With the globalization of today’s economy, companies are increasingly employing workers—both U.S. and non-U.S. citizens—in foreign countries. But just because an employee works beyond U.S. borders doesn’t automatically exempt him from the protections of the various federal employment statutes. This article provides a brief overview of the applicability (or inapplicability) of the major federal employment laws—Title VII of the Civil Rights Act of 1964 (Title VII), the Americans with Disabilities Act Amendments Act (ADAAA), the Age Discrimination in Employment Act (ADEA), the Fair Labor Standards Act (FLSA), the Equal Pay Act (EPA), and the Family and Medical Leave Act (FMLA)—to employees working abroad.
Title VII, the ADAAA, and the ADEA. Title VII prohibits discrimination and harassment based on race, color, religion, sex, or national origin, while the ADAAA prohibits discrimination based on disability. The ADEA prohibits discrimination against individuals age 40 and older. These three statutes expressly apply to some, but not all, employees working abroad. The application to employees working overseas depends on whether (1) the employee is a U.S. citizen and (2) the employer is an American employer or controlled by an American entity.
Specifically, Title VII, the ADAAA, and the ADEA apply to U.S. citizens employed overseas by American employers and foreign entities that are controlled by an American employer. Four factors are considered in determining whether a foreign entity is controlled by an American employer: (1) interrelation of operations, (2) common management, (3) centralized control of labor relations, and (4) common ownership or financial control. However, an employer can avoid liability if it can prove that compliance with Title VII, the ADAAA, or the ADEA would cause it to violate the laws of the country in which its U.S. citizen employees are located. This is often referred to as the foreign laws defense. For example, an employer cannot be held liable for age discrimination under the ADEA if compliance with the statute would violate a local law imposing a mandatory retirement age.
But these statutes don’t protect all employees working in a foreign country. For instance, non-U.S. citizens aren’t entitled to the protections of Title VII, the ADAAA, or the ADEA—even if they’re working abroad for an American employer or a foreign corporation controlled by an American employer. (By contrast, non-U.S. citizens working within the United States are entitled to the Acts’ protections.) Nor do these statutes apply to U.S. citizens working abroad for foreign entities that are not controlled by an American employer.
FLSA. The FLSA regulates wages and hours, including minimum wage and overtime compensation. The Act expressly states that it “shall not apply with respect to any employee whose services during the workweek are performed in a workplace within a foreign country.” Therefore, the FLSA doesn’t apply to any employee—even a U.S. citizen—working in a foreign country.
EPA. The EPA, which prohibits sex discrimination in payment of wages for equal work, was enacted as an amendment to the FLSA. For that reason, courts and the Equal Employment Opportunity Commission (the federal agency charged with enforcing the Act) have interpreted the EPA to be consistent with the FLSA, concluding that it does not apply to employees working abroad.
FMLA. The FMLA entitles eligible employees up to 12 weeks of unpaid leave to care for his own or a family member’s serious health condition. By its express terms, the Act applies only to “employees who are employed within any State of the United States, the District of Columbia or any Territory or possession of the United States.” Therefore, employees—whether U.S. citizens or aliens—are excluded from the FMLA’s coverage if they’re not employed within the territorial boundaries of the United States. Additionally, employees working outside the country’s territorial boundaries aren’t counted in determining employer coverage or employee eligibility under the FMLA.
The global workplace is well established. For that reason, you need to be prepared if and when you have employees working overseas. Companies with employees working abroad must be informed of which U.S. antidiscrimination laws apply beyond U.S. borders. It’s also important that employees sent on overseas assignments are educated on the fact that they are still protected against discrimination under some of the major federal employment statutes. Finally, while the topic is beyond the scope of this article, you should be mindful of your obligations to comply with the laws of the foreign host country in which your employees are working.