Does US Employment Law Apply to Companies in Other Countries?

business people walking in a high riseCitizens of the United States who work abroad often are unsure of what US employment laws still apply to their employer. As today’s economy continues to become more global, employees and employers must learn to navigate employment laws both in the home and foreign country. In some situations, employees may or may not be excluded from US employment laws.

Determining when  employment laws apply to an employee means understanding each law’s requirements for employers. Some laws are contained to the country borders while others focus on where the company is based. If you aren’t sure where your employer falls, consult a lawyer.

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How To Determine if an Employer is Subject to US Employment Law

The first requirement for determining the eligibility of an employer to be held to the standard of US law is to decide whether or not that company is based in the US or controlled by an US employer. While a US company located in another country might be subject to American law, some situations might be governed by the law in the country. Foreign laws defense can protect companies in foreign countries from being subject to American law.

What Companies Are Subject to American Law?

Companies that are incorporated or based in the United States are considered US employers. Sometimes a company that is deemed to have sufficient connections to the United States might be considered a US employer as well. Sufficient connections would include the majority of shareholders and management are from the US or the principal place of business is the US. To determine whether a foreign company is controlled by a US employer, a number of factors must be analyzed, including the operations, management, control of labor relations, and ownership.

Anti-Discrimination Laws in Foreign Countries

American citizens who are employed overseas by an American employer or controlled by an American entity usually receive the benefits provided by anti-discrimination laws. Title VII prohibits employment discrimination of employees based on their status in a legally protected class while ADAAA prohibits disability discrimination and ADEA prohibits age discrimination. However, an employer may be able to dodge responsibility to these laws by using the foreign laws defense.

The Age Discrimination in Employment Act of 1967 (ADEA)

Age discrimination within the USA is illegal. However, up until 1984, employees who tried to sue their companies (outside of the USA) for age discrimination according to US law faced rejection of their claims. But, in 1984, Congress amended the ADEA to include US citizens working abroad for US companies. This new amendment only applied to future cases and not to past lawsuits.

Title VII of the Civil Rights Act of 1964 (Title VII)

Although most cases of Title VII lawsuits operated on the belief that the law could be applied to US citizens outside of the US who were working for US companies, Congress officially amended Title VII and the Americans with Disabilities Act (ADA) to this rule in 1991. US laws do not apply to foreign-owned companies. However, if the foreign company is controlled by a US firm, then US laws apply.

The Fair Labor Standards Act (FLSA)

American citizens benefit from FLSA because it regulates minimum wage, work hours, and overtime compensation. However, American citizens who work abroad for a foreign or American company cannot expect the rights offered by FLSA. In fact, FLSA states that employees who work in a workplace in a foreign country do not receive FLSA rights. No American employee working in a foreign country can receive protections from the FLSA.

The Family and Medical Leave Act (FMLA)

FMLA provides eligible employees with up to 12 weeks of unpaid leave to care for serious health conditions or immediate family matters. However, FMLA clearly states that it only applies to employees within the USA and US territories. American citizens who work outside of the United States, even if working for a US company, are excluded from FMLA rights and protections. Moreover, employees who work outside of the country’s territorial boundaries cannot be counted when determining whether an employer or employee is eligible for FMLA.

What is the Foreign Laws Defense?

US employers who would be normally required to comply with US laws that stretch past the territorial borders of the United States can sometimes dodge legal responsibilities by using the foreign laws defense. Basically, the foreign laws defense argues that to adhere to a US law would violate a law of the host country of their workplace location. However, a company cannot transfer employees to these locations with the intention of discriminating against them since those locations are no longer held to the standard of American law.

An example of foreign laws defense is the following. Ella, a US citizen, works for an American contractor in Afghanistan as an assistant manager. When a supervisor position opens, she applies for it, but her employer tells her that she can’t be promoted because Afghanistan has a law forbidding women from supervising men. In the United States, Ella would have a sex discrimination case, but in Afghanistan, her employer has a foreign laws defense.



If you work abroad and are unsure of your employment rights, contact an employment lawyer who will know how to navigate your rights under the law.

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