On Thursday, February 13, the OECD presented a webcast which provided a status report on the development of an impact assessment of the anticipated tax collections and economic consequences of the proposed Pillar One and Pillar Two revisions to the international tax framework. Businesses (and presumably governments even more so) have been eagerly anticipating a readout on this work, as one of the hallmarks of OECD policy making always has been to base policy decisions on rigorous economic analysis.

To its credit, the OECD is attempting to tackle one of the most challenging aspects of tax revenue estimation, namely the effect of behavioral changes encouraged by new law. The status report suggested that two possible behavioral changes could be that multinational enterprises reduce their profit shifting intensity, and that some low-tax jurisdictions increase their corporate income tax rate.

The headline figures are eye-catching; the estimate at the moment is that Pillar One and Pillar Two in combination would result in an overall increase of annual corporate tax collections of up to USD 100 billion, or 4% of current corporate income tax collections. The analysis indicates that tax revenue gains would be broadly similar across high-, middle-, and low-income economies. The report projects that the only group of countries that would lose tax revenue in the aggregate under Pillar One (i.e., the ‘‘surrender states,’’ which would surrender tax rights over income that will be allocated to other jurisdictions) would be ‘‘investment hubs.’’ More than half of the Pillar One reallocated profit would come from 100 MNE groups. The OECD also expects that all three country groups — high, medium, and low income — would see an increase in corporate tax collections under Pillar Two.


Article first published in Bloomberg Tax: Tax Management International Journal on 13 March 2020.

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SEC 2020: Expect SEC Enforcement to Cast Wide Net on Corporate Disclosure

This is the second installment in our series of year-end analyses of the year in securities regulation and enforcement.

Based on our ongoing analysis of SEC enforcement actions in 2019, we expect the SEC’s Division of Enforcement to continue its expansive view of company disclosure issues that warrant enforcement scrutiny. In 2019, the SEC was aggressive against alleged accounting fraud by public companies and their executives, including actions alleging accounting schemes to meet earnings expectations and actions alleging sham transactions with third parties. Consistent with this focus on accounting misstatements, the SEC also brought stand-alone actions for internal control deficiencies. In addition, the Commission brought actions against outside auditors for recurrent audit failures and violation of auditor independence rules.

Expanding beyond this traditional focus, the SEC investigated companies for alleged misstatements or omissions involving non-accounting issues, such as data privacy breaches and cyber-related violations, as well as other non-technology negative developments affecting a company’s core operations. The SEC also brought actions against companies that were already sanctioned by other non-securities regulators. Finally, the SEC expanded its enforcement reach to foreign companies with securities that are primarily listed overseas, as long as the Enforcement Staff could find a US jurisdictional hook to sue such companies and their executives⁠—a trend we have seen continue into recent weeks.

The post US: Looking Back & Looking Ahead: A Series of Analyses of the Past Year in Financial Regulation and Enforcement and What to Expect in the Coming Year appeared first on Global Compliance News.


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Welcome to the March 2020 edition of Baker McKenzie’s International Trade Compliance Update.

This issue’s highlights:

  • WTO: trade policy review (EU), disputes, TBT notifications
  • WCO: agenda for 65th HSC, news
  • Other International Matters: CITES notifications, FAS Gain Reports
  • Panama: Official Gazette updates
  • Canada: consultations on WTO investment framework, comprehensive review of TRQs, consultation on possible modernization of Canada-Ukraine FTA, Canada’s post Brexit agreements with EU, Canada Gazette, restrictive measures, AD/CVD, advance rulings, notices and D-Memoranda
  • Mexico: Diario Oficial, AD/CVD
  • United States: Presidential documents, report on WTO Appellate Body, designation of LDCs under CVD law, sugar TRQs, ITC investigations, Sec. 232 and 301 updates, exclusions and guidance, CAFC upholds Sec. 232, import restrictions – Ecuador, Yemen, Jordan; CBP/TSA arrival restrictions, CBP documents, CBP ruling revocations/modifications, CSMS updates, FTZs, non-proliferation measures, natural gas export authorizations extended, BIS EAR revisions for Yemen and Russia, Huawei temporary licenses, information requested on CWC impact, Venezuela sanctions, Mali sanctions, boycotts, investment regulations updates, regulatory updates, APHIS updates, AD/CVD scope rulings, anti-circumvention determinations, AD/CVD cases
  • Argentina: Boletin Oficial, AD/CVD
  • Brazil: CAMEX, SECEX, AD/CVD ma ters
  • Chile, Peru, Colombia: regulatory updates
  • Australia: MOFCOM/GAC Notices, Peru-Australia FTA, Australia-Hong Kong FTA, AD/CVD cases
  • China: Tariff Commission announcements, countermeasures exclusions and tariff reductions, AD/CVD announcements, Hong Kong SAR notices
  • India: CBIC and DGFT notices, circulars and instructions, AD/CVD
  • Indonesia: e-Commerce, Indonesia-Australia FTA
  • New Zealand: restrictions on laser pointers, vehicle import requirements
  • Singapore: rules for FTZ
  • EU: EU-Vietnam FTA approved by Euro. Parliament, withdrawal of Cambodia preferences, classification rulings, CN EN updates, OJ documents, restrictive measures, AD/CVD
  • France: notice to importers
  • Switzerland: OFAC approved humanitarian trade arrangement, regulatory requirements, restrictive measures
  • Other EU-EFTA countries: regulatory requirements, restrictive measures
  • United Kingdom: statutory instruments, post-Brexit import controls, consultation on post-Brexit tariff regimes, export inspection procedures, HMRC updates, notices
  • Turkey: communiques and regulations
  • Ukraine: cancelation of special economic sanctions, legislation
  • Morocco: tax regime
  • EAEU: Board and Council Решения, classification preliminary decision
  • South Africa: Tariff amendments
  • Senegal: promoting start-ups
  • Togo: audio-visual communications
  • plus information on newsletters, webinars.

Plus information on Client Alerts and articles, webinars and seminars, and recordings of past events.

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The rapid spread of the 2019 Novel Coronavirus (COVID-19) is disrupting business (and life) everywhere. As new clusters are identified across Europe and the Middle East, fears of the virus are impacting the US stock market and there are concerns of a global pandemic.

With no end in sight, many US companies are questioning what policies and practices they need to put in place, and revisiting those that they may already have in place to deal with this rapidly evolving situation. We recommend that companies take the following steps now.

Next Steps for Employers

  • Emergency Preparation Team. Assemble a cross-functional emergency management team to handle issues such as employee health and safety, internal and external communications, medical leaves, personal leaves and disability accommodations, technology support, and legal compliance. As the situation continues to develop, it will become increasingly important to have a single team that is aware of all potential virus-related issues for consistency and precedent-setting purposes.
  • Decision Making Authority. The team should include responsible persons from the relevant departments (e.g., HR, IT, legal, communications, etc.), and should be or have access to decision makers who can make immediate decisions on office closures, leave requests, working from home policies, etc.
  • Pandemic Policy. The company should review its current emergency management policies. If it does not have a pandemic policy, it should develop one. Depending on the location, the company may have an analogous policy or experience with other business disruptions as a starting point (e.g., for earthquakes, floods, wildfires, hurricanes, strikes, etc.). This will likely include an emergency communication protocol, as well as procedures for closing and opening offices, working with limited staff, etc. In some companies, this could also include additional technical support to allow employees to work remotely, and HR and communication support to ensure that employees are being treated fairly and that the company is as consistent as possible in its messaging. •
  • Safety Awareness. The team should also closely monitor the relevant health guidelines from the relevant government and non-government authorities, such as the US Centers for Disease Control and Prevention (CDC). Workplaces should prioritize basic disease prevention measures, like promoting proper hygiene and actively encouraging workers to stay home if they’re not feeling well. CDC has additional strategies such as:
    • Place posters that encourage staying home when sick, cough and sneeze etiquette, and hand hygiene at the entrance of workplaces and in other workplace areas where they are likely to be seen.
    • Provide tissues and no-touch disposal receptacles for use by employees.
    • Instruct employees to clean their hands often with an alcohol-based hand sanitizer that contains at least 60-95% alcohol, or wash their hands with soap and water for at least 20 seconds. Soap and water should be used preferentially if hands are visibly dirty.
    • Provide soap and water and alcohol-based hand rubs in the workplace. Ensure that adequate supplies are maintained. Place hand rubs in multiple locations or in conference rooms to encourage hand hygiene.
    • Perform routine environmental cleaning. Routinely clean all frequently touched surfaces in the workplace, such as workstations, countertops, and doorknobs. Provide disposable wipes so that commonly used surfaces (for example, doorknobs, keyboards, remote controls, desks) can be wiped down by employees before each use.
  • Sick Leave. We generally advise that companies follow their existing medical and sick leave policies, but modified as recommended by the public health authorities. For example, in the US the CDC specifically recommends that companies:
    • Ensure that sick leave policies are flexible and consistent with public health guidance;
    • Develop “non-punitive leave policies” so that sick employees do not feel pressured to come into work where they can infect others;
    • Loosen requirements for a doctor’s note for employees to validate a respiratory illness or to return to work; and
    • Maintain flexible policies that permit employees to stay home to care for a sick family member.
  • Travel Restrictions. Companies are starting to take more proactive measures to prepare for a wider outbreak. Implementing business and personal travel policies is advisable. Currently, recommendations are as follows:
    • The CDC recommends that travelers avoid all nonessential travel to and from mainland China, Iran, South Korea and Italy. The CDC recommends that older adults or those who have chronic medical conditions consider postponing travel to Japan; and travelers should take usual precautions with regard to travel to and from Hong Kong. Of course additional countries may be added to the list based on emerging information regarding the spread of virus.
    • Consider instructing employees who have visited the above-noted restricted countries/regions or have been in close contact with someone who has been in those countries/regions within the last 14 days to promptly disclose their travel or contact history to their supervisor to determine if it is appropriate to work from home for a period of time.
    • Consider video conferencing as an alternative to foreign travel.
    • Look ahead to future big meetings and events to assess safety and to consider alternatives.
  • Visitor Policies. With respect to guests and visitors, companies are beginning to develop screening policies for clients, guests and other visitors, as well as limiting access to social visitors to company sites. This is an evolving issue, but we know that in jurisdictions that are at a higher risk level, companies can do so. Here in the US, it’s a little more difficult for a variety of reasons, in part because COVID-19 has not yet been designated as a “pandemic,” so all of the normal privacy, accommodation, etc. rules still apply. If, though, COVID-19 becomes a “direct threat” to US workplaces, then companies will likely have greater leeway to make inquiries to protect workplaces.
  • Cost-Cutting Strategies. Be forward-thinking. COVID-19 will impact the bottom line. As the economy braces for a coronavirus challenge, many companies may be forced to cut costs. Layoffs, furloughs and reducing labor costs are invariably top of mind. And, because international labor and employment rules are vastly different from those inside the US, it is vital in-house counsel and human resources professionals wear a global hat when approaching these changes. What works from a US point of view may not work internationally. Companies should be mindful of the differences as they plan cost-cutting measures involving their employees.

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The 2020 presidential race is well underway in the US Labor policy has been and will continue to be a key talking point for Democratic candidates and President Donald Trump moving into the general election.

In part one of this two-part article, we examine the key labor policy proposals advanced by the leading Democratic contenders of the 2020 race – Sen. Bernie Sanders, I-Vt., and former Vice President Joe Biden.

In part two, we will examine the policy proposals of any remaining Democratic nominees, after Super Tuesday, as well as President Donald Trump.

Bernie Sanders

Sanders has made increasing union membership a key battle cry of his campaign. Indeed, Sanders has promised that he will double union membership through his policy reforms in his first four years. The key proposed reforms include the following:

Implementing a Majority Sign-Up Process

To accomplish his goal of expanding union membership, Sanders proposes providing unions the ability to organize through a majority sign-up process, whereby the National Labor Relations Board would be required to certify a union if it receives the consent of the majority of eligible workers.

Another term for this plan is “card-check system.” This would require only that employees execute valid union cards. The NLRB would then confirm the validity of those union cards, and if a majority of bargaining unit employees have executed union authorization cards, certify the union as the employees’ bargaining representative.

There is no secret ballot election process under this system. Sanders’ proposal would eliminate the election process and ultimately reduce an employer’s ability to campaign against unions.

Imposing First Union Contract Provisions

Sanders proposes that employers be required to start negotiating with unions within 10 days after a union has been certified. If no agreement is reached within 90 days of negotiations, the parties must participate in compulsory mediation.

If no contract is reached after 30 or more days of mediation, the remaining issues in dispute are resolved through binding arbitration. This proposal would make it harder for an employer to force that issues be resolved in its favor (such as management rights clauses) or to swap issues.

Eliminating At-Will Employment

Sanders proposes to eliminate employment at will – one of the most well-known aspects of US labor and employment law under which an employee may quit working at any time and an employer may terminate an employee’s employment for any reason, so long as it is not an unlawful reason. Sanders proposes restricting an employer’s ability to terminate employees unless the employer has just cause for the termination.

As proposed by Sanders, the just-cause standard would apply to all employment terminations, irrespective of the existence of a union. Typically, collective bargaining agreements already require that various actions be taken only with just cause. This proposal would fundamentally reshape the employment relationship and likely create additional liability for employers, positioning employees to challenge a termination they deem unfair or unwarranted.

Codifying Browning-Ferris

Sanders also proposes codifying the NLRB’s Browning-Ferris Industries of California Inc. decision defining the joint employer standard. Under Browning-Ferris a company is a joint employer of an employee if it sufficiently exercises indirect control and/or the reserved right to control (i.e., potential control not necessarily exercised) over the terms and conditions of employment.

Proof that two or more companies actually exercise direct and immediate control over an employee would not be required to establish joint employment. This proposal would have significant implications for companies who use workers through a third-party company, and for franchisors who do not directly employ the workers of their franchisees.

Increasing Gig Economy Protections

Sanders also proposes policies establishing that gig economy workers (i.e., workers who perform services on behalf of a company – usually app-based service companies such as ride-sharing or meal delivery services) are employees of the companies for whom they render services, and not nonemployee independent contractors.

This change would have the practical effect of extending legal protections reserved for employees of companies (such as state and federal anti-discrimination statutes and wage and hour laws) to gig economy workers. Further, Sanders proposes amending the National Labor Relations Act to give gig economy workers the right to unionize and collectively bargain.

In addition to the above, and in summary, Sanders proposes:

  • Giving federal employees the right to strike (currently, federal employees may unionize but not go on strike);
  • Prohibiting the replacement of unionized workers who strike;
  • Eliminating right-to-work laws: Currently Section 14(b) of the Taft-Hartley Act, allows states to adopt right-to-work legislation. This would give unions the ability to collect dues from any employee whose employment is governed by a collective bargaining agreement;
  • Increasing the federal minimum hourly wage from USD 7.25 to USD 15; and
  • Implementing a paid family leave system, providing employees paid leave for their own or a family member’s serious medical condition, or for the birth, adoption or foster placement of a child.

Joe Biden

Biden also intends to strengthen unions and add additional legal protections for gig economy workers. Biden’s proposals include the following:

Restricting Employer Use of Arbitration Agreements

Biden supports passage of the Protecting the Right to Organize Act which, among other things, broadly restricts an employer’s use of arbitration agreements or class action waivers.

This would largely undo the US Supreme Courts 2018 ruling in Epic Systems Corp. v. Lewis, which held that an employer’s use of agreements requiring individual arbitration (thereby precluding claims from proceeding on a class or collective basis) are enforceable. Such a proposal could significantly increase the number of class and collective actions against employers in the US, up from the notable decline in such actions after the Supreme Court’s ruling in Epic Systems.

Prohibiting Noncompete and No-Poaching Agreements

Biden proposes banning an employer’s use of noncompete agreements “except for the very few that are absolutely necessary to protect a narrowly defined category of trade secrets.”

Biden would further eliminate no-poaching agreements – agreements between two or more employers promising that no party to the agreement will hire away the workers of another party to the agreement. Opponents of no-poaching agreements argue that they harm competitiveness in the market and negatively impact an employee’s freedom of movement by foreclosing employment opportunities.

Increasing Gig Economy Protections

Biden proposes codifying the ABC test when determining whether a gig economy worker is or is not an employee of a company. The test was recently codified in California as A.B. 5.

Under the ABC test an employer must demonstrate that the worker (A) is free from the employer’s control; (B) is performing work that is outside the employer’s usual course of business; and (C) customarily works as an independent business in that industry. Biden also proposes that gig economy workers be able to collectively bargain.

Implementing Enforcement Priorities for Employee Misclassification

Part of Biden’s plan includes “aggressively pursu[ing] employers who violate labor laws, participate in wage theft, or cheat on their taxes by intentionally misclassifying employees as independent contractors.” Biden’s proposals also calls for an “aggressive, all-hands-ondeck enforcement effort” to reduce US employee misclassification issues.

Key to Biden’s approach would be implementing specific enforcement priorities for the NLRB, the US Equal Employment Opportunity Commission, the IRS, and the US Department of Justice to work collaboratively to investigate and enforce misclassification issues. Biden also calls for increased funding for the retention of investigators in these same agencies to “facilitate a large anti-misclassification effort.”

Implementing a Majority Sign-Up Process

Biden supported (and co-sponsored) the original version of the proposed Employee Free Choice Act, which supports a majority sign-up process (or card-check system) as an initial option for union elections. Biden emphasizes his continued support for such a system through his 2020 labor proposals. Again, this will streamline the union election process and make it more difficult for employers to campaign against unions.

Codifying Browning-Ferris

Biden also proposes enacting legislation restoring the broad definition of “joint employer” articulated in Browning-Ferris. Further, Biden proposes:

  • Clarifying that employers may not retaliate against unauthorized workers who report labor violations, and expanding the U visa program. Currently, the U visa program gives unauthorized immigrants legal status in the US who have suffered serious mental or physical abuse while in the US and are willing to assist US law enforcement officials. Under Biden’s plan, the U visa program would extend to cover unauthorized workers whose employers commit unlawful workplace violations against them under federal, state or local labor law;
  • Increasing the federal minimum hourly wage from USD 7.25 to USD 15; and
  • Eliminating right-to-work laws in the US, in an effort to strengthen unions and increase union membership.

Key Takeaways

All of these proposals have the potential to change the way employers do business in the US Indeed, some proposals, such as Sanders’ just-cause proposal or the proposals for a broader joint employer standard, may transform the US workplace in several ways, by strengthening employee bargaining rights, reshaping the use of contractors in the workplace, and expanding numerous workplace protections.

Further, even if the Democratic nominee does not win the White House, their policy proposals may seep into the consciousness of the voting public and, consequently, their respective representatives in Washington, DC. This could lead to the adoption of some or all of these laws after the 2020 election, regardless of who takes the oval office this go-around. Employers should keep tabs on these policy proposals and the level of support they garner.

Article first published in Law 360 on 2 March 2020.

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What do Cardi B, Jordin Sparks and Alexa PenaVega have in common? If you guessed they each received warning letters from the Federal Trade Commission (“FTC”) last week, you are correct. The FTC sent letters to these three celebrities as well as seven other social media influencers warning that their Instagram posts about a detox tea did not adequately disclose that the endorsements were paid-for. The disclosures were inadequate because they were not visible without specifically expanding the text of the post beyond the “more” button and videos associated with the posts did not separately include the disclosure. The FTC letters specifically reminded the celebrities that their failure to make adequate disclosures about their connections to marketers may subject them to legal enforcement action by the FTC. The FTC letters require a written response from the celebrities by March 30 to explain what actions they are taking to ensure that their social media posts endorsing brands clearly and conspicuously disclose their relationship to the brand.

The FTC also announced that the manufacturer of the detox tea, Teami, LLC and its owners (collectively, “Teami”), had agreed to settle a lawsuit brought against it by the FTC in the Middle District of Florida for USD 15.2 million (the amount of the total sales of the products). Because of Teami’s inability to pay the full judgment, so long as Teami pays USD 1 million, the rest of the amount would be suspended. The proposed settlement agreement requires Teami to maintain a system to monitor and review how endorsers make their disclosures.

Teami had received a warning letter in 2018 about its need to adequately monitor its social media influencers, including the requirement that disclosures appear before the “more” button. Thereafter, Teami instituted a social media policy with its influencers that the disclosures must appear before the “more” button and stated that the influencers needed Teami’s approval in advance for posts. In practice, however, these non-complying posts were not prevented and clearly, the contractual provisions were not enough to prevent these influencers from making posts that did not adequately disclose that the endorsements were purchased. Either the pre-approval process was not followed in all instances or the non-complying posts were not caught during the pre-approval process.

The FTC Complaint explains how the posts look different on different devices and that the disclosures must be clear and conspicuous even if the post is viewed on a tiny telephone screen.

Under the agreement, Teami is required to, at a minimum:

  • Provide each endorser with a clear statement of his or her responsibilities to disclose and obtain from each such endorser a signed and dated statement acknowledging receipt of that statement and expressly agreeing to comply with it, except in the case of endorsers participating in a program through which they only receive free or discounted products or referral payments not to exceed USD 20 per month, an email signature acknowledging the endorser’s receipt of the statement of responsibilities and agreement to comply with it will be sufficient.
  • Establish, implement and maintain a system to monitor and review the representations and disclosures of endorsers, including reviewing each specifically contracted online video and social media posting promptly after publication, except in the case of endorsers participating in a program through which they only receive free or discounted products or referral payments not to exceed USD 20 per month, it will be sufficient to conduct monthly reviews of the fifty endorsers generating the highest levels of product sales, in dollars, in the prior month.
  • Immediately terminate and cease payment to any endorser who has failed to adequately disclose that it has been paid, except that Defendants may provide an endorser with notice of failure to adequately disclose and an opportunity to cure the disclosure prior to terminating the endorser if Defendants reasonably conclude that the failure to adequately disclose was inadvertent. Defendants shall inform any endorser to whom they have provided a notice of a failure that any subsequent failure to adequately disclose will result in immediate termination.
  • Create reports showing the results of the monitoring.

If you have any questions about how this decision may impact your use of social media influencers, please contact your Baker McKenzie attorney.

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On March 3, 2020, the US Supreme Court heard oral argument on whether the SEC has the authority to obtain disgorgement of “ill-gotten gains” in federal court for securities law violations. During the oral argument, in their questioning, the Justices frequently referred back to district courts’ inherent authority to enter equitable relief. Based on this long-recognized equitable authority, and the specific grant of that authority in the federal securities laws, we expect the Court to determine that disgorgement is properly ordered in SEC enforcement actions in federal court.

The courts’ equitable authority to order disgorgement was considered in the argument as an appropriate remedy intended to promote deterrence by ensuring that one held liable for wrongdoing is not permitted to benefit from his or her ill-gotten gains. This, of course, is distinguished from restitutionary remedies, which focus solely on returning assets to victims; however, while those distinctions were not significantly probed, the issue of returning funds to investors was an important point of the discussion.

And, a good deal of the Justices’ questions focused on the circumstances where a disgorgement order can appropriately be described as equitable, as opposed to penal. Based on the Justices’ questions, while it is very possible that the Court will not impose actual limitations on district courts’ exercise of equitable jurisdiction, we anticipate some language in the Court’s decision that recognizes the limits of disgorgement to the actual “ill-gotten gains,” and cautions that any amounts included in an order that might be seen as more than that, could be limited by an appeals court as, in fact, a penalty.

Challenge to SEC Disgorgement Power

In SEC v. Liu, the Ninth Circuit affirmed the trial court’s decision to grant summary judgment in the SEC’s favor imposing disgorgement of approximately USD 27 million in addition to an USD 8 million civil penalty against the defendants. 1 The defendants appealed, arguing that the SEC does not have the authority to seek disgorgement for violations of the federal securities laws. For decades, the SEC has sought disgorgement in federal court as a form of “equitable relief.” The defendants argue, however, that because equitable relief is meant to be remedial rather than punitive, disgorgement is not an equitable remedy. This argument stems in part from the Supreme Court’s decision in Kokesh, in which the Court held that SEC disgorgement operates as a “penalty” and thus is subject to the five-year statute of limitations that governs such penalties. 2 The Supreme Court granted the writ of certiorari by petitioners Liu and others.

In its appeal to the Supreme Court, the Petitioners argue in their brief that SEC disgorgement is a penalty and does not have the characteristics of traditional equitable relief. Petitioners argue that unlike traditional equitable relief to make victims whole, the SEC often deposits disgorgement funds into the US Treasury and does not return the funds to harmed investors. They point to the SEC’s practice of seeking disgorgement beyond the “net profit” of the alleged wrongdoer and not discounting legitimate costs, contrary to traditional equitable relief.

Our Takeaways

District Courts Will Continue to Be Able to Enter Disgorgement Orders

During oral argument, the questioning by a number of the Justices suggested that the Court might be willing to allow the SEC to continue to seek disgorgement in federal district court actions as an equitable remedy. This inclination seems based on the specific grant of equity jurisdiction provided to federal district courts by the federal securities laws. For example, Section 21(d)(5) of the Securities Exchange Act of 1934 provides that “[i]n any action or proceeding brought or instituted by the Commission under any provision of the securities laws, the Commission may seek, and any Federal court may grant, any equitable relief that may be appropriate or necessary for the benefit of investors.” The Justices appeared willing to permit the SEC to seek, and a federal district court to issue, disgorgement orders based on this and other similar grants of authority.

Disgorgement Amounts Should More Closely Reflect the Real-World Economic Reality

In recent years, the Staff has been very aggressive in calculating disgorgement amounts, often disregarding any costs or expenses borne by potential defendants in any business enterprise against which the Staff alleges securities fraud. Often in the context of settlement dialogues, the SEC Enforcement Staff has taken the position that, at most, only certain variable costs, but not legitimate fixed costs, could be offset against the gross profits number when calculating disgorgement. In FCPA cases, in particular, these SEC-imposed limitations can result in public companies paying back amounts greater than their economic benefit from a particular transaction or course of conduct. Any language in the opinion that purports to draw a line between “disgorgement” and “penalty” that suggests more care in determining what comprises “ill-gotten gains,” could open the door to arguments over whether any particular “gain” is causally connected to an alleged securities law violation — for example in FCPA cases alleging books and records and internal controls violations, where the SEC seeks disgorgement of the value of an entire contract or set of transactions.

Importantly, this litigation challenged only the ability of the SEC to seek disgorgement in federal district court actions. It does not challenge the SEC statutory power to seek disgorgement through administrative proceedings. However, if the Court opines or cautions on the scope of disgorgement, such a ruling may similarly limit the amount and scope of disgorgement in SEC administrative proceedings.

Pressure on SEC (and Potentially Settling Defendants) to Return Money to Investors

Another area of focus during the argument was the fact that disgorged funds are often not slated to be returned to investors, but instead are ordered to be paid to the US Treasury. Of course, this goes directly to the distinction between disgorgement and restitution, which was not really considered at the oral argument. Although the Justices plainly had some interest in this issue, they did not appear to question whether the SEC was exercising good faith efforts in trying to distribute disgorged funds.

However, the SEC has been struggling to return disgorged funds to investors. For instance, our recent analysis of SEC statistics from 2019 shows that the SEC has taken a significant amount of time to return funds to victims. And in our experience, the process of returning funds to investors is resource intensive and complex. Often, identifying victims and determining the appropriate monetary amounts to which they are entitled is not an easy task. Any comments in the Court’s opinion, even if offered as guidance in dicta, that can be seen as requiring the SEC to make more significant efforts to return funds to victims will increase the pressure on the SEC to accomplish this task. One danger is that the SEC may decide, as it has done in the past, to require defendants, as part of a settlement, to bear the cost and burden of returning funds to victims, including, for instance, the hiring of an independent fund administrator by settling defendants.

We will continue to monitor this matter and offer our insights when the Court does issue its ruling.

1 See SEC v. Liu, 262 F. Supp. 3d 957 (C.D. Cal. 2017), aff’d, 754 F. App’x 505 (9th Cir. 2018).
2 See Kokesh v. SEC, 137 S. Ct. 1635 (2017).

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When encouraging employees to wash their hands is not enough!

As the COVID-19 virus spreads rapidly throughout the world, and the possibility of a pandemic declaration inches closer each day, much of the advice to employers so far has focused on generic “good hygiene” recommendations from health departments. This advice is of limited utility for employers who have already faced or will soon confront coronavirus cases in their workforce. Companies and government agencies are scrambling to keep up, and difficult but nuanced decisions must be made now. “Wash your hands” simply won’t cut it when you have a confirmed COVID-19 case in your midst.

Baker McKenzie’s COVID-19 Rapid Response Team takes the opposite approach – providing practical, jurisdiction-specific guidance that employers can use to deal with their most pressing COVID-19 issues. This client alert supplements our extensive guidance in our Coronavirus Resource Center, by providing US employers with specific responses to common questions about the virus.

This alert is based on lessons learned in past pandemics. After the H1N1 outbreak in 2009 rose to the level of a pandemic, the EEOC issued an employer resource titled “Pandemic Preparedness in the Workplace and the Americans with Disabilities Act.” We have updated the EEOC’s 2009 guidance to provide employers with answers on what they can and cannot do in addressing the COVID-19 epidemic, in the form of a FAQ and examples.

The FAQ focuses on the Americans with Disabilities Act (“ADA”) because the ADA is the primary law regulating medical examinations and inquiries for US-based applicants and employees. For example, the ADA and state discrimination statutes, which generally protect applicants and employees from disability discrimination, regulate:

  • What questions an employer may ask an employee who calls in sick, in order to protect the rest of its workforce when a pandemic appears imminent?
  • Whether employers may require employees to submit to body temperature testing, and when?
  • Whether an employer may require employees to stay home if they have symptoms of the pandemic virus?
  • When employees want to return to work, whether employers may require the employees to provide health care provider notes certifying their fitness for duty?

To be sure, other federal, state and local laws govern health-related issues in the workplace, such as the OSHA-mandated obligation to provide a safe workplace for employees or protective equipment and procedures for certain positions, the National Labor Relations Act’s collective bargaining obligations, or leave laws such as the Family and Medical Leave Act. Those laws should not be disregarded, but the crux of the matter for most employers today is whether and when testing and medical inquiries are permitted. Such questions fall under the ADA’s umbrella if the employer has 15 or more employees (and is therefore covered by the ADA).

The ADA is relevant for three reasons: (1) the ADA regulates disability-related inquiries and medical examinations for all applicants and employees, including those who are not disabled; (2) the ADA prohibits covered employers from excluding individuals with disabilities from the workplace for health or safety reasons unless they pose a “direct threat” to themselves or others, which means a significant risk of substantial harm even with reasonable accommodation; and (3) the ADA requires reasonable accommodations for disabled individuals during a pandemic, unless providing an accommodation would constitute an undue hardship. And with that ….

Before a pandemic is declared, what can we do to prepare?

Q: I heard that COVID-19 most severely impacts persons with underlying health conditions, including those with compromised immune systems or chronic respiratory illnesses. Before a pandemic or local health emergency has been declared, can I ask my employees if they have underlying health conditions that the CDC or WHO says could make them more susceptible to COVID-19 complications?

A: No. Asking an employee to disclose a compromised immune system or a chronic health condition is a disability-related medical inquiry because the response is likely to disclose the existence of a disability. The ADA does not permit such inquiries in the absence of objective evidence that pandemic symptoms will cause a direct threat. Such evidence is typically lacking before a pandemic / health emergency occurs.

While there is much debate about when a pandemic should be declared, health experts generally agree that a “pandemic” is a global “epidemic” in which there is sustained human-to-human transmission of the virus worldwide, with the virus no longer contained to specific geographic regions. The declaration of a pandemic describes the breadth of the virus’s spread, but does not describe its severity.

This is an important distinction when evaluating whether an infected employee constitutes a “direct threat” in a workplace. Under the ADA, a “direct threat” means “a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.” If an employee poses a direct threat despite reasonable accommodation, he or she is not protected by the non-discrimination provisions of the ADA.

Q: How can I plan for employee absences and staffing shortages if I can’t ask employees about their underlying health conditions before a pandemic is declared?

A: You can ask questions that are not disability-related. A question is not disability-related if it asks about potential non-medical reasons for absences during a pandemic (e.g., lack of public transportation) instead of just medical reasons (e.g., chronic illnesses that increase the risk of complications). The question should be posed so that employees only answer “yes” or “no” without specifying the factor(s) that apply to them. The answer need not be anonymous.

Below is a sample ADA-compliant survey published by the EEOC to plan for employee absenteeism:


Directions: Answer “yes” to the whole question without specifying the factor that applies to you. Simply check “yes” or “no” at the bottom of the page.

In the event of a pandemic, would you be unable to come to work because of any one of the following reasons:

  • If schools or day-care centers were closed, you would need to care for a child.
  • If other services were unavailable, you would need to care for other dependents.
  • If public transport were sporadic or unavailable, you would be unable to travel to work.
  • If you or a member of your household fall into one of the categories identified by the CDC as being at high risk for serious complications from the COVID-19 virus, you would be advised by public health authorities not to come to work (e.g., pregnant women; persons with compromised immune systems; older people; people with certain underlying health conditions like heart disease, lung disease and diabetes).

Answer: Yes_______

Answer: No________ .

Q: Can I require new hires to submit to post-offer medical exams to determine their general health status?

A: Yes, so long as: (1) all new hires in the same job category are required to complete the same medical examination and (2) medical information from the examination is maintained in a separate medical file and is treated as a confidential medical record.

Example A: A fabrics importer employer implements a pandemic plan after the WHO and CDC confirm that a pandemic may be imminent because COVID-19 is infecting people in multiple countries, but has not begun “community spread” in North America. Much of the employer’s international business is in the affected regions. The employer announces that all newly-hired employees who will be required to travel to and work in affected regions must undergo medical examinations that include procedures to identify medical conditions that the CDC associates with an increased risk of complications from COVID-19. Because the employer administers the medical exams post-offer to all newly hired employees in the same job categories, the medical exams are ADA-compliant.

Q: If a post-offer medical examination reveals that an applicant has a medical condition that puts her at increased risk of complications from COVID-19, can I rescind the applicant’s job offer?

A: No, unless the applicant would pose a “direct threat,” based on reasonable medical judgment that relies on the most current medical knowledge and/or the best available evidence such as objective information from the CDC or state or local health authorities. The finding must be based on an individualized assessment of the individual’s present ability to safely perform the essential functions of the job, after considering, among other things, the imminence of the risk; the severity of the harm; and the availability of reasonable accommodations to reduce the risk. Before concluding that an individual poses a direct threat, the employer must determine whether a reasonable accommodation could reduce the risk below the direct threat level.

Example B: The same fabrics importer employer offers an applicant an office position at its US headquarters. The position does not involve regular contact with employees who travel to the affected virus regions. The applicant’s post-offer medical examination (which is the same as the examination given to all US headquarters employees) reveals that the applicant has a compromised immune system due to recent cancer treatments. Given the fact that the position does not involve regular contact with employees who travel to the affected region, and that COVID-19 has not spread to North America, the applicant likely would not face a significant risk of contracting the virus at work and does not pose a “direct threat” to himself or others in this position. Under the ADA, it would be discriminatory to rescind the applicant’s job offer based on the fear or possibility of a pandemic.

Q: Can I prohibit employees from traveling to non-restricted areas for vacation?

A: Employers generally may not regulate employees’ lawful off-duty conduct during non-work hours. A federal appellate court recently held that a company’s termination of an employee who planned to travel for personal reasons to a region of Africa experiencing an Ebola outbreak – because the employer feared the employee would become ill and infect other employees upon her return – did not violate the ADA. The employer in that case acted based on a potential, future disability, which the court held is not protected by the ADA. While the employer may have been acting on fear rather than facts, employers generally should not impose restrictions on employees’ travel to non-restricted areas for personal reasons. Instead, employers should educate their workforces about the potential dangers associated with travel during a pandemic.

A pandemic has been declared: how can we protect our workplace and employees?

Q: Can I send employees home if they display influenza-like symptoms during a pandemic?

A: Yes. The CDC and WHO have stated that employees who become ill with symptoms of influenza-like illness at work during the COVID-19 epidemic should leave the workplace. Advising such workers to go home is not a disability-related action if the illness is akin to seasonal influenza or the COVID-19 virus. You can also send an employee home under the ADA if the illness is serious enough to pose a direct threat. But if your workforce is unionized, make sure you consider your CBA-related obligations.

Q: During a pandemic, how much information can I request from employees who report feeling ill at work or who call in sick?

A: You may ask such employees if they are experiencing COVID-19-like symptoms, such as fever or chills and a cough or shortness of breath. You must keep all information about employee illness confidential in compliance with the ADA.

These inquiries are not disability-related. If a pandemic becomes severe, the inquiries, even if disability-related, are justified by a reasonable belief based on objective evidence that the severe form of COVID-19 poses a direct threat.

Q: During a pandemic, may I take my employees’ temperatures to determine whether they have a fever?

A: Generally, measuring an employee’s body temperature is a medical examination. If COVID-19 is deemed to be a pandemic, or if COVID-19 becomes widespread in the community as assessed by state or local health authorities or the CDC, then employers may measure employees’ body temperature. However, employers should be aware that some people with COVID-19 will not have a fever. Other persons may try to hide fevers by taking common fever-reducing medications before being tested. Additionally, employers should try to make the temperature checks as least invasive as reasonably possible.

Q: When an employee returns from travel during a pandemic, do I have to wait until the employee develops COVID-19 symptoms before I can ask the employee if he or she traveled to a COVID-19 affected region or otherwise about his or her exposure to COVID-19 during the trip?

A: No. These would not be disability-related inquiries. If the CDC or state or local public health officials recommend that people who visit specified locations remain at home for a period of time (currently 14 days) until it is clear they do not have COVID-19 symptoms, an employer may ask whether employees are returning from these locations, even if the travel was personal.

Q: During a pandemic, may I ask employees who do not have COVID-19 symptoms to disclose whether they have a medical condition that the CDC says could make them especially vulnerable to COVID-19 complications?

A: Probably. If COVID-19 turns out to be mild like seasonal influenza or the H1N1 virus in the spring/summer of 2009, making disability-related inquiries or requiring medical examinations of employees without symptoms is prohibited by the ADA. However, employers should allow employees who experience flu-like symptoms to stay at home, which will benefit all employees including those who may be at increased risk of developing complications. If an employee voluntarily discloses (without a disability-related inquiry) that he or she has a specific medical condition or disability that puts him or her at increased risk of COVID-19 complications, you must keep the information confidential, but may ask the employee to describe the type of assistance he or she thinks will be needed (e.g. telework or leave for a medical appointment). You should not assume that all disabilities increase the risk of COVID-19 complications. If, as it appears likely, a COVID-19 pandemic becomes more severe or serious according to the assessment of local, state or federal public health officials, employers may have sufficient objective information from public health advisories to reasonably conclude that employees will face or constitute a direct threat if they contract COVID-19. Only in this circumstance may employers make disability-related inquiries or require medical examinations of asymptomatic employees to identify those at higher risk of COVID-19 complications.

Q: Can I encourage employees to work remotely as an infection-control strategy during a pandemic?

A: Yes. Remote working is an effective infection-control strategy that is often granted as a reasonable accommodation. And employees with disabilities that put them at high risk for complications of COVID-19 may request remote working privileges as a reasonable accommodation to reduce their chances of infection during a pandemic. If your employees work under a CBA, be sure to consider its limitations on your ability to require remote work.

Q: Okay, can I require my employees to wash their hands three times per day for at least 20 seconds each time?

A: Yes. Requiring infection control practices, such as regular hand washing, coughing and sneezing etiquette, and proper tissue usage and disposal, does not implicate the ADA.

Q: During a pandemic, can I require employees to wear personal protective equipment (e.g., face masks, gloves, or gowns) designed to reduce the transmission of pandemic infection?

A: Yes. An employer may require employees to wear personal protective equipment during a pandemic. However, if an employee with a disability needs a related reasonable accommodation under the ADA (e.g., non-latex gloves, or gowns designed for individuals who use wheelchairs), the employer should provide these, absent undue hardship.

Q: What instructions should I give to an employee who is symptomatic at work?

A: Employees who are in medical distress or who have severe symptoms should seek emergency medical care. If symptoms are not severe, tell them “go home and contact your health care provider or the local health department for further instructions.” Employees who suspect they may have been exposed to the virus and feel sick with fever, cough, or difficulty breathing should get medical care. They should call the office of their health care provider before going and tell the health care provider about the employees’ travel or other exposure and symptoms. The health care provider will give instructions on how to get care without exposing other people to potential illness. While sick, employees should avoid contact with people, not go out, and delay travel to reduce the possibility of spreading illness to others. More information from the CDC available here.

Q: What instructions should I give to an employee who is symptomatic at home?

A: If employees are in severe distress, they should seek emergency medical care. If their symptoms are mild, they should contact their health care provider or the local health department for further instructions.

Q: Hurrah – scientists have developed an effective COVID-19 vaccine! Can I require all of my employees to take the vaccine regardless of their medical conditions or their religious beliefs during a pandemic?

A: No. An employee may be entitled to an exemption from a mandatory vaccination requirement based on an ADA disability that prevents him or her from taking the vaccine. Similarly, under Title VII of the Civil Rights Act of 1964, once an employer receives notice that an employee’s sincerely held religious belief, practice, or observance prevents him or her from taking the vaccine, the employer must provide a reasonable accommodation unless it would pose an undue hardship as defined by Title VII (“more than de minimis cost” to the operation of the employer’s business, which is a lower standard than under the ADA). Generally, employers should encourage employees to get the vaccine rather than requiring them to take it.

Q: During a pandemic, do I have to continue to provide reasonable accommodations for employees with known disabilities that are unrelated to the pandemic, barring undue hardship?

A: Yes. An employer’s ADA responsibilities to individuals with disabilities continue during a pandemic. Only when an employer can demonstrate that a person with a disability poses a direct threat, even after reasonable accommodation, can it lawfully exclude him or her from employment or employment-related activities.

If an employee with a disability needs the same reasonable accommodation at a remote worksite that the employee had at the workplace, the employer should provide that accommodation, absent undue hardship. In the event of undue hardship, the employer and employee should cooperate to identify an alternative reasonable accommodation.

Example C: A call center employee with low vision has a screen-reader on her work computer as a reasonable accommodation. In preparation for remote working during a pandemic, the employer issues notebook computers to all call center employees. In accordance with the ADA, the employer provides the employee with a notebook computer that has a screen-reader installed.

Q: During a pandemic, can I ask an employee why he or she has been absent from work if I suspect it was for a medical reason?

A: Yes. Asking why an individual did not report to work is not a disability-related inquiry. An employer is always entitled to know why an employee has not reported for work. Consult the CBA if one applies.

Example D: During an influenza pandemic, an employer directs a supervisor to contact an employee who has not reported to work for five business days without explanation. The supervisor asks this employee why he is absent and when he will return to work. The supervisor’s inquiry is not a disability-related inquiry under the ADA.

Q: During a pandemic, can I ask an employee’s health care provider to tell me if the employee tested positive for the COVID-19 virus, even if the employee refuses to give permission?

A: Yes. While HIPAA normally would prohibit a health care provider from sharing a patient’s protected health information with a third party employer, HIPAA contains an exception for disclosures necessary to prevent a serious and imminent threat. Health care providers may share patient information with anyone as necessary to prevent or lessen a serious and imminent threat to the health and safety of a person or the public – consistent with applicable law (such as state statutes, regulations, or case law) and the provider’s standards of ethical conduct. See 45 CFR 164.512(j). The Office for Civil Rights, U.S. Department of Health and Human Services, has confirmed that providers may disclose a patient’s health information to anyone who is in a position to prevent or lesson the serious and imminent threat, including family, friends, caregivers, and law enforcement without a patient’s permission. HIPAA expressly defers to the professional judgment of health professionals in making determinations about the nature and severity of the threat to health and safety. See 45 CFR 164.512(j).s.

The pandemic has ended: now what?

Q: Can I require employees who have been self-quarantined during a pandemic to provide a doctor’s note certifying their fitness to return to work?

A: Yes. Such inquiries are permitted under the ADA either because they would not be disability-related or, if the COVID-19 pandemic is truly severe, they would be justified under the ADA standards for disability-related inquiries of employees. Always consider CBA obligations if they apply.

As a practical matter, however, doctors and other health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have the pandemic virus.

The post US: Practical Guidance for Dealing with Coronavirus in the Workplace appeared first on Global Compliance News.


Many employers in the US are grappling with appropriate efforts to contain and protect the workforce against COVID-19. Those efforts include employee and visitor screening activities that range from requiring all personnel to provide an affirmation upon admission to a worksite to taking vital signs or other hands-on screenings. But are those screening activities lawful under applicable privacy and confidentiality laws in the US? And what should employers do when they have reason to suspect someone is infected? Are there obligations to inform other employees or health authorities?


The Health Insurance Portability and Accountability Act of 1996 (HIPAA) imposes restrictions on disclosures of protected health information only on a covered entity’s or business associate’s workforce. As such, unless a disclosure is made by or on behalf of an employer’s Group Health Plan, HIPAA should not generally apply to the scenarios described above, since the Group Health Plan is considered to be a separate legal entity under HIPAA, and we assume that none of these activities would be paid for by the Group Health Plan under covered insurance transactions. Business associates are generally persons or entities that perform functions or activities on behalf of a covered entity, such as a Group Health Plan, which as noted should not be implicated here. Accordingly, HIPAA’s Privacy Rule does not apply to the collection, use, or disclosures of individually identifiable health information made by an employing entity in the context of worksite COVID-19 screening activities.


The Illinois Biometric Information Privacy Act (BIPA) restricts the collection, use, or other processing of biometric identifiers by entities (including employers), unless certain requirements are met. Those requirements include, among others, informing individuals that biometric information is being collected or stored; informing individuals about the purpose and length that this information will be retained; obtaining a “written release” for the collection, use, and storage of that information; and establishing and posting a policy on these issues. In the context of an employer performing COVID-19 worksite screening activities seeking to obtain body temperature through a hand-held thermometer or a scan for temperature, BIPA should not apply because the term “biometric identifier” generally refers to “retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” Photographs or human biological samples used for testing or screening, or demographic data, are specifically excluded. Performing temperature scans or other basic screening activities should, therefore, not fall within the definition of “biometric identifier” that triggers the application of BIPA, unless specific data is collected.

Other State Privacy Laws

At the state level, several states have generic medical confidentiality laws, but those laws should generally not restrict worksite screening activities. California, for example, has the Confidentiality of Medical Records Act. This law generally restricts the disclosure of “medical information” without first obtaining authorization, subject to numerous statutory exceptions. The term “medical information,” however, refers to “individually identifiable information, in electronic or physical form, in possession of or derived from a provider of health care, health care services plan, pharmaceutical company, or contractor regarding a patient’s medical history, mental or physical condition, or treatment.” An employer performing worksite screening activities would generally fall outside the scope of this definition. Texas also has the Medical Record Privacy Act that imposes similar restrictions on medical information. That statute, however, specifically exempts an “employer” from its scope.

Americans with Disabilities Act

Finally, even if worksite screening activities are permissible, employers must still take steps to protect the confidentiality of affected employees. Title II of the Americans with Disabilities Act (ADA) (42 USC § 12101 et seq.) establishes the basic rule is that, with limited exceptions, employers must keep confidential any medical information they learn about an applicant or employee (42 USC § 12112(d)(3)(B)). Information could be confidential, even if it contains no medical diagnosis or treatment course, and even if it is not generated by a health care professional. For example, an employee’s request for a reasonable accommodation for COVID-19 treatment or recovery may be considered medical information subject to the ADA’s confidentiality requirements.

ADA also restricts an employer from requiring a medical examination, or making certain disability inquiries of employee, unless that examination or inquiry is shown to be job-related and consistent with business necessity. Employers may, however, perform voluntary medical examinations as part of a worksite employee health program, and inquire about the ability of an employee to perform job-related functions. (42 USC § 12112(d)(4)). The extent and frequency of those medical examinations in the context of COVID-19 worksite screening, and the mandatory or voluntary nature of those activities, should, therefore, be carefully considered with counsel.

Regulatory Guidance for Employers

The Centers for Disease Control and Prevention recommends employers take the following steps at worksites:

  • Separate sick employees. If upon arrival to work, an employee becomes sick, separate that employee from others, and send them home immediately. This includes visitors and other non-employees.
  • Actively encourage sick employees to stay home, and not return to the workplace until they are free of fever (100.4° F [37.8° C] or greater using an oral thermometer), signs of a fever, and any other symptoms for at least 24 hours, without the use of fever-reducing or other symptom-altering medicines (e.g. cough suppressants).
  • Do not require a healthcare provider’s note for employees who are sick with acute respiratory illness to validate their illness or to return to work. This is because healthcare provider offices and medical facilities may be extremely busy, and unavailable to provide documentation in a timely way.
  • Review and be prepared to follow a “Business Infectious Disease Outbreak Response Plan” based on the present condition in each worksite.
  • Coordinating with state and local health officials is strongly encouraged. Since the intensity of an outbreak may differ according to geographic location, local health officials will be issuing guidance specific to their communities.

The post Employee and Visitor Screenings: A Privacy Guide for US Employers Dealing with COVID-19 appeared first on Global Compliance News.


Employers and their workforce are waking up to news this morning of further US travel restrictions given the COVID-19 pandemic. This time, the restrictions affect most travelers from the European Union (EU). The following are highlights of what you need to know today:

Foreign nationals who have visited the Schengen Area in the past 14 days will not be permitted to enter the United States under Presidential Proclamation.

Similar to recent presidential proclamations that restrict travelers who have visited China or Iran, the Presidential Proclamation that President Trump signed yesterday suspends the entry of most foreign nationals who have been in the Schengen Area at any point during the 14 days prior to their scheduled arrival to the United States. The countries in the Schengen Area are Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland. The proclamation is effective at 11:59 p.m. Eastern Daylight Time on March 13, 2020. The proclamation does not apply to persons aboard a flight scheduled to arrive in the United States that departed prior to 11:59 p.m. Eastern Daylight Time on March 13, 2020.

This restriction does not apply to travelers coming from the UK.

While the Presidential Proclamation does not explicitly create an exception for UK residents, the President stated during his televised address last night that the restrictions do not apply to travel from United Kingdom. However, the proclamation is clear that the latest travel restrictions apply to “all aliens” who were physically present within the Schengen Area during the 14-day period preceding their entry to the United States. This suggests that EU nationals will not be allowed to transit to the United States via the United Kingdom as an alternative to direct travel from the EU to the United States. Those traveling from the United Kingdom who have recently visited the Schengen Area should consider postponing travel until it is clear that they will be permitted entry into the United States.

Please continue to watch for government announcements and our future alerts as more specific information is released.

This restriction also does not apply to legal permanent residents (“green card” holders), immediate family members of US citizens, and other individuals who are identified in the proclamation.

The exemptions generally fall into the following categories:

  • Immediate relatives (parent, spouse, child, siblings of a certain age) of US citizens or green card holders;
  • Specific nonimmigrant visa holders: Crew members, diplomats, government officials;
  • Members of the US armed forces and their family; and
  • Individuals whose entry would be deemed in the national interest or to promote law enforcement objectives.

US citizens, green card holders, and exempted foreign nationals traveling from the EU will be routed through selected airports for enhanced screening procedures.

Details should be released in the coming days. However, return travelers should expect a health screening at an airport upon arrival and may be placed under quarantine for 14 days depending on their health and travel history.

The following airports are currently designated as airports with CDC quarantine stations:

  • John F. Kennedy International Airport (JFK), New York
  • Chicago O’Hare International Airport (ORD), Illinois
  • San Francisco International Airport (SFO), California
  • Seattle-Tacoma International Airport (SEA), Washington
  • Daniel K. Inouye International Airport (HNL), Hawaii
  • Los Angeles International Airport (LAX), California
  • Hartsfield-Jackson Atlanta International Airport (ATL), Georgia
  • Washington-Dulles International Airport (IAD), Virginia
  • Newark-Liberty International Airport (EWR), New Jersey
  • Dallas-Fort Worth International Airport (DFW), Texas
  • Detroit Metropolitan Airport (DTW), Michigan

What Steps Should Employers Take Now?

  •  Determine whether any of your employees are currently in Europe, whether they fall into any of the exemptions, and whether it is possible for them to return before the proclamation takes effect.
  • Evaluate how the travel restriction will impact your employee population from a business and personal/family perspective.
  • Consider travel to non-European US Consulates for essential immigration-related travel (e.g., visa renewal).
  • Plan for employees “stuck” in Europe and ensure your company has a policy in place for remote work given the potential employment, tax and immigration concerns.
  • Develop a broader communication that outlines what the proclamation does – and doesn’t – mean based on the current information available.

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