Australian Supreme Court Decision Holds Important Lesson for Companies with Australian Operations Regarding Use of Post-Employment Restraints
On December 20, 2013, in Pet Tech Pty Ltd v Batson  NSWSC 1954, Justice Young of the New South Wales (NSW) Supreme Court ruled that businesses that want to enter into enforceable post-employment restraint agreements in Australia must ensure those agreements are written in accordance with Australian law. The decision holds an important lesson for any company with Australian operations.
Pet Tech Pty Ltd brought proceedings against one of its former sales agents attempting to prevent the employee from using or retaining information that the company considered to be confidential. Post-employment restraints like this are not uncommon in Australia, particularly for executive, management and sales employees. However, in this case, the court noted that it was required to interpret the enforceability of a "very strange" agreement because the document appeared to be an "American document which has been adopted to Australia unthinkingly." Accordingly, Justice Young said that "whatever its effect under American law might be I have to deal with its effect in New South Wales." As such, the court advised the company "to get some local lawyers to draft an actually enforceable contract" to cover employees in the future.
Because the company had failed to have its employees sign agreements that were legally compliant with Australian law, the court determined that the relevant clause upon which the company sought to rely came "very close to being void." The clause in question which stated, "[the employee has] the burden in any dispute of showing that information is not [the company's] confidential information," placed the onus of disproving that something is not confidential information onto the employee. The court found this clause to be problematic because "it virtually means that whatever the [company] says must be accepted by the court unless the contrary is proven."
Another important point the court highlighted was the fact that the agreement purported to not only bind the plaintiff company but also "its parents, subsidiaries and affiliates" (including the company's related U.S. entity), which is not an uncommon provision contained in U.S. confidentiality agreements. The court said that "a contract with more than one part is either a joint contract, a joint and several contract or a several contract. . . . if there is no specification as to whether the contract is joint or otherwise it is taken to be a joint contract. The contract accordingly must be construed as one with not only the plaintiff but also jointly with its parents, subsidiaries and affiliates. Under rule 6.20 of the Uniform Civil Procedure Rules 2005 all these people must be plaintiffs before the contract can be enforced."
As such, the use of broad post-employment restraint documents in Australia which purport to extend coverage to a company and its related entities should be carefully drafted to clearly spell out the document's intention should a dispute arise. Alternatively, as this case appears to indicate, companies that engage in these types of disputes will need to include relevant related entities as parties to the dispute.
Pet Tech Pty Ltd presents a number of important lessons for U.S. companies doing business in Australia, and reinforces that it is extremely important to ensure that a company's employees are subject to terms and conditions of employment that are compliant with applicable local laws.
In Australia, significant consequences can result from a company's failure to have legally compliant contracts. If a business has related companies and/or a number of employees working in Australia, employers should undertake a review of the language in its current contracts. The law in Australia is complex when it comes to post-employment restraints, non-competes and the protection of confidential information, intellectual property and proprietary information. Accordingly, businesses should not adopt a one-size-fits-all approach. Unless contract terms are properly drafted, they are unlikely to be enforceable.
Australian workplaces have long been subject to anti-bullying laws, but effective January 1, 2014, workers have an additional avenue in which to bring workplace bullying complaints against employers.
Australian workers have been able to lodge workplace bullying complaints under workplace health and safety laws to the various health and safety authorities in each state of Australia. Now, the Fair Work Commission (the Commission) also has jurisdiction to deal with workplace bullying complaints as a result of the former government's pre-election amendments to the Fair Work Act 2009 (Cth) (the Act). The Commission has already received a small number of bullying claims, with some lodged as early as January 1. The Commission has not released the number of complaints it has received under the new amendments and is unlikely to do so ahead of its standard quarterly data release which will occur next in March.
Under the new system, a worker is now able to lodge an application to obtain an order that workplace bullying cease if it is found to be occurring in the workplace.
Under the Act, a worker is bullied at work if an individual or group of individuals repeatedly behaves unreasonably towards the worker or a group of workers of which the alleged victim is a member. The Act clarifies that reasonable management action that is carried out in a reasonable manner does not amount to bullying.
While the Commission cannot award damages for bullying claims under the amendment, it can order that bullying cease. If an employer does not take appropriate action, the worker can apply to the federal court, which can order fines against a corporation of up to $51,000 or against an individual of up to $10,200 (Australian dollars).
Workers may also lodge a workers' compensation claim with respect to any alleged illness or injury flowing from workplace bullying.
If recent unfair dismissal statistics are any indication of what is to come, Australian employers should expect to experience a steady rise in bullying complaints through this new system.
Any company with Australian operations should consider implementing the following steps:
- Ensure that you have an up-to-date anti-bullying policy in place for your Australian workplaces.
- Ensure that your anti-bullying policy contains an internal complaint procedure.
- Ensure that all workers are regularly trained on equal opportunity matters including workplace bullying.
The National Labor Relations Board's legal attempt to revive its notice posting rule issued in August 2011 has run its course. The rule - Notification of Employee Rights under the National Labor Relations Act - would have required employers to conspicuously display a notice informing employees of their rights under the NLRA. In May 2013, in National Association of Manufacturers, et al. v. NLRB, the U.S Court of Appeals for the D.C. Circuit invalidated the rule, finding that the enforcement mechanisms imposed by the rule were unlawful. Four months later, the court dismissed the Board's petition to review. Read the full post here. (January 3, 2014)
Bill Prohibiting Pre-Employment Credit Checks Introduced in Senate
Sen. Elizabeth Warren (D-MA) has introduced a bill that would prohibit employers from asking prospective employees about their credit histories or obtaining such information through a consumer or credit report. In addition, the Equal Employment for All Act (S. 1837) would amend the Fair Credit Reporting Act (FCRA) to prevent employers from discriminating against employees on the basis of their credit worthiness. The bill would make an exception for jobs that require a national security clearance or where credit information is otherwise required by law. Notably, the bill does not include exceptions for positions in the financial services or banking industries. Read the full post here. (December 19, 2013)
Four Headaches Facing Multistate Employers in the U.S.
With much of the focus on the federal healthcare law, the Patient Protection and Affordable Care Act, and other federal initiatives (or the lack thereof due to political constraints in Congress), it is often all too easy for employers operating in multiple states to overlook the need to familiarize themselves with the many state laws to which they are subject. Alternatively, multistate employers may very well know they need to keep their eye on state laws throughout the country - but quickly become overwhelmed by the sheer number of rules and regulations coming out of the states in which they operate. Understanding how those laws may interact with or alter the effect of federal law may be as equally complicated. Read the full post here. (December 4, 2013)
House Subcommittee Hearing Examines New OFCCP Actions
The House Subcommittee on Workforce Protections held a hearing on Wednesday to discuss recent Office of Federal Contract Compliance Programs (OFCCP) rules and other initiatives affecting federal contractors, subcontractors, and healthcare providers. Notably, the OFCCP recently issued its final revised affirmative action rules for protected veterans and individuals with disabilities. Among other requirements, these rules set hiring benchmarks for veterans, and a 7% utilization goal for employment of qualified individuals with disabilities for each of the job groups established in the contractor's women and minorities' affirmative action plans. Read the full post here. (December 4, 2013)
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Federal Agencies Issue Fall 2013 Unified Agendas and Regulatory Plans
In a quiet release two days before Thanksgiving, federal agencies issued their fall 2013 unified agendas and regulatory plans. The unified agendas, published twice a year, provide a roadmap of agency activity for the coming months, and highlight what proposed and final rules are imminent. The regulatory plans, published in conjunction with the fall agendas, provide additional details about the most significant actions the agencies plan to undertake in the coming year, and identify agency priorities. The following summarizes the key regulatory measures that the Department of Labor (DOL), Equal Employment Opportunity Commission (EEOC), National Labor Relations Board (NLRB) and Department of Health and Human Services (HHS) consider priorities for 2014. Read the full post here. (November 27, 2013)
NYU and UAW Agree to Union Election for Graduate Students
NYU and the UAW have reached an agreement to pave the way for an election among covered graduate students at NYU and NYU-Poly to determine whether the graduate students will be represented as a bargaining unit by the UAW. Read the full post here. (November 27, 2013)
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House Subcommittee Examines Implications of DOL's Home Healthcare Rule
During a House Subcommittee on Workforce Protections hearing - Redefining Companion Care: Jeopardizing Access to Affordable Care for Seniors and Individuals with Disabilities - panelists and lawmakers highlighted problems that await home care providers, workers, and care recipients when the Department of Labor's new home care rule takes effect in January 2015. Issued in September, the final rule eliminates the Fair Labor Standard Act's (FLSA) minimum wage and overtime exemption for home care workers employed by home care agencies and other companies. This rule also significantly narrows the exemption for home care workers employed directly by the individuals or families receiving home care services. Read the full post here. (November 20, 2013)
Workplace Injuries and Illnesses Continue to Decline; OSHA Schedules Hearing on Electronic Reporting Proposal
According to the Bureau of Labor Statistics' (BLS) annual Workplace Injury and Illness Summary, private sector employers reported approximately 3 million nonfatal workplace injuries and illnesses in 2012, or about 3.4 instances per 100 full-time equivalent workers, down from 3.5 instances per 100 workers reported in 2011. This data is in keeping with the steady decline of reported injury and illness rates over the past five years. Read the full post here. (November 14, 2013)
Senators Introduce Bill Targeting Independent Contractor Misclassification; DOL Forges Ahead with Classification Survey
During Tuesday's Senate Subcommittee hearing - Payroll Fraud: Targeting Bad Actors Hurting Workers and Businesses - Senator Robert P. Casey, Jr. (D-PA) announced that he, along with Senators Tom Harkin (IA) and Sherrod Brown (D-OH), had that day introduced the Payroll Fraud Protection Act of 2013 (S. 1687), a bill that would "hold employers accountable" for independent contractor misclassification. This hearing occurred just days after the Department of Labor (DOL) sent its proposed Worker Classification Survey to the Office of Management and Budget (OMB) for review and approval. The proposed survey will likely provide the groundwork for the future "right-to-know" rule that would amend an employer's recordkeeping requirements under the Fair Labor Standards Act (FLSA) to provide employees with greater information about their employment status. Read the full post here. (November 13, 2013)
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Agencies Issue Final Rules Governing Mental Health Parity and Addiction Equity Act
The Departments of Labor, Treasury, and Health and Human Services have released final rules implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which requires parity between mental health or substance use disorder benefits and medical/surgical benefits with respect to financial requirements and treatment limitations under group health plans and group and individual health insurance coverage. Read the full post here. (November 8, 2013).
EEOC to Hold Public Meeting on National Origin Discrimination
On Wednesday, November 13 at 9:30 a.m. ET, the Equal Employment Opportunity Commission (EEOC) will hold a public meeting on national origin discrimination in today's workplace. Topics of discussion include various recruitment and hiring issues; discriminatory treatment in assignments; pay discrimination; language and accent issues; effective communication and access issues; harassment; and retaliation. Read the full post here. (November 7, 2013)
The findings from a 2013 survey of "International Business Attitudes to Corruption" conducted by Control Risks and the Economist Intelligence Unit, two independent international business risks and opportunities consultancy firms, suggest that many companies are unprepared to handle a corruption scandal and have yet to implement best practices for anti-corruption compliance. The study surveyed general counsels, senior corporate lawyers and compliance heads in more than 300 companies worldwide.
A Synopsis of the Survey's Key Findings
Pressure to Pay is Biggest Concern and Most Significant Challenge
Of those surveyed, the majority (58%) of respondents stated that their biggest concern is whether their employees will be able to resist the demands for "operational" bribes. Only 29% cited the "classic" bribe, i.e., demands for bribes to secure contracts, as their main concern. Operational bribes typically present themselves as demands for small amounts of money, carrying the threat that the company's transactions --- whether a license application or custom processing --- will be significantly delayed if the company fails to pay.