International Employment 101:What it Means to be a

Global Employer in 2015?

Issues and Concerns That Arise WhenMoving People Across Borders and

Becoming a Global Employer

March 10, 2015

Today’s Presenters

• Nicole J. Simonian, Partner, Asia Coordinator and AsiaLabor and Employment Group Leader, Bryan Cave(nicole.simonian@bryancave.com)

• Marilyn Fish, Partner and Practice Group Leader, AtlantaEmployment Team, Bryan Cave(marilyn.fish@bryancave.com)

• Jackson Pai, Associate, Trade and Employment Law,Bryan Cave (jackson.pai@bryancave.com)

Roadmap

• Becoming a Global Employer

• What U.S. Laws Apply Abroad?

• Specific Issues When Hiring Abroad

• Thinking About Global Mobility

Becoming a Global Employer

• Who is an employer?– Forming foreign corporate entities – subsidiaries, joint venture

– Using staffing agencies – co-employment liabilities, who has control

– Engaging “consultants” or independent contractors

• Most countries have strict rules on who is an employee which is dependenton what actually happens in the relationship rather than what the contractsays

– Assigning U.S. employees abroad

• Consequences of being an employer– Local employment laws apply – most countries are much more

protective of employees than the U.S.

– Tax – having an employee usually means doing business locallythereby creating a permanent establishment or nexus

What U.S. Laws Apply Abroad?

Main Requirements to be Protected by Anti-Discrimination Employment Laws

1. Be an employee (“individual who is a citizen of theUnited States”).– Foreign nationals working abroad are not protected, whether they work

for American or foreign employers

2. Work abroad for U.S. companies or for entitiescontrolled by U.S. companies.– Whether a foreign entity is “controlled” by a U.S. corporation depends

on whether the two entities share (i) interrelationship of operations, (ii)

common management, (iii) centralized control of labor relations and (iv)

common ownership and financial control.

– Determined on a case-by-case basis

Applicable Anti-DiscriminationEmployment Laws

1) Title VII of the Civil Rights Act of 1964

• Prohibits discrimination based on race, color, religion, sex(including pregnancy) or national origin

• Exceptions for “foreign-compulsion defense”

– Three element test: (i) action taken with respect to anemployee in a foreign country; where (ii) compliance withTitle VII would cause respondent to violate the law of theforeign country; (iii) in which the workplace is located.

– Post-world-war-II Friendship, Commerce and NavigationTreaties between U.S. and various countries.

Applicable Anti-DiscriminationEmployment Laws (Cont.)

2) Americans with Disabilities Act of 1990(ADA)

• Prohibits discrimination against qualifiedindividuals on the basis of disability andthose regarded as having a disability

• Does not cover foreign employers of U.S.citizens working abroad but covers U.S.employees working abroad for U.S.controlled employers.

Applicable Anti-DiscriminationEmployment Laws (Cont.)

3) Age Discrimination in Employment Act of 1967(ADEA)

• Prohibits discrimination against individuals aged 40or older

• Express but limited provision to cover U.S. citizensworking for U.S. controlled companies.

• Generally applies to foreign employers operating inthe United States. However, does not apply toemployment actions involving work abroad.

Additional Issue for U.S. Companies

• Foreign Corrupt Practices Act (FPCA)– Corporations have potential exposure for the actions of their

employees, agents, subsidiaries

– Elements:

• Acting on behalf of an “issuer” or Corporation of “domesticconcern”

• Corrupt intent

• Payment or offer of payment

• “Foreign official” – including political candidates and employeesof state owned enterprises

• Business purpose

– High penalties and collateral consequences

– U.S. employers to create, implement and disseminate tosubsidiaries and local staff FCPA compliance programs

Specific Issues When Hiring Globally

Sources of Law

• Local Laws

• Laws of Other Countries– In certain situations, employees may be protected by more than one

country’s laws (e.g. expats)

• Directives of Regional Governing Bodies

• Corporate Code of Conduct & Policies

• Individual Contracts (e.g., employment contracts,assignment agreements) and Collective BargainingAgreements

• Religious law

General Trends

• Legal traditions may dictate attitudes towardemployees (“at-will” vs. “not at-will”) – wide range inlevels of protections

– Common law generally less protective of workers

– Civil law generally more protective

• General trend toward increasing worker welfare, aswages rise across the region and workers assertmore rights

• Trend toward European-style data protection laws

Background Checks, Drug Tests and Pre-Employment Testing

• Certain jurisdictions may impose legal restrictions

• In most cases, requiring prior consent from prospectiveemployees is highly recommended

• Credit checks and criminal records checks are moreproblematic

• Discrimination laws may apply

• Recommended to have HR policies with clear languageand definitions

• Keep results confidential to protect data privacy andavoid discrimination claims

Employment Contracts / Offer Letters

• Written labor contracts or offer letter generally required; offer lettersmay be sufficient in common law jurisdictions

• In certain jurisdictions where no employment contract or offer isrequired, a written contract or offer may still be recommended

• Documents generally required for onboarding:

– Tax

– Social benefits and pension

– Immigration documents or proof of eligibility to work (relievingletter from previous employer)

Confidentiality and Restrictive Covenants

• What to Consider?– Confidentiality obligations are accepted in most jurisdictions

– Not all jurisdictions allow enforcement of restrictive covenantssuch as non-competes or non-solicitation, and those that allowusually require some business reason

– Where permissible, enforceability of restrictive covenants post-employment generally requires consideration in the form ofpayment and is limited to a reasonable period of time

– Internal policies and employment/stand-alone agreementsaddressing confidentiality and restrictive covenants to ensureprotection of companies interests recommended

– There may be different mechanisms of enforceability(employment vs. contract obligation)

Termination

• Jurisdictions may have “at-will” employment, whileothers may not

• In certain jurisdictions, severance may not be mandatedby law, but provided by local company’s severance plan

• Separation or release agreements may not be legallyrequired and waiver of employment/labor rights might beunlawful

• No one-size-fits all -- different types, requirements,procedures and protections for terminating an employee

Data Privacy

• Strong data protection laws may affect processing andstoring of personal information– European-type data privacy laws are being enacted in many

jurisdictions

• Certain jurisdictions require Data Transfer Agreements(DTA’s) and consent from the employees for thecollection, storage, transfer of data

• Restrictions on the collection of PersonalData/Information from employees and candidates

Thinking About Global Mobility

Most Frequently Selected Countries forInternational Assignments

Country Percentage

United States 21%

China 12%

United Kingdom 10%

Singapore 7%

Germany 4%

Hong Kong 3%

Switzerland 3%

Canada 3%

Netherlands 3%

Source: 2014 Global Mobility Trends Survey, Brookfiled Global Relocation Services

Global Mobility Issues

• Determine that the person is truly an “expatriate” and intends toreturn home at the end of the assignment

• Determine how to structure the assignment

– Localization, direct foreign posting, secondment, temporarytransfer/localized, and dual-/co-/joint employment

– Structure contracts and assignment documents appropriately toensure that no additional obligations are created for theemployer and employee expectations are met

• Consider any offer letter issues – once provided with an offer letter,it may be hard to modify/adjust it later

– Lack of clarity may mean significant financial implications later inthe employment/termination process

Global Mobility Issues (Cont.)

• Determine what country’s laws apply generally (based onwork location, assignment structure) but understand somehost country laws may apply no matter what

– Example: is the employee “at-will” or is “cause” required?

• Ensure that when an assignment ends that the expat iscompensated according to the terms dictated in thejurisdiction where the law would apply

– Severance packages may be statutory in some countries

• Consider what other obligations may be owed to theexpatriate (e.g., relocation costs) – check local policies andthe assignment agreement.

Future Perspectives

• Global mobility continues to play a role in the followingyears due to increasing international engagements:– Companies involving in more complex foreign

transactions including investments abroad, sourcingfrom abroad, foreign sales and distribution

– Companies providing more flexibility for globalemployees and hiring a global workforce

• Variety of assignments types rather than traditional home-to-host international assignments– Review of relocation packages, benefits, allowances

and tax equalization agreements

– For industries with longer lead time for overseasdevelopment, the need for traditional long-termassignments will remain.

QUESTIONS??