2015 Hot Topics for Multinational Companies
Posted on December 22, 2014 by Littler Mendelson
By Philip Berkowitz, Johan Lubbe and Peter Susser
As we enter the New Year, Littler's international practice has identified a number of key employment and labor law issues for multinational companies (MNCs). The past year has brought to the fore some challenging issues likely to grow in importance in 2015, among them the increasing strength of global unions as well as the ever-growing importance of corporate compliance. While some of these topics are certainly familiar—data privacy and whistleblower protection, for example—the continuing importance and expansion of these issues highlight their increased complexity and correspondingly increased challenges.
Data Privacy
Keeping Data in the Cloud. More MNCs are keeping data available "in the cloud," greatly widening its access within an organization but also subjecting it to potential breach. MNCs must implement rules and safeguards regarding the use of and access to this data, as well as procedures to safeguard it, in an environment where data privacy is of increasing concern worldwide.
Theft of Trade Secrets and Data Breaches. The recent Sony Pictures data breach highlights the risks and concerns of multinational companies in preserving trade secrets as well as the confidentiality of internal discussions and deliberations.
E-Discovery and the Expansion of Discovery and Privilege Issues (in Domestic and Cross-Border Litigation). Cross-border litigation and conflicting rules on discovery and privilege pose continuing labor-intensive and costly challenges for multinationals. In the United States, discovery and the attorney-client privilege are familiar problems, but overseas, where discovery in civil litigation is virtually non-existent, the attorney-client privilege usually is not as developed as it is in the U.S.— or it may not exist at all. Thus, clients need to consider that many cross-border communications may not be protected by this privilege, regardless of whether the client is seeking and receiving legal advice.
Uncertainty in the Law. The European Union (EU) likely will approve broad changes in its data protection framework by the end of 2015. The Safe Harbor (a streamlined process for U.S. companies to comply with the EU Directives on the protection of personal data) likely will change in some respects in 2015. Further, many countries have recently enacted data protection regimes and there likely will be new guidance, case law, and/or enforcement actions in 2015.
Third-Party Compliance Liability
Numerous risks may arise from an organization's use of third parties for compliance purposes. Failure to prevent or mitigate these risks can expose an organization to financial loss, litigation, and reputation damage. The board of directors and senior management of a public company are ultimately responsible for managing activities conducted through third-party relationships, and identifying and controlling the risks arising from such relationships, to the same extent as if the activity were handled within the organization. The use of third-party relationships does not eliminate the inherent responsibility of the board of directors and management. The organization's officials must develop a clearly defined system of risk management controls built into the management system that governs the organization's compliance operations, including controls over activities conducted by affiliates and third-party vendors. The more significant the third-party program, the more important it is that the organization conduct regular periodic reviews of the adequacy of its oversight and controls over third-party relationships.
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