Section 901 of the Civil Rights Act of 1991 amended Title VII of the Civil Rights Act and the ADA to extend the protections of Title VII and the ADA to American citizen working abroad for an American employer.
Factors to Determine Whether The Employer Is An "American Employer" include:
(1) Whether The Company's Place of Incorporation Is In The U.S.;
(2) Company's Number of Contacts In The U.S.;
(3) Company's Principal Place of Business;
(4) Nationality of Controlling Shareholder(s);
(5) Nationality And Location of Management; and
(6) Company Is Controlled By An American Employer.
Determining whether an employer is an American employer is done on a case-by-case basis. If a company has significant connections with the U.S., it may be deemed an American employer even if it is not incorporated in U.S. territory.
Foreign Laws Defense Available To The Employer
Section 901 leaves a loophole for foreign employers by stating that the employer is not required to comply with Title VII or the ADA if compliance with the law would cause the employer to violate a foreign law in the country where the employer is located. There are three requirements the employer must met to use this defense:
(1) The Action Is Directed At An Employer In A Workplace In A Foreign Country;
(2) Compliance With Title VII or The ADA Would Cause The Employer to Violate A Law Of The Foreign County;
(3) The Workplace Is Located In The Foreign Country In Which The Law Would Be Violated.
Discrimination By Foreign Employers In The U.S.
As long as there are no treaties or international agreements imposing constraints, foreign employers are subject to Title VII if the employer discriminates in U.S. territory. The general premise is that if the employer does business in the U.S., it has availed itself to the privileges and protections of U.S. law, and likewise should be subject to any enforcement requirements or penalties under U.S. law.
One type of agreement commonly raised in defense to Title VII charges is a friendship, commerce, and navigation (FCN) treaty. When such a defense is raised, the parties must assess whether:
(1) The Employer Is Protected By The Treaty;
(2) If So, Whether The Employment Practices Involved Are Covered By The Treaty; and
(3) If So, The Impact Of The Treaty On Application To Title VII Or The ADA.
As always, it is important to remember that jurisdiction is not a one-sided issue. For employees alleging discrimination by an American employer abroad, the employee must be a U.S. citizen, in addition to the requirements set forth above for jurisdiction over the employer. However, for situations where discrimination by a foreign employer in the U.S. is alleged, the employee can be either a U.S. citizen or an alien.
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