Volume 43 | Number 2 Spring 2008
The Result of Disparate Treatment of Third-Country Alien Employees in Multinational Enterprises: A Class Distinction
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I. INTRODUCTION
Imagine two employees with equivalent job training, education, and personalities. One is Mexican, the other American. Both work for an American multinational enterprise (“MNE”) in China. Both are sexually harassed by the same supervisor and subsequently file grievances with their employer. What are the results? These two employees will have vastly different remedies available to them even though each of them suffered the same harm.
One problem aliens face when working for American MNEs in a country other than their home country is that they are not entitled to the same labor and employment protections as the American employees working alongside them. An American worker can assert a Title VII claim against her employer and receive redress for acts that would be illegal had they occurred in the United States, even though the acts were committed on foreign soil. In other words, an American employer must treat an American employee employed in a foreign country with the same standard of care required in the United States. However, an individual working for the same American employer, but having a different national origin (in this example, Mexico), will not have the same legal protections and redress against the same employer for the same harassment.
A variety of issues arise due to the multinational dimension of the employment relationship, including determining available remedies. Should the law of an alien employee’s home country extend to apply to its citizens abroad, as the law of the United States does in the example above? Should the law of the employer’s domicile apply? Or should the law of the country in which the act was committed?
Because the remedies available to our hypothetical Mexican worker in China are less desirable than those available to the American worker, she faces a disparate result. Neither the law of China, the country where the harassment occurred, nor the law of her home country would protect the Mexican worker as effectively as American labor and employment law. Unless she is covered by American law, the Mexican worker is subject to a lower standard of care than is her American counterpart.
Following a 1991 United States Supreme Court decision limiting Title VII’s application for American MNEs abroad,1 Congress made clear that the protections of Title VII extend to American citizens while employed by American companies overseas.2 Yet these protections still do not apply to non-resident aliens working for the same United States employer. In a situation such as the one set forth in our introductory example, a Chinese worker would be covered by Chinese law, and an American worker would be covered by American law. Mexican employment law does not extend to employees abroad, and Title VII does not extend to non-U.S. citizens. Because Chinese courts are unlikely to adequately protect her, the Mexican worker would be left with no redress for the harm she suffered.
While some observers could argue that the United States has no duty to protect non-U.S. alien workers abroad, this Note argues that American companies would benefit from applying American labor standards uniformly throughout the world. By requiring both American employees and alien employees who are not citizens of the host country to sign mutual arbitration agreements authorizing the use of American labor standards, American MNEs could avoid many of the problems that arise from choice of law issues and from the existence of differing employment policies within a single workplace. This is also a more realistic and attainable scenario than forcing all workers within the American MNE to utilize the American standard. Extending Title VII protections through arbitration agreements to alien employees who are not citizens of the host country would diminish the perception of American corporations as imperialistic, reduce the possibility of stratification between employees, and provide an opening for improved labor standards throughout the world.
Part II of this Note details the evolution of the United States’ Title VII law, which extended protection to U.S. citizens abroad and denied protection to aliens employed by American MNEs abroad. This section will also provide discussion of why further application of Title VII to workers in all countries would be misguided. Part III then provides a brief analysis of provisions of Mexican and Chinese law that are analogous to Title VII. Part IV evaluates the implications—taking into account both historical and potential future issues of stratification within the workplace—that arise from applying different legal standards to equivalent employees under similar circumstances. Part IV also discusses the merits of using the American sexual harassment standard in an international setting from both an economic and fairness perspective. Part V addresses possible solutions to the problem, including the use of an American choice of law arbitration agreement which all MNEs could utilize. Finally, Part VI discusses the possible negative implications of adopting such a policy and addresses concerns raised by adopting the American standard.