Australia: How U.S. laws may apply to non-U.S. employees

Be Global: Employment law e-bulletin - October 2013
Last Updated: 9 October 2013
Article by Maria C. Rodriguez, Michelle Kunihiro and Ben Gipson

How U.S. Laws may apply to non-U.S. Employees, and a lesson in strategic planning

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 sister entities.

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.

© DLA Piper

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 this publication.

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

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