The 5cs of U.S. Employment Law: Human Resource Management Lessons for U.S./Foreign Corporations and Their Subsidiaries

By Fitzpatrick, William M.; DiLullo, Samuel A. | Competition Forum, July 1, 2010 | Go to article overview

The 5cs of U.S. Employment Law: Human Resource Management Lessons for U.S./Foreign Corporations and Their Subsidiaries


Fitzpatrick, William M., DiLullo, Samuel A., Competition Forum


EXECUTIVE SUMMARY

Over 60,000 lawsuits are filed annually in U.S. courts by employees seeking redress from their employers in matters related to violations of U.S. employment law. These lawsuits impact foreign firms, American firms, and their offshore subsidiaries. Much of this litigation arises from a failure of both employers and employees to understand the intricacies of U.S., foreign and treaty-based laws impacting employment relationships/workplace discrimination. This paper attempts to clarify the complexity of these employment laws through articulation and discussion of the 5Cs typology. Recommendations for reducing ambiguities and promoting better compliance to current employment laws are also provided.

Keywords: Employment law, Employment discrimination, Extraterritoriality, BFOQs

INTRODUCTION

John Ofori-Tenkorang, a foreign national permanently residing in the United States, filed suit against American International Group (AIG) in 2003. The basis of this litigation was derived from Ofori-Tenkorang's allegations that he had been a victim of both (a) discriminatory staffing decisions implemented by AIG management in the United States; and (b) workplace discrimination that occurred after his transfer by AIG to its South African operations. While in South Africa, Mr. Ofori-Tenkorang alleged that he was (1) placed under increased work place scrutiny; (2) unfairly blamed for the poor performance of his work place colleagues; (3) a victim of pay discrimination; (4) threatened with termination in a manner inconsistent with company personnel/performance appraisal policies; (5) required to provide differentially more information than other employees when applying for medical leave; and (6) improperly suspended from work while assigned to AIG's South African subsidiary (Ofori-Tenkorang v. American International Group, 2006).

Laurence Rabe (a French national) worked for United Airlines as a flight attendant based at the United Airlines hub in Hong Kong. During her employment at this location, she claimed to be victimized by her supervisor's intolerance of her sexual orientation. Despite complaints to airline management, this harassment continued and subsequently precipitated her termination from United Airlines for misuse of personal travel tickets to visit her domestic partner in the United States. In her lawsuit, Ms. Rabe claimed that the motivations for this employment discrimination arose from the deliberate age and sexual orientation biases of airline personnel/management (Rabe v. United Airlines, 2009).

Dennis Brinson and Paul Crabtree were employed in the Cincinnati (Ohio) division of the Asplundh Tree Expert Company. In 1998, they and other employees were assigned to work on a temporary project in Canada. While in Canada, these individuals complained that workers assigned to projects in Quebec were receiving higher per diems and better lodging arrangements than they were experiencing in Ottawa. These complaints were forwarded by the on-site supervisor to corporate management. Corporate management informed the supervisor that these employees were "whiny cry babies". Management felt that this verbal behavior denigrated Asplundh es corporate image in the eyes of their Canadian clients. The supervisor was instructed to terminate any worker that prioritized resolution of this labor dispute over fulfilling the Canadian contract (NLRB v. Asplundh Tree Expert Company, 2004).

Each of these aforementioned legal actions initiated against employers are typical of employment litigation affecting many American/foreign companies and the subsidiaries they operate abroad (Roberts, 2007). In deciding these and other cases, the courts have reviewed a variety of legal criteria which this paper identifies as the 5 Cs of employment law. These 5 Cs or criteria include (a) crossborder or extraterritorial enforcement of employment/labor law; (b) citizenship (national origin) of the plaintiffs and defendants; (c) compliance with foreign laws; (d) cultural differences legitimizing the differential treatment of employees; and (e) the geographic location of the corporate entity which exhibits control over corporate policies/human resource management decisions. …

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