|
| |
Offshoring of Jobs - Proposed "Jobs for America
Act" Would Affect Outsourcing and Shared Services by a WARN Act Amendment
© 2004 Bierce & Kenerson, P.C. All rights reserved.
On February
12, 2004, Senator Tm Daschle (D. South Dakota) and 14 other Senators sponsored a
bill, S. 2090, the "Jobs for America Act of 2004," to protect American
jobs from offshore outsourcing.
Co-sponsored
by two then 2004 Democratic Party Presidential candidates (and perhaps a third,
Hilary Clinton, for 2008), this legislation will serve as a lightning rod for
debate on domestic economic policy issues during the Presidential election of
2004. The driving concepts are to establish transparency in the offshoring
of jobs and to extend from 60 to 90 days the period of wage protection for
Americans who lose their jobs to declared offshore outsourcing.
Impact of
the Proposed Legislation. The overall effect would be to delay layoffs
for mass layoffs, plant closings and offshoring of jobs, increase the costs of
such layoffs, and enable greater intervention, at an earlier stage, by local
legislators, tax administrators, regional development administrators and other
regulators at all levels of state, local and federal government.
The draft law clearly targets outsourcing of jobs to
India. But the draft covers all offshoring of jobs, including to Canada,
Mexico and the European Union. It Includes both outsourcing to external
service providers and to foreign "shared services organizations"
established by a U.S. multinational that wishes to continue as employer
abroad. Also covered are internal shifting of jobs between existing
international subsidiaries of the same global enterprise.
Scope and Terms of Proposed Legislation. Under
the Jobs for America Act of 2004, if enacted, the Worker Adjustment and
Retraining Notification Act of 1988 (the "WARN Act") would be amended
to:
-
include "offshoring of
jobs" as an event requiring employers to give advance notice to their
employees and competent local officials:
-
extend the reach of the WARN
Act to employers of 50 employees, instead of 500 employees;
-
extend the 60 day period to
90 days for all notifications required under the WARN Act;
-
requiring notification to the
federal Department of Labor, with ongoing federal regulatory review and
reporting to Congress on the mass layoffs, plant closings and offshoring of
jobs, including which countries are most involved, the number of jobs
affected and the underlying causes of outsourcing; and
-
requiring employers to post
notices of employee rights under the WARN Act.
Legality of
Proposed Legislation. This draft legislation would rely upon Congress's
right to legislate and regulate trade between the states and between the United
Sates and Foreign countries. Since 1988, there has been apparently no
objection to Congressional authority to enact a law governing mass layoffs and
plant closings.
However, in
light of U.S. obligations under treaties and conventions, if enacted, this draft
law might be subject to attack under various international commitments
undertaken by the United States in its pursuit of globalization of trade, such
as:
-
the World Trade Organization
multilateral trade agreements that prohibit certain restrictions on trade in
services;
-
the North American Free Trade
Agreement, with similar undertakings; and
-
bilateral investment treaties
that mandate both national treatment and most-favored nation
treatment. For example, the U.S.-Bolivia Bilateral Investment Treaty
of April 17, 1988 provides:
With respect to the
establishment, acquisition, expansion, management, conduct, operation and
sale or other disposition of covered investments, each Party shall accord
treatment no less favorable then that it accords, in like situations, to
investments in its territory of its own nationals or companies (hereinafter
"national treatment") or the investments in its territory of
nationals or companies of a third country (hereinafter "most favored national
treatment"), whichever is most favorable (hereinafter "national
and most favored nation treatment"). Art. 1
Most-favored national treatment
might be violated by bilateral agreements governing the same issues.
Bilateral investment treaties
also prohibit the United States from imposing any measures
to achieve a particular level
or percentage of local content, or to purchase, use or otherwise give a
preference to products or services of domestic organ or from any domestic
source. BIT, US-Bolivia Art. VI(a).
This draft legislation is subject
to a possible claim by a foreign country, with whom the United States has a
bilateral investment agreement, under the theory that a requirement of 90-days
notice and an explanation of where the work will be done constitutes a
"preference to...services of domestic origin or from any domestic
source."
Further Information.
If you are interested in the possible application of any of such trade
agreements to this draft legislation, or other legal or business implications,
for further advice and information, contact Bierce & Kenerson, P.C.
212-840-0080.
Related Topics:
U.S.
- Australia Foreign Trade Agreement
(Free registration required)
|