The proliferation of multinational corporations and cross-border joint ventures has lead to an increase in the number of U.S. citizens employed abroad.l In 1994 the Bureau of Economic Analysis, a division of the United States Department of Commerce, estimated that approximately 21,500 U.S. citizens were employed by 18,929 foreign affiliates of 2,529 U.S. parent companies.2 This increase in transnational employment has raised concerns among U.S. employers operating overseas regarding the extraterritorial reach of U.S. laws.3 United States employers operating overseas often face the challenge of determining which U.S. laws apply to them and which statutes exempt them from compliance? Unfortunately, however, the law is often ambiguous and no definitive answers guiding employers exist.
Congress, recognizing the need to be cautious in applying U.S. laws abroad to prevent foreign relations problems and retaliatory legislation by foreign sovereigns,5 is often unclear when it includes extraterritorial provisions in statutes. For example, in 1991 Congress amended Title VII of the United States Code (Title VII), which prevents discrimination in employment on the basis of race, color, sex, religion or national origin,6 to provide for the extraterritorial application of the anti-discrimination provisions.7 Congress exempted employers operating abroad from complying with Title VII if doing so would cause the employer to violate the laws of the foreign country.8 Congress, however, did not determine what constitutes a law of a foreign country or whether the foreign laws exemption includes customs, cultural norms, and religious beliefs.
This Note examines the inadequacy of the foreign laws defense under Title VII and offers an appropriate clarification and implementation. Part II of this Note discusses the history of Title VII and the 1991 amendment that created Title VII's extraterritorial provision. Part III discusses the foreign laws defense the 1991 amendment established and provides examples of various non-legal considerations-such as customs, cultural norms, and religious beliefs-that may have the force of law in some countries. Part IV of this Note argues that the parameters of the foreign laws defense should be broadened. Specifically, Part IV addresses problems that may arise due to the Equal Employment Opportunity Commission's (EEOC)9 strict interpretation of "law" when a U.S. employer is operating in Japan or Saudi Arabia. Finally, Part V proposes a two step solution that confers upon the EEOC sole authority to determine whether non-legal influences shield an employer from Title VII liability.
II. HISTORY OF TITLE VII AND THE 1991 AMENDMENT A. The Development of the Civil Rights Act of 1964
The Civil Rights Act of 1964 made it illegal for an employer to refuse to hire, discharge, classify, or otherwise discriminate against an employee on the basis of race, color, sex, religion, or national origin.Io Congress passed this Act codified in Title VII "to advance the rights guaranteed by the Fourteenth Amendment, to remedy past discrimination . . . and to discourage future like discrimination."" Title VII included the recognition that, in certain situations, religion, national origin, or gender may be a "bona fide occupational qualification" (BFOQ).12
Although Congress intended Title VII to provide a broad range of protections, the original legislation did not include specific language concerning how employers should treat U.S. employees working abroad.13 Due to Congress's silence, the EEOC filled the policy gap and in 1988 began advocating the extraterritorial application of Title VII.14 The EEOC claimed that the legislative history of Title VII indicated that Congress intended Title VII protection to extend abroad.l5 The EEOC's position prevailed until it was judicially tested in 1991.16
B. The EEOC v. Arabian American Oil Co. Case
In EEOC v. Arabian American Oil Co. …