The US Presidential Race

The candidates websites reveal little about specific policies, so we will
look at some legislative history on the issues. At her website, Hillary Clinton
says she will empower our workers and ensure that all Americans contribute
their fair share. Hillary will ensure that unions are strong. She will also
ensure that trade policies work for average Americans. Trade policy must raise
our standard of living, and they must have strong protections for workers and
the environment. As to innovation, she claims, The core of my plan is to
create the high wage jobs for the futureand well do that by restoring our role
as the worlds innovation superpower. Thats what America does best. This
country was built on innovation. As President, I will lead our nation to create
millions of new jobs by investing in clean energy and doubling investments in
basic and applied research. Further, Hillary will finance her investments in
innovation without increasing the deficit by devoting a portion of the revenue
from ending tax breaks for companies that shift jobs overseas.

Barack Obama affirms both free trade and enforcement of free-trade
agreements. Obama will fight for a trade policy that opens up foreign markets
to support good American jobs. He will use trade agreements to spread good labor
and environmental standards around the world and stand firm against agreements
like the Central American Free Trade Agreement that failed to live up to those
important benchmarks. Obama will also pressure the World Trade Organization to
enforce trade agreements and stop countries from continuing unfair government
subsidies to foreign exporters and non-tariff barriers on US exports.

John McCain advocates participation in the world trade agreements. The US
should engage in multilateral, regional, and bilateral efforts to reduce
barriers to trade, level the global playing field, and build effective
enforcement of global trading rules. McCain understands that globalization will
not automatically benefit every American. We must prepare the next generation of
workers by making American education worthy of the promise we make to our
children and ourselves. We must be a nation committed to competitiveness and
opportunity.

Employment Rights

Labor law is at the heart of policy disputes on outsourcing and offshoring.

Regarding workforce globalization, a 2006 federal report suggested that some
US policies are reported to actually encourage and reward foreign business
operations. It claimed that off-shoring was encouraged by the relatively weak
requirements for US firms, compared to European counterparts, to pay severance
or negotiate with unions over plans to move jobs overseas. The impact of
globalization upon employment translates into political policies that pit the
employee against the employee. Such policies relate to the Worker Adjustment and
Retraining Notification (WARN) Act, civil rights laws, and other workplace
rules. No longer is it sufficient, argue Democrats, to allow employers to
terminate employees at will. In contrast, Republicans would oppose such
legislation as not providing a fair balance between employer and employee for
the risks of conducting a business and employing personnel.

Even without any new legislation, several existing laws and regulations
protect workers and provide a modicum of assistance when an employment is
terminated due to globalization (offshore outsourcing).

Globalization is not the only force causing displacement of workers.
Employment is also lost to automation under business-process methods that reduce
error rates, increase productivity, streamline inefficiencies, permit customers
to use the Internet for self-service and self-help at all stages in the customer
relationship, and generally integrate enterprise resources planning software
(for example, Oracle and SAP) to avoid duplication of inputs. Industry
consolidation also results in job losses.

Since the enactment of the WARN Act of 1998, the Democrats have sought to
make it into a worker protection framework to protect against automation,
outsourcing and offshoring.

Democrats from states, with significant erosion of employment due to global
competition, proposed an Early Warning and Health Care for Workers Affected by
Globalization Act, that would erect a whole new set of protections and
procedures for US employers to comply with before terminating employment due to
plant closings or mass layoffs. It would enlarge the number of protected
workers and increase the number of employment-related events that would trigger
mandatory notifications.

More precisely, while such draft legislation does not add offshore
outsourcing to the list of events requiring employers to notify their employees
and governmental officials, it does just the same in spirit. It would extend the
WARN Act coverage to part-time employees. It would reduce the number of
terminated employees from 50 to 25 as a trigger for notification, without regard
to the size of the employer organization. (Thus, for an employer with 10,000
employees, a mass layoff of just 0.4% of employees would require WARN Act
notifications.) Like prior attempts by Senators Clinton, Kerry, and Edwards in
2004, this draft legislation would also increase the warning period from 60 to
90 days before the effective date of the termination of employment, thus
exposing the employer to risks of sabotage, featherbedding, and disruption from
protected workers. As a combination of provisions, the draft legislation would
create a statutory six-months severance package for all terminated employees
for employers having 100 or more employees. The bill would automatically double
the back pay and benefits of terminated employees for even inadvertent
non-compliance, and employers who acted in good faith would not be able to limit
its liability.

Additional burdens would be imposed on employers that offer group
health-insurance plans. Insurance continuation rights for terminated employees
would be extended under COBRA (a general law for all employees to continue group
coverage by paying post-termination group insurance premiums for individual
coverage), particularly for those employees claiming rights under the Trade
Adjustment Assistance Act of 1974. This change would apply to workers who have
attained the age of 55, or have completed 10 or more years of service with the
same employer.

Finally, the proposed legislation would spawn a new class of employment
lawyers who represent terminated employees. Under the draft law, an employer and
an employee could not settle their mutual claims unless the settlement is
negotiated by the secretary (of labor), an attorney general of any State, or a
private attorney on behalf of affected employees. As a result, employers could
not negotiate severance payment in excess of wages during the notice period as
additional consideration for a waiver of claims under the WARN Act, without the
intervention of such new class of attorneys.

The Republicans that reviewed this legislation objected to this draft
legislation as a misguided approach to addressing issues of competitiveness and
the dislocation of some jobs due to foreign trade and overseas competition.
Rather than adopting a forward-looking, proactive approach to worker
dislocation and employment generation, they claimed the bill would dramatically
expand the burdens of federal regulation and mandates on employers. The bill
does nothing to minimize job loss to foreign competition or the impact of trade
and competition on workers, and represents a failure of both policy and process.
Committee Republicans were unanimous in rejecting this measure. The Republicans
contested the majority conclusion of the Democrats that the bill will have
minimal impact on the regulatory burden.

In short, the bill would exponentially expand the scope of protections and
the US employers liability, compliance costs, penalties for failure to comply
under the WARN Act and, in conjunction with the Sarbanes-Oxley Act of 2002, the
potential for shareholder lawsuits due to lack of adequate controls or
disclosures to shareholders about the risks and liabilities under such an
expanded WARN Act. If elected, the Democratic President would likely sign such
legislation as a first order of business, supported by a likely Democratic
majority in each chamber of Congress.

In 2007, Senators Clinton and Obama co-sponsored a bill to establish new
civil rights for American workers. The goal of the proposed Civil Rights Act of
2007 would be to shift to the employer the burden of proof of that there was no
discrimination in cases of alleged disparate treatment of protected workers
based on national origin, race, religion, sex, age over 40 and handicap. Instead
of proof of actual discriminatory intent, the draft law would require only that
the impact of the employers policies be shown to be discriminatory through
disparate treatment based on a prohibited discriminatory factor. The draft law
would overcome existing Supreme Court rules that require more than proof of
disparate treatment. Further, the proposal would deny employers the right to
require arbitration of disputes on such civil rights, reinforcing class action
remedies that historically have resulted in financial settlements even where the
validity of claims might be debatable.

The impact of such legislation on the global services industry would be
mixed. Foreign service providers would need to focus on the discriminatory
impact of their policies in hiring foreign H-1B and L-1 workers, thus exposing
them to new civil rights claims by American employees. Domestic companies might
decide that certain business processes should be outsourced (via outsourcing or
captives) in order to avoid intrinsic risks of civil rights violations.

Organized labor has suffered significant declines in membership in the last
decade. Unions look to the Democratic Party to make it easier to win
unionization elections.

Immigration

Immigration law reform was attempted in 2006, resulting in much heat and no
legislation. Senator McCain supported a comprehensive immigration law reform,
109th Cong, S 2612, for broadening border enforcement tools, expelling aliens
guilty of violating criminal laws and, most importantly, banning employment of
unauthorized aliens, and imposing fines and penalties on employers. Employers
using a contract, sub-contract, or exchange to obtain the labor of an alien in
the US knowing that the alien is an unauthorized alien with respect to
performing such labor would be considered to have violated the prohibitions on
hiring illegal aliens, unless the sub-contract mandated compliance with such
laws and the employer exercises reasonable diligence to ensure such compliance
by the sub-contractor. This legislation was highly divisive because it included
amnesty for illegal aliens who remained in the US for over five years, thus
inviting future waves of illegal hoping for a future amnesty.

The outsourcing industry should anticipate the probability that the economic
conditions and the political climate will not allow the expansion of rights of
service providers to obtain temporary work visas for highly skilled
non-immigrants. In late 2007, Senator Hillary Clinton supported Governor Eliot
Spitzers proposal that the New York State Legislature adopt a law entitling
illegal aliens to obtain drivers licenses. Both Governor Spitzer and Senator
Clinton were severely chided for such a proposal, reflecting hostility toward
undocumented aliens and a perceived paranoia about job displacement.

None of the candidates has a policy on immigration of highly skilled workers.
Given the demographic changes in the US leading to the impending retirements of
mid-level managers, this may be short sighted.

William B Bierce

maildqindia@cybermedia.co.in

The author is an award winning outsourcing and international corporate lawyer
with Bierce & Kenerson, New York Republished with permission from Global
Services