Companies employing foreign nationals in high-level positions often need to provide their foreign national employees with employment contracts commensurate with their position in the company.

Whether the contract arises from a company policy or because of a special employment arrangement with the manager or executive, additional terms are often necessary for foreign nationals. These contract additions will help companies stay informed about the immigration status of the individual, be responsive to and prepared for agency audits, and ultimately get the best return on its investment in obtaining the visa for its employee.

Special Immigration Provisions in the Agreement

Special provisions relating to the foreign national's immigration status should be included in the employment agreement in order to be proactive in identifying the responsibilities of the company and the foreign executive.

  1. Status documentation. The foreign national should be required to provide a copy of passports, and a copy of each visa and Form I-94 received by the individual and family members during the employment, to the employer.
  2. Travel documentation. Several nonimmigrant visa types can be extended for an additional period equal to the length of time the foreign national spends outside of the U.S., whether the overseas travel is for business or for personal purposes. As a result, the foreign national should be required to provide documentation of the time spent outside of the U.S. such as travel itineraries, air travel tickets, hotel bill receipts, I-94s and passport stamps.
  3. Public Information. Depending on the type of visa, the United States Citizenship and Immigration Service or the US Department of Labor may require that a company provide certain information to inspectors or the public. The contract should specify that only the company is authorized to decide what, when and to whom such documents are provided.
  4. Extensions or Changes of Immigration Status. The company, as the sponsor of the employee's visa, should have decision-making ability about whether to change, extend or modify the nonimmigrant visa status of the employee while employed. Additionally, the contract should not guarantee the company will obtain a "Green Card;" however, if this is a deal term, the agreement should always specify that the company has the discretion when to prepare and file documentation, responses, and whether to appeal or abandon any adverse determinations.
  5. Government Audits. Several Federal agencies have been aggressively auditing companies regarding the employment of foreign nationals. In some cases, representatives of Federal agencies will sometimes contact the employee directly to obtain information regarding the employment arrangement, even if they know that counsel represents the company. There have been a few reports of state agencies also contacting employees and companies regarding the details of the employment arrangement and the terms of the employee's visa. Because of this, the agreement should specify that the employee is to provide prompt notice of any inquiries so that the company can involve counsel. The agreement should also require the employee to respond truthfully to any inquiries regarding her employment or immigration status.

Other Typical Considerations

By definition, multi-national companies operate their operations in multiple countries; among other considerations, jurisdiction issues always arise as to enforceability of contract terms that are usually material in the United States.

One example is a covenant not to compete. Hypothetical: Company A has facilities in North Carolina and Ohio, as well as in Asia, Denmark and in France. The manager, while based in the U.S., travels to each facility and effectively manages an important part of the operations of the entire company. During the course of employment, the manager naturally learns important company information that would be valuable to the company's competitors. The company's HR director inserts a worldwide covenant not to compete into the agreement. Manager leaves the U.S. company two years into the agreement to work for the company's sole competitor, which is located in Malaysia.

Basic question: Assuming (incorrectly) that the company wins a restraining order from a U.S. court based on the non-competition terms of the employment agreement, how will the company enforce this judgment against its departed manager in Malaysia? Basic answer: It will not. However, there are other ways that the company could have handled this situation, if there was an effective and legally-enforceable agreement with the employee.

Another common jurisdictional and practical issue arises when a subsidiary or parent company has previously employed the foreign national in one of its foreign offices and relocates the worker to the U.S. on a temporary basis. For example, an executive was previously employed by the company's subsidiary in France, and enjoyed a generous amount of time off plus other employment benefits unheard of in the United States. How does the company compensate the executive during her time in the U.S. without alienating either the executive or its American workforce, and account for her benefit expectations when she returns to her home country?

Other examples of typical contract terms that need to be examined for foreign nationals are provisions for compensation, compensation in foreign currencies, taxes, benefits, disability, retirement, and relocation expenses – especially when it comes to foreign nationals who intend to not reside permanently in the U.S. after the end of the work assignment and are high-worth executives. In some cases, there are treaties that may apply between the U.S. and the home country of the foreign national that may provide gap-fillers between U.S. Social Security withholding in the U.S. and the retirement/disability benefits available in her home country.

Conclusion

Companies need sophisticated employment agreements in order to retain non-U.S. talent, attract additional foreign expertise, and to protect the company. Ultimately, employers should structure each employment agreement in a way that fairly compensates the employee while protecting the company's investment in bringing the foreign manager or executive to the United States.

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.