For any company with a large and geographically dispersed workforce, generating and implementing uniform employment policies is a challenge. Few people are more aware of that than Andrew Scoggin, vice president for labor relations and employment law at the nation’s second largest grocery chain, Albertsons Inc.
With 240,000 employees (60 percent of whom are unionized) located in 38 states, 2,500 stores and a high rate of employee turnover, Albertsons has to work especially hard to keep policies and practices current, especially when state labor laws are in a constant state of flux.
“The law’s always changing judicially and legislatively,” Scoggin said. “Keeping up with the changes for a large and broad-based workforce is not easy. It’s especially difficult to ensure those changes happen within each individual store.”
Scoggin and other attendees at the recent Martindale-Hubbell Counsel To Counsel Forum in Chicago, “Manage With Care: Labor and Employment Issues,” shared their best practices on how to stay abreast of changes to employment law in order to avoid costly lawsuits.
“Wage and hour class actions are on the rise, and plaintiffs are having success with a record number of Fair Labor Standards Act collective actions against employers,” said Deborah McMurray, moderator of the forum.
“Employment issues continue to be one of, if not the most, expensive areas for companies today,”
A United Front
Albertsons has taken a proactive approach to confronting labor issues. In 2001 Scoggin sat down with Albertsons’ general counsel, John Sims, to developa system for keeping up with new labor laws and significant judicial decisions. The process they invented had three steps. One was to reduce the number of employment law firms the company used from more than 100 to just eight regional firms. The second was for the regional firms and in-house counsel to audit employment practices for each region and consult with corporate headquarters on how the company should update its policies. The final step was to set up a communications network so all the lawyers could update each other on any changes that might be coming down the pipeline.
“I want our law firms to think of themselves to some degree as one big firm,” Scoggin said. “If something happens in Oregon that has ramifications in New Mexico, I want that attorney to pick up the phone and call the other counsel in New Mexico. Law firms aren’t used to doing this, but it works because we’ve chosen a regional system and the firms aren’t direct competitors.”
Outside counsel attendees at the forum supported this approach.
“It’s a huge advantage for outside counsel to share information,” said Adrianne Mazura, a partner at DLA Piper Rudnick Gray Carey in Chicago.
“When you partner with other outside firms, you get a better idea of the whole enterprise, and you can serve the client much more effectively.”
Once that network was in place, the remaining challenge for Albertsons was ensuring that updated policies became part of the way business was being done on a store-to-store basis.
“To me the measure of success is how rapidly I can take a change in the law and drive it to 240,000 people and be in compliance,” Scoggin said. “In a large company you can’t just think you’re OK because you have a policy written and not think about what’s going on 10 steps down the line.”
Toward that end, the company implemented computer programs that allow the legal department to audit which managers have received the latest training, and got in-house lawyers more intimately involved with the development of compliance programs. Albertsons even invested in technology through which employees who don’t have access to computers receive training via video in individual stores and sign off electronically.
On The Dotted Line
A related labor issue attendees grappled with was ensuring that employees had actually signed off on essential contracts such as noncompetes and agreements about the transfer of intellectual property rights to the company.
For example, lawyers at the anti-virus software company McAfee Inc., were unsure whether the company’s subsidiaries, employees and contractors were working under valid agreements that granted copyrights on their work to the company. This question was essential to McAfee–their business is built on proprietary software developed by its employees and contractors throughout the world.
“Our task in legal is to make sure that intellectual property we’re paying employees to create ends up in the corporation,” said Kent Roberts, executive vice president, general counsel and secretary at McAfee. “In the U.S., when an employee creates a copyright it automatically goes to the company. That’s also the case in Europe most of the time. But in India, where we have a significant part of our workforce, it’s not as clear. That’s why you need to make sure your employee documentation is up to date.”
Roberts wanted to conduct an audit of the entire creative workforce to ensure that IP rights were going through the appropriate channels. To achieve this daunting goal (McAfee has 3,000 employees, 45 percent of whom are involved on the creative side) he enlisted the help of human resources. The first step was to evaluate the agreements and ensure they were enforceable under local laws; the second was to go into individual employee files and see if the agreements had actually been signed; and the third was to bring 100 percent of employees under valid agreements.
“You have to do this proactively,” Roberts said. “If agreements aren’t signed and then a contractor decides to leave, you may end up paying twice for the same product. Work collaboratively with HR and other units within the company to make sure that what you think is your policy is what in fact is happening.”
Other attendees agreed that it’s essential to make sure employees not only sign, but also understand work-related contracts and employment policies.
“We attach our most important policies right to the employment contracts, so there’s never a question after the fact as to whether people knew about the policies,” said Amita Kent, vice president for legal affairs and compliance for Schering Canada Inc. “In some instances we have an acknowledgement at the bottom that says the employee has seen, understands, and has a copy of the policy. We also ask our employees for feedback on the employment contracts with respect to its clarity.”
An Ounce Of Prevention
Overall, attendees agreed that the key to managing labor and employment issues in today’s increasingly complicated business world is to be vigilant and proactive.
“I’m struck by how our labor and employment work has become increasingly complex,” said Marilyn A. Pearson, a partner at DLA Piper. “Now it’s not just state and federal laws, but many companies are dealing with an international component to their business. This requires an enormous amount of coordination.”
In-house and outside counsel agreed that stopping labor problems before they start is the most valuable service employment lawyers can offer.
“Once I demonstrated to executives how much we were spending every quarter to settle cases, I had instant buy-in on spending a little money now to avoid huge problems down the line,” Roberts said. “Watch your competitors and prepare to deal with any liabilities they encounter. You can avoid a world of expense and trouble by just being aware.”