United States: #MeToo Claims Hit Foreign Sovereign Employers In The U.S.

Last Updated: October 4 2018
Article by Rebecca M. Aragon and Ian T. Maher

Accusations of harassment against Harvey Weinstein, Charlie Rose, Matt Lauer, Bill Cosby and now even Supreme Court Justice nominee Brett Kavanaugh, among many others, over the past year underscore one thing: No one, whether he or she is a prominent politician, corporate CEO, judge, famous entertainer, ambassador or consul general, is immune from the adverse publicity, if not liability, that follows once harassment claims are made.

Indeed, as many of these publicized incidents show, the mere accusation of harassment is enough to prompt immediate resignations or terminations. But even then, the alleged harassers' employers are left with the burden of salvaging their reputations and grappling with #MeToo claims by employees who allege they were adversely affected, directly or indirectly, by the harassers' conduct.

Many foreign consulates and embassies that employ individuals in the U.S. erroneously assume they are immune from employment claims brought by their employees under U.S federal, state or local laws.

The Foreign Sovereign Immunities Act (FSIA) establishes the limitations under which a sovereign foreign nation (or its agencies) may be sued in U.S. state or federal court. If the "commercial activity" exception FSIA applies, foreign sovereign employers would be subject to U.S. employment laws.

Presuming immunity under the FSIA could be a costly mistake: Judgments in harassment and discrimination claims could carry significant emotional distress damages, and noncompliance with wage and hour laws creates risk of exposure to costly class or collective action lawsuits. On top of the liability exposure, many U.S. employment laws contain provisions allowing the award of attorney's fees to a successful plaintiff, which could easily run into six or seven figures in a case litigated through trial.

Recent court filings show that across the U.S., plaintiffs are filing employment lawsuits against consulates and embassies. In 2017 and 2018 alone, there have been at least eight employment lawsuits filed against embassies and consulates alleging claims of national origin discrimination, religious discrimination, disability discrimination, age discrimination, wage and hour claims, and sexual harassment.

In one case involving sexual harassment claims, the plaintiff alleged that the consul general repeatedly called and texted her; said he wanted to spend time with her; told her how beautiful she was and how good she smelled; that he moved her office closer to his; that he leered and stared at her breasts; that he followed her around the office and touched her; that he bought her a necklace, gold ring and perfume; and that he requested that she travel with him to New York City. Some of these complaints expressly seek millions of dollars in damages. If an embassy or consulate wrongly assumes it is immune from such suits under the FSIA, it could incur significant costs in defending employment suits.

Foreign embassies and consulates can take a number of steps to reduce the risk of employment lawsuits. First, they must implement harassment and discrimination policies and conduct preventative training. Taking such steps not only helps to prevent discrimination and harassment from occurring by educating management-level employees about U.S. employment laws, but it also can serve as a basis for certain defenses to discrimination and harassment claims. Indeed, in this #MeToo era, it is particularly important to be aware of the risk of harassment and discrimination claims and take steps to reduce such risk.

Second, because many plaintiffs include wage/hour claims in their harassment-related suits, foreign embassies and consulates should conduct an audit to determine which employees are engaged in commercial activities as the commercial activity exception triggers possible employer liability in employment suits. For any employees whose job duties could fall within the commercial activity exception, embassies and consulates should review their job descriptions to ensure employees are properly classified as exempt or non-exempt and check to make sure that employees are being paid in accordance with applicable wage and hour laws. Compliance should be assessed across federal, state and local laws given that some states and cities (particularly in California) have more stringent wage and hour laws than under U.S. federal law, such as requirements for meal and rest periods, differing overtime requirements and higher minimum wages.

Third, foreign consulates and embassies should consider adopting, for their commercial employees, agreements that provide for arbitration of all employment disputes on an individual basis. The U.S. Supreme Court recently affirmed the validity of such agreements that require arbitration of employment disputes on an individual basis and waive the right to participate in class or collective actions in 2018 case of Epic Systems Corp. v. Lewis.

Such agreements can protect embassies and consulates from class or collective wage and hour claims by requiring that employees bring their claims on an individual basis in arbitration, and not in court. Arbitration can provide other benefits such as increased confidentiality given that arbitration filings are not a matter of public record, like court records. Arbitration agreements also have the added benefit of moving employment disputes out of courts. This is particularly important if the embassy or consulate is in an employee-friendly jurisdiction that likely will favor the plaintiff, or in a jurisdiction that may be hostile toward foreign governmental entities.

Foreign embassies and consulates cannot assume that they are immune from all employment claims in the U.S. However, there are various ways that embassies and consulates can reduce the risk of costly employment lawsuits, particularly as harassment, discrimination, retaliation and piggy-back wage/hour claims proliferate in this #MeToo era. Embassies and consulates should take preventive measures to reduce their risk of liability on employment claims in the event a court finds they are not immune under the FSIA.

This article originally appeared in The Washington Diplomat on September 28, 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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