AROUND THE WORLD WITH SEYMOUR MANSFIELD
Legal News with an International Perspective
GAULDING ON GLOBAL EMPLOYMENT LAW
Seymour J. Mansfield, Attorney at Law
To the international businessman or his globe traveling executive employee, the law in cross border situations may just be a "bramble bush" to quote the famous 20th century law teacher Karl Llewellyn, or "conundrum wrapped in an enigma," or to paraphrase the words of the great 19th century author Charles Dickens, as muttered by immortal Mr. Bumbles in Oliver Twist: Cross border law may be "an ass - an idiot."
But truth to tell as our guest author, my colleague Jill Gaulding explains, it is none of these but instead an evolving infrastructure and platform without which international business, employment and dispute resolution simply cannot grow and thrive.
Quite apart from governing the law between sovereign countries, or between individuals and those countries, the need for international law governing the rights of individuals and business from different states was recognized long ago as Europe emerged from the Dark Ages into the Renaissance Period. The pre-existing Roman and Germanic legal systems could not address the issues of the then burgeoning transnational commerce. That led to guilds and merchant associations formulating their own customs and norms for fair dealing, and soon they established their own courts. Eventually, by the 15th and 16th centuries, these rules, sometimes known as lex mercatoria or merchant law, were adopted and applied by both the church and governmental courts. Indeed, many of the ancient lex mercatoria concepts can be found even today within our fifty states' commercial codes, as well as international treaties and conventions.
For disputes between parties to an international contract, the parties may agree on the governing law and on the jurisdiction and adjudicatory forum (i.e., court, arbitral body, etc.). The parties' choices will usually, but not always, be honored. If contested by the parties, that mutual contractual choice may be set aside if it conflicts with the so-called fundamental "choice of law" principles of the forum country.
To help decide situations, with or without a contractual choice of governing law, where parties from our different states are involved, lawyers in the United States often make reference to the Restatement (Second) of Conflict of Laws § 6, which tries to summarize and condense the guiding principles followed by the majority of our states. Just for fun, please take a look at what § 6 provides:
§ 6. CHOICE OF LAW PRINCIPLES
(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law.
(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include:
(a) the needs of the interstate and international systems,
(b) the relevant policies of the forum,
(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,
(d) the protection of justified expectations,
(e) the basic policies underlying the particular field of law,
(f) certainty, predictability and uniformity of result, and
(g) ease in the determination and application of the law to be applied.
When it comes to the global market place, these choices of law issues can become even more complex. They move from the just confusing to a complicated, multi-factor puzzle.
Regardless, the United States can not retreat into insularity or into the isolationism that characterized U.S. policy at the beginning of the 20th century. Continuing globalization is inevitable. The international laws, treaties and conventions, including International Conflict of Law rules, need to grow and progress at an ever more rapid pace. But just as in the days of lex mercatoria, they must embody today's best concepts of fair dealing, protection from abuse, and uniform and clear standards which can be accepted and applied between corporate and individual citizens of different nations.
In this issue of eWatch, we are fortunate to have the following guest column by my colleague, Jill R. Gaulding, former law professor, experienced civil rights and discrimination litigator and a recognized expert and teacher of International Employment Law. Drawn from her recent lecture to senior business school students at the University of St. Thomas, as you read her column, please imagine yourself in her class hearing this lecture from Ms. Gaulding (unfortunately without her ubiquitous Power Point slide show).
Seymour J. Mansfield is a founding shareholder of Mansfield Tanick & Cohen, P.A. His practice includes employment law, international law, medical device law, commercial litigation and complex and class action litigation. Mr. Mansfield is the Firm's lead representative to Lawyers Associated Worldwide (LAW), www.lawyersworldwide.com, an association of independent law firms located in over 100 major commercial centers in 50 countries throughout the world. LAW allows Mansfield Tanick & Cohen to service the legal needs of our clients that are expanding their operations and relationships into new domestic and foreign markets. Mr. Mansfield has served on LAW's Executive Committee (governing board) since 2004. He can be reached at 612-339-4295 or via email at smansfield@mansfieldtanick.com.
GUEST COLUMN
Global Employment Law: A Primer on the Law that Applies
By Jill Gaulding
We tend to think of law as being territorially bound: German law applies in Germany; Chinese law applies in China, and so forth. This territorial model of law is nice and simple, and most of the time, it works just fine. But the model can break down if the targets of the law cross borders. In the employment law realm, this is happening more and more frequently. Employers are crossing borders in order to create and sell their products or services, while employees are crossing borders in order to work as migrants or expatriates, or just to meet with co-workers, clients, or suppliers. The law needs to keep up, somehow. But how can law cross borders? Or, to rephrase the question, "How can employment law become global?"
The simplest solution would involve a single, universally-applicable set of employment laws, enforced by some sort of world court. But we all know that this simple solution is quite unrealistic, at least until we all start living like the Jetsons - and I haven't seen any flying cars yet. To be realistic, global law solutions must work on a smaller scale. For example, a group of nations can agree to treaty terms that govern certain aspects of their employment relations (think NAFTA or E.U. law). Individual jurisdictions can also globalize law. Comparative law is one mechanism for this, because it permits jurisdictions with gaps in their law to adopt legal concepts and rules from other jurisdictions. In recent years, this mechanism has led to increasing globalization of U.S. employment discrimination law, since it is often seen as exemplary. (Cue groans from experts in U.S. discrimination law, who know that not all aspects of that law deserve to be copied elsewhere - but that is a topic for a separate article!)
Extraterritorial application of law is yet another mechanism for globalizing employment law. The name suggests something about the way this mechanism works: picture the law from one jurisdiction reaching across a border, so that it can be applied in another jurisdiction. With this picture in mind, it is easy to see why extraterritorial application of law is generally disfavored: it violates the norms of the territorial model of law. But the mechanism looks more appropriate when we acknowledge the complicated fact scenarios that can arise in a globalize economy.
Assume, for example, that a German corporation has established a branch office in Shanghai, and that one of its German national employees is sexually harassed while on a short-term assignment there. Should that employee only have rights under Chinese law? The answer is not as clear as the territorial model would suggest. Indeed, as the facts in employment law cases become more and more globalized, it can become less and less clear that a traditional, territorial application of law is even possible, since it is no longer clear which jurisdiction is the relevant "territory," and which jurisdictions are "extraterritorial." This means that even the label "extraterritorial application of law" can be misleading. When the facts of a case are globalized, a court or arbitral panel must consider all of the various laws that might apply. If those laws would lead to different outcomes, the court must somehow choose between them. This process is better labeled "choice of law" (or the preferred European term, "private international law").
Lawyers who remember this topic from their law school years may recoil at the thought. For some reason, choice of law analysis has long been considered both esoteric and confusing, but the global economy is about to change that assessment, at least for international business and employment law attorneys. In the future, competent business law and employment law attorneys will have to understand how choice of law analysis works. Choice of law analysis won't be esoteric or rare; it will be the day-to-day stuff of legal practice. To the attorneys who handle cross-border issues, if not their perplexed clients, it will also be quite interesting.
Consider the following hypothetical scenario as an example:
Joe Smith graduated several years ago from the University of Minnesota with a stellar academic record. After graduation, he got a job with a global company, Global Co., which is headquartered in St. Paul, Minnesota, but has operations around the world. Smith did such great work for Global Co. that soon he was offered an exciting promotion: he could become a manager at the Global Co. facility in Amsterdam, Holland. Smith accepted the offer and moved to Amsterdam with his wife, Jane Smith, a novelist who was pregnant with their first child. At first, life in Amsterdam was good. Joe loved his new job, and Jane was making progress on her novel while also caring for their baby, Jennifer. But when Jennifer was 2 years old, the Smiths decided that they needed to make a change. Jane's novel had been accepted for publication, and she would need to do book tours. They needed to organize child care for Jennifer. Joe thought this would be no problem, since - although childcare in Amsterdam was scarce and expensive - his employer offered onsite childcare. Yet when Joe applied for a spot for Jennifer, he was told that she was not eligible, since spots were reserved for the children of female employees (unless a male employee could prove that he had an "emergency need"). Joe was so surprised by this policy, and angry, that he wrote a memo to his boss and his boss's boss, asking that this "blatantly discriminatory policy" be altered immediately. Instead, Joe's job status was altered and he was fired for insubordination.
What will be the outcome of a lawsuit brought by Joe against his employer?
To reach an answer, a court would first have to decide which substantive laws might apply. Both U.S. and E.U. law might bar Global Co. from offering child care only to female employees: Title VII of the Civil Rights Act of 1964 forbids employers from "discriminat[ing] against any individual with respect to...compensation, terms, conditions, or privileges of employment, because of such individual's...sex," while the E.U. Equal Treatment Directive (76/207/EEC) provides that "men and women shall be guaranteed the same conditions without discrimination on grounds of sex." Likewise, both U.S. and E.U. law might bar Global Co. from firing Joe because he complained about the child care policy: Title VII forbids employers from "discriminat[ing] against any [individual] because he has opposed any practice made...unlawful...by [Title VII]," while the E.U. Equal Treatment Directive provides that "employees [must be protected] against dismissal by the employer as a reaction to a complaint...aimed at enforcing compliance with the principle of equal treatment."
At first glance, then, the choice of law analysis in Smith v. Global Co. seems easy. To quote the famous language of US Magazine, it looks like Europeans are "just like us!" "They bar sex discrimination!" "They forbid retaliation!"). This means that the parties would not need to dispute the proper choice of law, since it would make no difference in the outcome whether the court applied U.S. or E.U. substantive law.
First glances, however, can be deceiving. Consider the difference between two recent cases, Knussman v. Maryland, 272 F.3d 625 (4th Cir. 2001), and Lommers v. Minister van Landbouw, Case C-476/99 (ECJ, Mar. 19, 2002). Knussman was decided under the Equal Protection Clause of the U.S. Constitution (the source of Title VII rights). Lommers was decided under the E.U. Equal Treatment Directive. Although both courts interpreted very similar language - basically, requiring that men and women be treated "equally" by employers - they came to very different conclusions.
The plaintiff in Knussman was a police officer who had been denied leave to care for his newborn baby while his wife recovered from serious post-natal complications. The police department had denied him leave under a "primary care giver" provision of its leave policy, based on the notion that fathers can never be primary care givers unless the mother is "in a coma or dead," since "God made women to have babies." The 4th Circuit Court of Appeals rejected the police department's reasoning. Without commenting on God's intent, the court noted that the Equal Protection Clause was intended to bar sex discrimination stemming from stereotypes about gender roles.
The Lommers plaintiff faced a similar employer policy: his employer denied male employees access to onsite childcare facilities except in cases of emergency, since, in light of current societal expectations about gender roles, mothers who want to work outside the home "need" childcare more than fathers. The European Court of Justice upheld this policy under the E.U. Equal Treatment Directive, because, in the ECJ's view, the policy works to "remove existing inequalities."
Based on these two decisions, Joe Smith would want to argue for the application of U.S. law. Under the terms of Title VII, his argument should succeed, as long as he is a U.S. citizen and the Global Co. facility in Amsterdam is "controlled by" Global Co. corporate headquarters in the U.S., according to the factors laid out in Title VII (see 42 U.S.C. § 2000e-1(c)(3)).
Global Co., by contrast, would want to argue for the application of E.U. law. Its argument should also be successful, since we would expect E.U. employment law to apply to all employers located within E.U. territory, just as Minnesota employment law applies to all employers in Minnesota, regardless of whether they are global or local.
This might seem to leave Global Co. in a real bind: how can it possibly function, if both U.S. and E.U. law apply to its operations in Amsterdam, and those laws conflict? But a closer look reveals that the laws do not actually conflict. Title VII, under a Knussman analysis, bars Global Co. from offering childcare only to female employees. The E.U. Equal Treatment Directive, under a Lommers analysis, is not in conflict with Title VII, because it does not require Global Co. to offer childcare only to female employees (and to deny it to male employees); it merely permits an employer to offer female-only childcare, should it choose to do so. Thus, Global Co. would be able to comply with both laws by offering gender-neutral childcare. That's a relief - although given the hypothetical facts above, Global Co. will likely be found liable to Joe for breach of Title VII's anti-discrimination and anti-retaliation provisions.
But what if the two laws really did conflict? In that case, Global Co. would still not be in a bind, because the authors of Title VII built in an escape hatch known as the "foreign law defense." The defense reads, "It shall not be unlawful...for an employer...to take any action otherwise prohibited by such section, with respect to an employee in a workplace in a foreign country if compliance with such section would cause such employer...to violate the law of the foreign country in which such workplace is located." Given this escape hatch, Global Co. cannot be trapped between Title VII and the E.U. Equal Treatment Directive: if the two laws conflict, then Global Co. would no longer bound by Title VII.
Suppose for a moment that Title VII did not have this built in escape hatch, and Title VII did conflict with the E.U. Equal Treatment Directive, or some other law. In that case, the court would face a true conflict of laws, and it would need to apply the forum jurisdiction's "conflict-of-law law" in order to decide which of the conflicting laws should apply. (As Seymour Mansfield observes in his preface above, at this point, deciding the law that applies becomes "a complicated, multi-factor puzzle.")
If all this seems mind-boggling, consider the situation of Global Co.'s other employees in Amsterdam. Since Title VII, by its terms, only applies "extraterritorially" to U.S. citizen employees working for U.S.-controlled enterprises, the Dutch citizens working for Global Co. in Amsterdam would not be protected by Title VII. This means that, as a technical matter, Global Co. could have a gender neutral childcare policy for its expatriate employees and a gender specific childcare policy for its Dutch employees.
Whether that would be wise might be a good topic for my next guest column. We could also consider whether an employee like Joe should have a viable retaliation claim under Title VII, if he is terminated for protesting an employer policy that would violate Title VII, but for the foreign law defense.
Or does your head hurt enough already?
Ms. Gaulding practices plaintiff-side employment law with the Schaefer Law Firm in Minneapolis and frequently works with Seymour Mansfield and other Mansfield, Tanick & Cohen attorneys in an of counsel capacity. Prior to joining the Schaefer Law Firm, she spent three years as a Bundeskanzler Scholar in Germany, researching German and European discrimination law, and four years as a faculty member at the University of Iowa College of Law, where she taught Employment Discrimination Law, Global Employment Law, and Contract Law. She can be reached at 612-436-9018 or via email at jgaulding@schaeferlaw.com.
