent in a court filing and the Labor Department issued a request for comments from the public—the first step in the federal government’s rulemaking process.

A new overtime rule issued by the Obama administration in 2016 raised the salary threshold at which employees are exempt from overtime pay from $23,660 to $47,476, but was blocked from going into effect by the courts and ultimately overturned by a federal judge in Texas last September, who found that the department had erred in setting the new rules for overtime eligibility based on salaries alone and not job descriptions.

The Labor Department appealed that judgment, not because it intends to maintain the previous administration’s rule, but rather out of concern that the ruling would hinder its ability to rewrite it. Current Labor Secretary Alexander Acosta had been critical of his predecessor’s decision to raise the threshold dramatically, indicating in his confirmation hearing last year that he thought an increase was needed but that doubling it all at once would put undue stress on the economy.

Employers may have hoped for a slightly speedier regulatory process, SHRM’s Lisa Nagele-Piazza reports, but now can likely expect a final new rule within two years, giving them plenty of time to prepare for what will probably be a less onerous new standard than the Obama administration’s:

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NLRB Considering New Joint Employer Regulations

NLRB Considering New Joint Employer Regulations

The US Department of Labor under President Donald Trump and Secretary Alexander Acosta has been working over the past year to undo the regulations implemented by the Obama administration regarding the definition of “joint employers.” Acosta, like many employers and business associations, considers the previous administration’s standard too broad.

Now, the National Labor Relations Board is weighing a rulemaking process to update the standard, the board announced on Wednesday:

“Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today,” says NLRB Chairman John F. Ring. “The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.”

Acosta’s Labor Department rescinded Obama-era guidelines on the joint employer standard last June, while the National Labor Relations Board’s regional directors were instructed in December to slow enforcement of the Obama administration’s standard. Shortly thereafter, the NLRB overturned its ruling in the landmark Browning-Ferris case, in which it had considered a company to be a joint employer with a subcontractor if it exercised “indirect” control over the terms and conditions of employment or had the “reserved authority to do so.”

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