How U.S. Laws may apply to non-U.S. Employees, and a lesson in
With conscious planning and an eye toward local law, an
organization may enjoy the benefits of uniform management of its
parent and subsidiaries with respect to company culture, cohesion,
and efficiency, and meet other business needs, while also
protecting against cross-national and cross-company litigation.
Although there are unique considerations with every step and
every new jurisdiction, proper organizational structuring and
growth planning is key to achieve this balance, particularly in the
United States where "joint employment" litigation is
prevalent. U.S. employers have long been aware of the "joint
employment" concept domestically, but a new case from New York
federal court cautions multinational companies that the concept may
be applied internationally between parents, subsidiaries, and
While each court case is highly fact-specific, and it is not
clear how expansively this court-opinion will be interpreted, the
August 2013 St. Jean v. Orient-Express Hotels Inc. opinion from New
York federal court illustrates one employee's success in
surviving a motion to dismiss her case, where she worked for a
Caribbean company but sued its U.S.-based sister entity under U.S.
law when she was terminated.
In St. Jean v. Orient-Express Hotels Inc., Plaintiff
Melissa St. Jean worked at Cupecoy Village in the Caribbean.
Cupecoy did not have its own management, marketing, and human
resources departments, but instead operated under its U.S. sister
company Orient-Express Hotels, Inc.'s Managing Director,
Director of Real Estate Marketing, and Human Resources, all based
in the United States. Plaintiff complained to the U.S. Human
Resources department that she was being sexually harassed by a
co-worker, and Plaintiff was terminated by the U.S. Managing
Director. When Plaintiff sued for discrimination and retaliation,
she brought her lawsuit against the U.S.-based Orient-Express
Hotels Inc., under U.S. Title VII anti-discrimination law, claiming
that Orient-Express was her true employer, and the Court allowed
Plaintiff to proceed with her case beyond the pleading stage.
Ultimately, Orient-Express demonstrates that U.S.
courts may entertain lawsuits from foreign employees against
related U.S. entities if the terms and conditions of the
plaintiff's employment were heavily controlled by the U.S.
entity. In Orient-Express, Plaintiff claimed that she dealt with a
number of the U.S. entity's employees on a daily basis as part
of her job; that the U.S. entity's Managing Director was
responsible for hiring, firing, and setting the income for
employees at Cupecoy and, in fact, he signed Plaintiff's
termination letter; and that the U.S. entity and Cupecoy shared
operations and management, such that Plaintiff reported to the U.S.
entity's Managing Director and Director of Real Estate
Marketing on budget items, finances, invoicing, sales results and
reports, and weekly traffic logs, among other commonalities.
The opinion indicates that the more control the U.S. entity has
over a foreign employee's employment terms, the more likely it
may be that the U.S. entity is determined to be an employer under
U.S. law, and therefore U.S. employment laws apply to that
employee. Not only may this expose companies to additional
litigation, but it raises other concerns regarding what laws apply
to which employees. However, by developing a mindful strategy for
entity organization, management, and growth, organizations may
avoid the pitfalls of Orient-Express and also maintain
organizational, philosophical and management unity.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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