Customize inclusion programs for international workforces.
More than ever, businesses must adopt a global mindset to remain viable in the worldwide marketplace. As companies attempt to promote cooperation among subsidiaries and affiliates, they may also seek to foster a corporate culture of diversity and inclusion. While that's a noble goal, employers should be aware that there are significant risks in trying to implement a single diversity program that applies across national borders.
Here are a few of the legal approaches that different countries take toward diversity in the workplace and the potential consequences of running afoul of them.
In the U.S., the concept of "diversity" was first driven by race, but it has expanded to include gender, religion, pregnancy status, national origin, age and disability, among other things.
Equal opportunities for individuals in all of these groups are governed by federal legislation, including Title VII of the Civil Rights Act (race, color, religion, gender and national origin), the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Rehabilitation Act, the Fair Labor Standards Act (equal pay by gender), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (diversity in the financial industry). In addition, individual states have separate diversity requirements, including some that track federal laws and others that are more stringent.
Problems that stem from U.S. diversity initiatives are often addressed through litigation, and employers that violate the law may face a variety of monetary penalties and equitable consequences as well as the negative effects of low public opinion and poor employee morale.
A key difference between diversity approaches in the U.S. and several other countries is in the use of quotas. While the U.S.'s Title VII does not permit businesses to use quotas based on gender, race or other prohibited factors, such quotas have been embraced in many European and Asian countries.
That said, a new rule that took effect on March 24, 2014, does establish "goals" for government contractors employing individuals with disabilities. The Office of Federal Contract Compliance Programs' Final Rule 41 C.F.R. Section 60-741.45, which applies to individuals with disabilities under Section 503 of the Rehabilitation Act, establishes a "utilization goal of 7 percent for employment of qualified individuals with disabilities for each job group in the contractor's workforce, or for the contractor's entire workforce" if the contractor has fewer than 100 total employees. However, the rule provides that the goal should not be used as a quota or ceiling that restricts the employment of individuals with disabilities.
Federal legislation in Australia generally mirrors the diversity mindset of the United States. Australian Commonwealth statutes prohibit discrimination by employers against employees (or prospective employees) on the grounds of race, color, sex, sexual preference, age, physical or mental disability, marital status, family or career responsibilities, pregnancy, religion, political opinion, national extraction, or social origin.
In 2010, amendments to the Australian Security Exchange's Corporate Governance Principles and Recommendations suggested that a diversity policy should be established in the financial industry as of July 1, 2010, and that the policy should be disclosed. According to an independent report covering the period of Dec. 31, 2011, to Dec. 30, 2012, and issued on March 8, 2013, a majority of Australia's listed companies had a gender diversity policy in place or planned to implement one. Australia has also seen a significant increase in litigation stemming from diversity-related issues.
Unlike the United States, Australia has become increasingly interested in the use of quotas.
Many European diversity initiatives are aimed at achieving gender diversity, and they focus on doing that by imposing quotas for upper-level executives and company board members. …