Volume 43 | Number 2 Spring 2008
The Result of Disparate Treatment of Third-Country Alien Employees in Multinational Enterprises: A Class Distinction
V. Recommendations
There are several options which American MNEs can use to promote equality within the workforce and reaffirm the value of employees throughout the world.
A. Arbitration Agreements
In the international sector, American MNEs can reduce the impact of the disparate application of Title VII by requiring all non-host country employees to sign an arbitration agreement. This arbitration agreement would provide protection under Title VII to employees who would otherwise not receive those protections, and would reduce any uncertainty regarding choice of law in the event a claim is brought.
Most companies have a standard set of forms which are filled out when they hire a new employee, and one of those forms is usually a mutual arbitration agreement. This agreement varies slightly from company to company. The arbitration agreement proposed here should specifically state that in the event of an employment dispute, an alien employee working for the employer abroad would be subject to American labor standards—including Title VII. This language would avoid any possible choice of law issues and would subject the claim to arbitration in an unbiased forum. Further, arbitration would save time and money for all parties involved, in part because arbitration does not require discovery. Saving the costs of attorney’s fees, time, and travel would be economically beneficial for both the company and the plaintiff.
1. Increased Title VII Protections
As discussed in Part II of this Note, different countries have varying definitions of what constitutes sexual harassment and provide varying remedies for sexual harassment. Arbitration agreements allow American MNEs to voluntarily extend the higher American standards for sexual harassment to all employees.
Another important benefit of the increased Title VII protections to the employee is that she would know, by signing the arbitration agreement, that she had a legally protected means of redress in the event of a harassment dispute. Since the arbitration agreement can specify the type of law that applies in the event of a disagreement, the American standard could be chosen. Further, an arbitral body can be identified within the agreement. A truly unbiased body, such as the International Chamber of Commerce (ICC),99 can be utilized and asked to apply the laws of the United States. The employee would not have to file multiple claims in several different courts, thus simplifying the process and saving the employee—and the employer—money.
2. Consistency Across the MNE
The MNE will no longer have to worry about inconsistent policies should the American standard be adopted. A worker will not need to wonder whether she has redress from harassment because of her national origin. Instead, that person will know that company policy dictates a remedy within the workplace to the employee, based upon both the policies of the employer and Title VII. Because company policy is consistent, the employee will always be able to first pursue workplace sanctions prior to bringing suit. Further, knowing that the American courts are available to enforce an arbitral judgment or to pursue alternate claims helps the employee to feel secure that even if the employer sanctions do not work, legal recourse is available.
3. America’s World Reputation
One problem the rest of the world has with the United States is its reputation for being imperialistic. While some may respect the United States a great deal and believe its laws to be socially progressive, others dislike the idea of America “taking over” the world by imposing its standards and norms on other countries. Arbitration agreements could help strengthen America’s reputation throughout the world by making American law an opt-in system for disadvantaged workers.
Arbitration agreements could help avoid one potential issue surrounding the reputation of the United States. American employers would be unable to come into a country and treat employees unfairly. Alien employees would be subject to the same standard as American employees, with the American standard tending to be more progressive than the standards of other countries. Since this standard does not affect citizens of the host country, there would be no problems with national sovereignty. Although this Note addresses only sexual harassment, these progressive standards apply to many other aspects of the labor force, and American courts are more willing to hear claims alleging violations of labor standards. By demonstrating that American employers abroad are willing to apply their labor standards throughout the world, the United States can begin to counteract negative connotations which arise when American employers come in and “take over.”
VI. Possible Negative Implications
There are many who believe that applying United States labor standards to alien workers employed by American companies abroad would be detrimental to the world and to American companies.100 In this section of the paper, we address some of the counterarguments to applying the Title VII standard internationally.
A. Increased Protection Under Title VII and Choice of Law
As discussed in Parts II and III of this Note, a variety of standards regarding sexual harassment exist throughout the world. What makes the American standard the correct standard to apply, as opposed to the standard of another country—such as the host country?
For the most part, American labor standards are more progressive than the applicable standards in many other countries. As indicated earlier, many countries are only now implementing sexual harassment policies.101 Without the courts’ active enforcement of these policies in these countries, employees are at a disadvantage when trying to get the courts to hear and address their claims. While there is a movement in China toward providing legal remedies to address sexual harassment, Chinese courts and Chinese society have not yet embraced the changing role of women in the workplace. To help provide these protections, where the employer is an American company, Title VII should apply to employees who are not citizens of the host country.
Another reason to use the Title VII standard is the nature of the claim in sexual harassment suits. If the definition of employee under Title VII had not specifically excluded aliens working for American companies abroad, a sexual harassment claim by an alien employee against an American worker could be heard in the courts of the United States. Because the employer is an American company, and the complaining party is a third-country alien, the host country’s courts will be reluctant to pursue the claim because there is little forum interest. While the harassment underlying the claim was committed in the host country, neither party is a national of the host country. Furthermore, some countries do not specifically extend the application of their laws to their citizens who are working abroad; as in our example, the laws of Mexico do not apply to Mexican workers employed in China.
Because American workers have these protections and are unlikely to relinquish them, it makes sense to extend the application of Title VII to alien employees through the use of arbitration agreements. Without every employee signing the same agreement, there could be problems enforcing the provisions of the arbitration agreement.102 As discussed in Part III, the application of different standards to different employees would cause numerous problems to the MNEs. If different standards applied, there would be problems with enforcing agreements, determining which standard applies to which person, providing consistency throughout the MNE, maintaining overall morale of the employees, and increasing stratification of employees. An arbitration agreement with the American standard of law is easier to enforce. American workers already know the policy, and all employees know that the same standard will apply. Moreover, there will be fewer human resource issues surrounding the actual implementation of the agreements.
B. America’s World Reputation
Some could argue that the reputation of the United States would be diminished rather than enhanced if American MNEs go into other countries and require foreign employees to agree to the application of American law. It is true that American MNEs have a reputation for going into other countries and forcing their policies onto others. However, the arbitration agreements would not be forced upon the workers of the host country. Instead, they would simply address the lack of protection afforded to foreign nationals employed by the American MNE, working in the host country, and resulting in no impact on national sovereignty. Instead, there will be increased protection provided to employees who would be otherwise unprotected.
C. Stratification of Employees
One point of contention for some opponents of the use of arbitration agreements might be the continued potential for stratification amongst employees. If all foreign nationals are treated one way, but those employees who are citizens of the host country are subject to the host country’s law, how are problems of stratification avoided? While this is an important concern, there are several reasons to believe that the use of arbitration agreements that specify Title VII as the applicable law would still be beneficial to MNEs and would still reduce stratification among employees.
First, employees who are citizens of the host country are already protected by the law of the host country, and they do not need the protection in the same way as alien employees. Many alien employees are not protected against harassment and discrimination by any law. One reason why aliens working in the host country would be less likely to have a remedy for the harassment they have suffered is that there is little forum interest in the courts of the host country. While the harassment occurred within the country, it might not have involved any nationals from the country. If an American employer harassed a Chinese worker, the Chinese courts might be sympathetic to the worker’s claim. In fact, one study suggests that foreign employers are more likely than Chinese employers to harass Chinese employees.103 Therefore, American companies will not be forcing their laws onto unwilling workers who are citizens of the host country. Instead, the agreements will provide protection to those workers currently without protection. Unfortunately, Chinese employees working for an American MNE would not have the protection afforded by Title VII. If the Chinese government is reluctant to allow Chinese employees to arbitrate their sexual harassment claims under American law, then the MNE would be seen as forcing its policy position on other countries. In the interests of not only keeping the American MNE in China, but also strengthening relations between the countries, the application of Title VII to Chinese workers is not feasible.
Second, stratification is more likely to occur if American employers were to come in to the country and force Chinese employees to accept American standards. Many Chinese people would be resentful of efforts to force American law upon Chinese workers in China. This is not to suggest that American employers should treat Chinese workers with a lower standard because they have not signed arbitration agreements and Title VII does not apply. Instead, the arbitration agreements would still protect those who otherwise would not have protections and allow the elimination of the black-collar workers within the plant. The use of arbitration agreements would eliminate many of the problems of stratification that might arise if there exist both protected and non-protected employees. The Chinese labor standard is lower than the American standard, and there is a possibility that because the Chinese workers do not have to sign arbitration agreements they may be subjected to a lower standard of care. However, the Chinese workers still have redress under their law, whereas the black-collar workers would have no redress without the arbitration agreements. Requiring the third-country aliens to sign the arbitration agreements is the best available option because the American standard then covers only those employees who are otherwise without legal recourse when they suffer sexual harassment, without imposing on the existing Chinese remedies for the Chinese workers.
VI.Conclusion
American MNEs should apply American legal standards when dealing with sexual harassment of and discrimination against third-country alien employees working abroad. Denying these employees protection against sexual harassment and discrimination can lead to stratification in the workplace between protected and non-protected employees and can lead to the formation of a new black-collar class of employees. These alien employees’ home countries may not provide protection from sexual harassment violations, and unless Title VII applies, they would be without adequate remedies. Requiring all foreign third-country employees to sign an arbitration agreement specifying Title VII as the applicable law would reduce difficulties raised by with choice of law issues and encourage consistent behavior throughout the MNE. Further, it would reduce stratification among the employees and discourage disadvantageous treatment due to the national origin of an employee. If MNEs were to adopt the American standard in dealing with all employees’ claims, not only would it be fair and economically efficient, it would also signal to its employees and the world that it values all of its employees, regardless of their national origins.
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Footnotes
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