Project Management Institute

EEO laws for expatriate project managers expanded

Legal Lights

Jon M. Wickwire
  Feature Editor

The following article adresses recent changes in the Civil Rights Act as it applies to overseas operations of United States companies. The Supreme Court's decsion in EEOC v. Arabia American Oil Company was the subject of an earlier article by two of these authors. The significant change in the law effected by the Civil Rights Act of 1992 merits the attention of management and pesonnel engaged in overseas operations for companies based in the United Sates. As noted by the authors, adoption of the Civil Rights Act of 1992 evidences the intent of Congress that equal employment provisions of the Act apply beyond the territorial boundaries of the United States.

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Robert K. Robinson, The University of Mississippi, University, Mississippi
Billie M. Allen. The University of Southern Mississippi, Hattiesburg, Mississippi
Ross L. Fink, Bradley University, Peoria, Illinois

INTRODUCTION

As reported in a previous issue, the Supreme Court of the United States ruled in March 1991 that U.S. equal employment opportunity laws are limited to the confines of the United States of America (EEOC v. Arabian American Oil Co. (ARAMCO), 111 S.Ct. 1227, 1231). Specifically the court ruled that since Congress did not explicity state its intent that the Civil Rights Act applies beyond the territorial boundaries of the United States, only companies located within the jurisdictional limits of the U.S. are required to follow the provisions of the Act. In other words, equal employment opportunity provisions for the protection of minorities, women, and older workers would not apply to the overseas operations of companies whose headquarters are located on U.S. soil. Congressional action, however, changed this.

EXTRATERRITORIAL APPLICATION OF EEOC

In the ARAMCO decision, the Supreme Court ruled that any extraterritorial extension of any U.S. legislation, including civil rights laws, must be expressly stated in the particular statute. That is to say, unless the particular law specifically states its application beyond U.S. boders, then it must be assumed to not apply overseas. Accordingly, the court ruled in ARAMCO that overseas employment practices of U.S. companies were immune to the provisions of Title VII (the component of the Civil Rights Act which governs equal employment). Hence, the only employment laws that a U.S. company was required to be in compliance were the laws of the host country. The U.S.-based company, therefore, had to follow U.S. employment laws only in those operations within U.S. jurisdiction.

In November 1991, President Bush signed into law the Civil Rights Act of 1991 which substantially modified the legal environment initially described in the ARAMCO decision. The new civil rights law provides specific language of extraterritorial intent that was lacking in the older statute.

The overseas extension of civil rights protection is not, however, universal or automatic. First, the new act explicitly states that employers will not be required “to take any action otherwise prohibited by such section [of the Civil Rights Act of 1964] with respect to an employee in a workplace in a foreign country if compliance with such section would cause such employer…to violate the law of the foreign country in which such workplace is located” (42 U.S.C. 2000-1(b)). In more succinct terms, if a conflict between U.S. employment law and the host country's employment law arises in an overseas operation; the U.S.-based employer is expected to comply with the host country's law. For example, assume that a company has an operation in a foreign country which has statutes prohibiting the employment of women in project management positions. That company would be expected to follow the law of the host country and would not be liable for sex discrimination under Title VII of the Civil Rights Act of 1964.

If, however, the host country has no employment laws which explicitly prohibit the employment of certain minorities, followers of particular religions, members of specific nationalities, or women; the employer is expected to provide the U.S. mandated equal employment opportunities for its U.S. employees. In other words, U.S. citizens working for a U.S.-owned or controlled corporation's foreign operations are entitled to the same employment rights that they would enjoy had they been working at a domestic site belonging to that employer—unless these rights are prohibited by the laws of the host country. Under the previous scenario, if the U.S. company should deny a project management position to a qualified American female employee because she is a woman, and the laws of the host country do not bar women from such positions, she may now initiate a suit in U.S. federal court alleging sex discrimination.

IMPLICATIONS FOR EMPLOYERS

The significance of the new law is obvious. Members of those classes protected by Title VII (i.e., racial minorities, religion groups, women, nationalities, employees over 40, and qualified workers with disabilities) will now be afforded the protection of U.S. EEO laws when employed by U.S. companies in foreign countries. The only exception occurs when compliance with the provisions of Title VII would violate the law of the foreign country in which the U.S. employee is assigned. It is the intent of Congress to ensure that all American workers receive as much protection as practical against employment discrimination when assigned beyond the territorial boundaries of the United States. By allowing aggrieved employees to seek relief through U.S. Federal courts, Congress is creating a disincentive discouraging any U.S. multinational firm from engaging in discriminatory practices towards its expatriates.

Robert K. Robinson is an assistant professor of management at the University of Mississippi. He earned his Ph.D. in personnel administration and industrial relations from the University of North Texas. His research interests involve equal employment opportunities, sexual harassment, business ethics, and AIDS in the workforce. Professor Robinson's writings have appeared in Employee Responsibilities and Rights Journal, Labor Law Journal, Personnel Administrator, Public Personnel Management, and SAM's Advanced Management Journal.

Ross L. Fink is an assistant professor of operations management at Bradley University, Peoria, Illinois. He earned his Ph.D. in management science from the University of Alabama. A frequent contributor to management and production journals, his current writings have appeared in Industrial Management and Production Planning and Control.

Billie Morgan Allen is associate professor of management at the University of Southern Mississippi. Dr. Allen earned her Ph.D. in organizational behavioral the University of North Texas. She has authored articles which have appeared in Labor Law Journal, Public Personnel Management, and Southern Law Journal.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

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