Tuesday, August 5, 2014

International Employment Newsletter

Dear all

Welcome to the summer edition of our newsletter. Many thanks to all those who contributed articles - this edition, we have articles from Canada, France, UAE and the US, as well as an article about a recent ECHR ruling. Please let me know if you are interested in submitting an article for future editions.

Helen Colquhoun
Withers LLP
Dual qualified in NY and England & Wales

Canada - Changes to Temporary Foreign Worker Program Impose Significant Burden on Employers

By Sergio Karas, Principal, Karas Immigration Law Professional Corporation, Canada

On June 20, 2014, the Federal government announced major changes to the much maligned Temporary Foreign Worker Program after months of negative media reports concerning high profile scandals, public pressure, and a looming Federal election campaign. The changes announced are profound and will make it more difficult for employers to hire foreign workers in many categories. The most significant policy changes can be summarized as follows:

• Labour Market Opinions (LMOs) are now replaced by Labour Market Impact Assessments (LMIAs), which will be based on enhanced labour market data rather than on occupation descriptions listed in the National Occupation Classification (NOC). Filing fees are increased from $275 to $1,000 per applicant.

• Temporary foreign workers will now be separated into two main categories according to their wage level. “High-wage temporary foreign workers” will be those in positions at or above the provincial/territorial median wage; and “low-wage temporary foreign workers” will be those in positions earning below that median wage. Currently the median wages vary from a low of $17.26/hour in Prince Edward Island, to a high of $32.53/hour in the Northwest Territories. The median wages will be revised periodically.

For low-wage temporary foreign workers, Work Permit duration will be limited to a one year maximum rather than the previous two year maximum. Temporary foreign workers who are currently in Canada with longer Work Permits will not be affected.

For high-wage temporary foreign workers, employers will be required to present Transition Plans in addition to other recruitment efforts to demonstrate how they intend to decrease their dependence on temporary foreign workers. Limited exceptions will apply.

• The Seasonal Agricultural Worker Program is renamed the Primary Agricultural Stream but its elements are largely unchanged. Further, no changes have been made to the Live-In Caregiver program for the time being, but media reports indicate that the government is planning an overhaul in the near future.

New Recruitment Requirements

The new LMIA will require employers to provide much more comprehensive information regarding their recruitment efforts and to demonstrate that Canadians cannot be found for a specific position. These efforts are in addition to current advertising requirements. Employers will also need to demonstrate that Canadians have not been laid-off or had their hours reduced at a worksite that employs temporary foreign workers. The authorities will rely on better sources of labour market information to determine if there are Canadians who could fill those positions. The new labour market information will include a proposed new job matching service to allow Canadians to apply directly for positions through the Job Bank, a quarterly job vacancy survey by Statistics Canada, an annual national wage survey also to be conducted by Statistics Canada, and better use of government data. It remains to be seen how the government will roll out these new sources of information and how they will accurately reflect labour market conditions.

Cap on Low-wage Temporary Foreign Workers

All employers with more than 10 employees will be subject to a cap of low-wage temporary foreign workers. The cap will be set at 10% of the employer’s workforce per location. The cap will be calculated based on the total number of hours worked at the specific worksite by all employees.

These changes are designed to reduce the number of workers in low-skilled occupations by limiting the number of employees in each employer location. Employers with ten or more employees applying for a new LMIA are subject to a cap of 10% on the proportion of their workforce that can consist of low-wage temporary foreign workers. This cap will be applied per worksite on an employer and is based on total hours worked at that worksite.

Employers who are currently above the 10% cap will be provided with a transition period to reduce the number of low-wage foreign workers. Initially, they will be limited at 30% or frozen at their current level, whichever is lower. Those employers will have to reduce that percentage to 20% as of July 1, 2015, and eventually to 10%. According to recent media reports, the government has indicated a desire to eliminate the low-wage temporary foreign worker program all together, but no such action has yet been taken.

Unemployment Rate and Foreign Workers

Another measure announced will result in the refusal of LMIA applications for employers in the accommodation, food services, and retail trade sectors for positions that require little or no education or training, in geographical areas where unemployment rates exceed 6%. This applies to occupational titles such as food counter attendants, kitchen helpers, light duty cleaners, cashiers, construction labourers, landscaping and grounds maintenance labourers, janitors, specialized cleaners, security guards, and attendants in accommodation and travel. The government’s rationale for such move is that Canadians hit with high unemployment rates should be afforded an opportunity to apply for those positions. However, this does not take into account the fact that many unemployed Canadians refuse to accept low wage occupations.

Transition Plans for High-Wage Temporary Foreign Workers

Employers who want to hire temporary foreign workers in high-wage occupations will be required, with limited exceptions, to submit Transition Plans with their LMIA applications to ensure that they are taking steps to reduce their dependence on foreign workers over time. These Transition Plans are in addition to the existing recruitment and advertising requirements that employers must meet during the course of an application. The Transition Plan is designed to provide proof that employers are either training Canadians for the position, or assisting the temporary foreign worker to become a Permanent Resident.

Employers will also be required to undertake further recruitment activities, including reaching out to organizations with groups traditionally underrepresented or affected by high unemployment such as aboriginal people, youth, Canadians with disabilities, etc. Employers will need to report on the success of their Transition Plans if they are selected for inspection.

Highest-Demand, Highest-Paid and Shortest-Duration Occupations

Occupations in the skilled trades, or highest-paid (top 10 percent of earners) or short-duration (under 120 days) will now be provided with a 10-business-day service standard. It must be noted that employers will still be required to advertise and undertake the same recruitment efforts as with other LMIA applications. Employers are exempt from the requirement of the Transition Plan when hiring in these categories. Typically, the positions benefitting from the faster processing will be those in skilled trades that are critical for the development of infrastructure, or for those whose wage level indicates that they are highest-skilled in their occupation, or are those involved in short-term projects or warranty work.

Enforcement Measures

The government promises to increase the number and scope of inspections of employers hiring temporary foreign workers to ensure that they are complying with all the requirements of the Temporary Foreign Worker Program, through more site visits conducted without a warrant, interviewing temporary foreign workers and other employees, compelling employers to provide documents for the purposes of verifying their compliance with the program, and banning employers who break the rules. The government will also expand its use of the Confidential Tip Line launched in April 2014 to report abuse of the Temporary foreign Worker Program which has received more than 1000 tips to date.

Perhaps the most serious enforcement mechanism will be the criminal prosecution of employers suspected of activities that are in breach of the Immigration and Refugee Protection Act (IRPA) such as employing foreign nationals that are not authorized to work in Canada, counselling misrepresentation, and actual misrepresentations. This is an effort to combat fraud. The government proposes to impose monetary fines of up to $100,000.00 and imprisonment of up to 5 years, or both, for those found criminally liable.

These major changes indicate a complete reversal of prior policies that encouraged temporary foreign workers to come to Canada with valid Work Permits first, in order to gain the necessary experience to become Permanent Residents. Also, prior policy allowed employers more flexibility in addressing labour shortages. The new guidelines penalize employers in specific service sectors that cannot attract a sufficiently high number of Canadians, such as the hospitality and fast food industries.

Notwithstanding the complexity of the new guidelines, the government has failed to address some of the most obvious sources of abuse, such as those perpetrated by small employers hiring relatives with little or no experience in an occupation as a path to obtain Permanent Residency. Further, the government ignores a problem of its own creation: the growing number of open Work Permits granted under the International Experience Class (IEC) to young workers from overseas who come to Canada and compete directly against Canadians in entry level or junior professional positions. In fact, Minister Jason Kenney has expanded that program, which is scheduled to climb to 10,000 open Work Permits to young citizens of Ireland. Other countries benefitting from the IEC include Australia, the United Kingdom, France, and many others currently suffering from high youth unemployment rates. It makes little sense to expand the open Work Permit category while reducing the number of employer-specific Work Permits.

Obviously these reforms are politically motivated, constitute an overreaction to media reports of abuse, and appear to be calculated as an opening salvo for the 2015 Federal election campaign. Rather than completely revamping the Temporary Foreign Worker Program, the government should have concentrated on detecting abuse, enforcing existing rules and imposing significant penalties on violators. It is noteworthy that although enforcement provisions have been part of immigration legislation since 2002, there have been very few prosecutions of employers under the Immigration and Refugee Protection Act in connection with the unauthorized employment of foreign nationals. The reason for the low number of charges against alleged abusers is due to the fact that investigations are costly, time intensive, and usually require the cooperation of foreign worker victims as witness. There is also a high bar to obtain convictions. So it is difficult to understand how an increase in penalties will deter abuse, or result in better prosecutorial outcomes, as it is unclear, how many resources will be allocated to investigate complaints and the enabling legislation remains fundamentally unchanged.

There is no doubt that the Temporary Foreign Worker Program has just become more cumbersome and will impose a significant burden on employers trying to fill vacancies and positions that Canadians are not prepared to accept or for which they are not qualified. The complexity of the new rules adds several layers of red tape for businesses. Consulting legal counsel to navigate those rules is now imperative for all employers desiring to engage foreign workers.

France - New Health & Safety Risk in France

By Roselyn Sands, EY Societe d'Avocats

Over the past years, health and safety has been at the heart of French legislation and case law. Long considered essential to preserve the physical health & safety of the employees, the notion of health and safety in France has evolved and the expanded notion of health and safety now focuses not only on physical health but also on mental, emotional and psychological health.

To underscore the importance of these legal developments, here are some examples:

1. Recent case law

• In a recent decision of the Paris Court of Appeal, a restructuring plan organized by one of France’s largest entertainment retail chains was deemed illegal because “the restructuring plan failed to account for health and safety risks tied to the fact that the plan would potentially lead to an increase in individual workload which would, in turn, increase stress and affect the psychological health of the remaining employees”. Thus, a company planning a restructuring needs to evaluate and quantify potential impacts on individual workloads of the remaining employees, instead of merely focusing on the exiting employees.

• The French Supreme Court ruled that unless proper supervision was applied, contracts which provided that employees were to be paid per working day and not per working hour were invalid, given that they threatened the psychological health of employees. This decision had a considerable impact since such contracts were commonplace for managers, given that, as a general rule, the working week in France cannot exceed 35 hours. Therefore, in order to remedy this situation, employers must now set up bi-annual meetings with employees whose work contract contains such provisions, in order to evaluate the psychological impact of the employee’s workload and avoid excessive stress at work.

2. Bullying claims are more and more commonplace

The focus on psychological health has led to new litigation tied to bullying and discrimination at work. Employers must not only guarantee the physical health of their employees, but must also ensure that the psychological health is protected. Over the past few months, there have been several cases were employers were fined on the basis of “health and safety” violations because they failed to protect an employee against “psychological” bullying by his/her colleagues and superiors.

3. New health & safety committee obligations

The powers of the French health & safety committees have also expanded in this new environment. As such, mandatory health & safety consultation is now required in unexpected situations, such as, in a restructuring context and during stressful periods such as performance reviews.


In conclusion, health and safety in France is becoming a prevalent issue for companies which must now be concerned with ensuring the physical health of their employees, but must also protect them against overwork and stressful working conditions and related psychological harm.

ECHR - French Ban on Full Face Veil Does not Breach ECHR

By Bernd Weller, Heuking Kühn Lüer Wojtek, Frankfurt, Germany

On 11th October 2010, France issued a ban on the public wearing of clothing designed to conceal one’s face. Despite the neutral wording of the law, the ban was discussed in the public as a “burqa-/niqab-ban”. Consequently, the Muslim community in France and other European countries felt discriminated against for its beliefs and the traditional wearing of concealing clothes for Muslim women.

Apart from France, only Belgium introduced a similar ban, whilst most other European countries did not implement such a ban because they believed that such a ban would constitute a breach of the European Convention of Human Rights, in particular article 8 - right to respect for private and family live, article 9 – freedom of thought, conscience and religion, article 10 – freedom of expression and finally, a breach of article 14 of the European Convention of Human Rights – prohibition of discrimination.

A French national – born 1990 – a devout Muslim wore burqa and niqab in accordance with her religious beliefs. The burqa is a full-body-covering which has a mesh over the face; whilst the niqab is a full-face-veil leaving an opening slit for the eyes only. The claimant highlighted that neither her husband nor any other member of her family put any pressure on her wearing such dresses. She emphasized that she wore a niqab both in public and in private, however not systematically and at all times.

The French government had questioned the claimant’s status as a victim making reference to the fact that the law did not refer to her individually but rather demanded general conduct. The ECHR rejected that argument and did not consider the claim as an (illegitimate) actio populares.

The ECHR agreed with the claimant that the French ban on full-face-concealing clothes did indeed interfere with the claimant’s rights under articles 8 and 9 of the European Convention. At the same time, the ECHR accepted that this interference was justified by the ratio legis, i.e. public safety and protection of rights and freedoms of others.

The ECHR on the one hand highlighted that the complete ban of face concealing clothes was not necessary to ensure and protect public safety. A mere obligation to show the face and to identify themselves was considered a less severe infringement of the basic rights compared to a complete ban. The ECHR on the other hand found that the ban was justified entirely by the protection of the rights and freedoms of others. According to the court’s opinion, the ban was necessary to ensure the respect for the minimum set of values of an open democratic society which triggers in particular

• respect for gender equality,
• respect for human dignity, and
• respect for the minimum requirements of life and society (living together).

The ECHR found that a full-face veil builds a barrier raised against others that could undermine the notion of living together. It shared the French government’s opinion that the face of a human being plays a significant role in social interaction. Furthermore, the ECHR showed its understanding for the view that people might not wish to see, in public places, practices or attitudes which would fundamentally call into question the possibility of open interpersonal relationships, which by virtue of an established consensus, form an indispensable element of community life within the society in question.

With regard to the question as to whether or not a complete ban of full-face concealing clothes is proportionate, the ECHR considered the following:

• there is a relatively small number of women concerned;
• for these women the complete ban has a significant negative impact;
• several national and international human rights bodies regard a complete ban as disproportionate;
• the ECHR further highlighted its concern about the public debate about the law – which had been dominated by islamophobic remarks.

Considering all of the above and the fact that the sanctions for infringements of the blanket ban were on the lower end, the ECHR found the French law legitimate and, thus, in line with the European Convention on Human Rights. Only the German and Swedish judges made a dissenting vote.


It must be said, that public opinion in Europe expected the ECHR to take the opposite stand with regard to the French law. The decision to uphold the French blanket ban was therefore somewhat surprising. Even more surprising are the arguments on which the court based its opinion – the opinion that an open democratic society legitimates a blanket ban because an open democratic society is based on the possibility of seeing each other’s face.

It remains to be seen if other European countries will come back to the issue and introduce new bans as well. It furthermore will be interesting to see whether or not employers might have legitimate means to ban full-face concealing clothes at the workplace – in particular in countries without a statutory ban. In Germany, such a case in the city of Frankfurt’s administration hit two years ago but never made the courts – as a settlement was concluded beforehand.

UAE - Global Mobility Considerations

By Rebecca Ford, Clyde & Co LLP, Dubai

Managing an internationally mobile workforce can be challenging, particularly as home country and host country laws can be vastly different. Whilst a multinational employer may wish to centralise its employment policies and administration as far as possible, nevertheless, legal compliance with local laws in the host country may mean that it is not possible to impose global policies on the workforce. Taking the UAE as an example of a host country, the following is a useful checklist of the issues which HR and legal departments have to consider.

What contractual documents do you need?
Many organisations prefer to maintain home country contracts for their mobile staff, in order to provide some comfort to the employees that their accrued service will continue to be recognised, benefits supplied to an employee will be maintained, and rights and obligations will be familiar to the employee. Ideally, internationally mobile staff will not be inundated with paperwork and a simple letter confirming the international status of the employee is preferred.

However, it is not always possible to approach the contractual documentation with a light touch and the immigration requirements of the host country can often drive the employment documentation process. Expatriates working in the UAE, for example, must have a residence visa and work permit which enables them to live and work in the country. As part of the application process, an employee will be required to enter into a standard form local contract (supplied by the Ministry of Labour or relevant free zone authority).

What law applies to the international assignment?
Where there is a requirement for a local contract, such as in the UAE, the local laws will apply to the employment – in the UAE, in most cases, this will be Federal Law No. 8 of 1980, as amended (the Labour Law).
This means that a company must consider how the host country laws will dovetail with the home country, in cases where a home country contract is maintained.

For example, in the UAE, the Labour Law sets out certain minimum standards, covering issues such as annual leave, sick leave, and end of service gratuity, which cannot be contracted out of. This means that a company will have to look at its usual policies and consider whether these need to be enhanced in order to ensure host country law compliance. Equally, a company will want to ensure that an employee does not receive two sets of entitlements and that any leave, for example, runs concurrently in both jurisdictions. In addition, local statutory rights may increase the value of benefits offered to an employee in the host country. In order to ensure parity with employees across the globe, it may be necessary to offset statutory benefits in the host country against contractual benefits in the home country. For example, in the UAE, an employee who achieves one year’s service is entitled to an end of service gratuity payment on termination of employment (unless they are dismissed for gross misconduct, or are instead in receipt of a pension provided in lieu of gratuity). A multinational employer may therefore wish to agree that any statutory end of service gratuity paid to the employee in the UAE is offset against a contractual redundancy payment offered in the home country.

Who is the employer?
As noted above, in many cases, the immigration requirements of the host country mean that an employee is obliged to enter into an employment contract with a local entity in the host country. The host country employer may therefore be a branch or other group company of the home country entity, however, it could be a joint venture partner or local sponsor.

An employee may therefore acquire an ability to bring a claim both against the host country entity and the home country entity in the event of a dispute. It is important, then, that the home and host entities are aligned in their management of employee relations and in particular, who is the disciplining and dismissing party. Whilst the host company would usually deal with the day to day management of the employee (including disciplinary matters), nevertheless the home company will want to maintain some control over this, or at the very least, be consulted with prior to any disciplinary or dismissal action. This can be dealt with by way of an agreement between the two employing entities.

When moving employees from one jurisdiction to another, the multinational employer must consider both the tax implications for the employee (for example, in what circumstances is income tax payable in the home or host country, or both), as well as the tax implications for the employer – for example, is a permanent establishment created when one or more employees are sent to a particular location?
In the UAE, for example, there is no income or corporation tax, however, certain employees (for example, American nationals), may still be obliged to account for tax in their home jurisdiction.

Medical requirements
Immigration requirements can pose specific problems to multinational companies seeking to transition employees smoothly to the host jurisdiction. For example, in some jurisdictions, it is illegal to require an employee to take an HIV test. However, in others, such as the UAE, the immigration process includes a medical test which checks for communicable diseases, such as HIV.

The employer will need to explain to the employee that the medical examination is imposed by the authorities and obtain the employee’s cooperation. The employer may also want to consider how it will deal with the employee if things go wrong – for example, what happens if the employee fails the medical test, either at the outset or during the course of employment when the employee’s visa is renewed? Will the company continue to employ the individual in the home jurisdiction? Will the company supply counselling (particularly if the failure of the medical examination comes as a surprise to the employee)?

Policies: can one size fit all?
In most cases, although a multinational can maintain similar employment policies globally, it is unlikely that they will all be the same. For example, a policy providing accommodation and other benefits to an unmarried couple would not be appropriate in jurisdictions such as the UAE, where to live together would be illegal; a drug rehabilitation policy would equally be inappropriate in the UAE.

In other cases, a policy may be able to be maintained but some parts of it amended – for example, a whistleblowing policy cannot promise protection for the whistleblower where there is no statutory whistleblowing policy and where the publishing of certain allegations may in fact lead to a criminal complaint of defamation against the whistleblower.

Policies should therefore be looked at from a host jurisdiction perspective, in order to ensure local law compliance.

Health & safety and company beliefs
In a large multinational where employees are disbursed across the globe, it can be difficult to maintain consistent standards. For example, different nationalities may have different views as to what is and is not appropriate behaviour in a workplace. Equally, certain policies may be so important to a company – for example, health & safety policies – that these must be consistently applied and observed across the globe. This may require the multinational employer to provide training and education to its workforce, both to introduce the required behaviours and to maintain an awareness of them during the course of employment.

Nationalisation requirements
Multinational companies need to be cognisant of local nationalisation laws in the host jurisdiction; for example, is there a limit to the number of expatriates who may be employed by the company in the host location? Alternatively, are the constituent nationalities which make up the workforce regulated (for example, in the UAE, additional fees are charged by the Ministry of Labour to companies who do not adequately employ UAE nationals or whose workforce is not diversified)?

Whilst it may be appropriate to work with trade unions in certain jurisdictions (and even to have an international framework agreement in place), the multinational employer should bear in mind that it may not be able to promise the recognition and activity of a union in certain jurisdictions. For example, in the UAE, there is no right to freedom of association and collective action such as striking is expressly prohibited by the criminal code.

Public relations
Multinational companies are usually concerned to maintain best practice employment standards, not least because a failure to do so can attract criticism in the world’s press. Even where a jurisdiction does not require compliance with certain standards – for example, there are no anti-discrimination provisions in the UAE Labour Law – nevertheless, from the viewpoint of an international workforce, the integrity of a company and its policies should be consistent throughout the globe.

As companies and their employees become more globally mobile, in part as a response to economic challenges in home jurisdictions, the issues identified above will need to be considered on a more regular basis. The most appropriate time to consider the issues is at the outset, before an employee embarks on a role in a host location, in order that the correct legal and immigration policies and structures can be put in place in order to best serve the company and its employees.

USA - Wage/Hour Law Compliance for International Business Travelers and Guest Workers

By Donald C. Dowling, Jr., White & Case, New York

Most every country imposes wage/hour laws that regulate minimum wages and overtime pay as well as (in most countries) holiday pay, vacation pay, rest breaks and total hours worked. Usually these wage/hour laws reach not only locally hired staff but also inbound expatriates whose places of employment have become the host country. But the analysis as to which wage/hour laws apply gets murky as to business travelers and temporary guest workers—staff whose regular place of employment remains the home country but who spend time working abroad. Whose wage/hour laws apply to travelers working temporarily overseas?

This question is important in the United States, where wage/hour law compliance gets a lot of scrutiny and class actions under the Fair Labor Standards Act [FLSA] pose a real threat. But this question is perhaps even more vital abroad, because wage/hour laws in other countries can be much broader than stateside, offering fewer exemptions while imposing extra requirements like holiday pay, vacation pay and caps on hours worked. Also, wage/hour class actions exist even outside the United States (such as in Australia, Canada, India, Poland and some other countries), and in jurisdictions like Brazil, individual wage/hour lawsuits are extremely common. Further, many countries actually criminalize wage/hour violations: In Canada, Croatia, France, Greece, Korea, Latvia, Serbia, Slovakia and elsewhere, a boss who violates wage/hour laws in theory (and occasionally in practice) goes to prison.

The problem of which country’s wage/hour laws reach business travelers and guest workers is more complex than it may seem because the wage/hour laws of any country can reach both outbound and inbound business travelers. And so a quick in-and-out overseas business trip can implicate two countries’ wage/hour rules: Home-country wage/hour laws can reach an outbound traveler on home-country payroll, while that same traveler may fall under host- country wage/hour laws as an inbound worker. Most jurisdictions’ wage/hour laws tend to reach inbound business travelers and guest workers because of the strong public policy in play here—no jurisdiction wants low-wage-earning or long-hour-working foreigners coming in and undercutting the locals.

Because two jurisdictions’ laws are usually in play at the same time, choice-of-wage/hour law as to business travelers and guest workers gets even more complex than choice-of-law as to other aspects of employment law, like unionization, discrimination, mandatory benefits and severance pay rules. To understand which wage/hour laws reach an international business traveler or guest worker working only temporarily overseas, break the analysis into two parts: compliance with home-country (outbound) wage/hour laws and compliance with host-country (inbound) wage/hour laws.

Compliance With Home-Country (Outbound) Wage/Hour Laws

To what extent do wage/hour laws of an international business traveler’s or guest worker’s home (payrolling) country reach overseas and regulate how the traveler must get paid and treated during the time worked abroad? When the home or payrolling country is the United States, this question primarily implicates compliance with the FLSA. And every FLSA inquiry begins with the question of whether the employee is exempt. Most international business travel outside the United States seems to involve FLSA-exempt staff. In those cases, the U.S. wage/hour law issue drops out.

As to non-exempt American staff who set off abroad on short- term business trips or overseas stints as guest workers, the FLSA reaches each week in which a traveler works on U.S. soil for just one hour. Whenever a non-exempt U.S.-based U.S.-payrolled employee spends part of a workweek working stateside and part of that same week working abroad, FLSA computation rules— including FLSA overtime and travel-time rules—reach all work and compensable travel time outside the United States for that week. Non-exempt U.S.-based employees escape the reach of the FLSA only during entire weeks worked abroad. (29 USC. §213(f); 29 C.F.R. §776.7; US Dep’t of Labor Wage and Hour Division Field Operations Handbook (5/16/02) [DOL Handbook] at § 10e02; Cruz v. Chesapeake Shipping, 932 F. 2d 218, 226 (3rd Cir. 1991); Wright v. Adventures Rolling Cross Country, Inc., 2012 US Dist. LEXIS 104378 (N.D. Cal.); Torrico v. IBM, 213 F. Supp. 2d 390, 402 (SDNY 2002) (dictum))

However, U.S. federal FLSA analysis is only part of the American- law compliance issue here. Remember state wage/hour laws. Even where an outbound non-exempt American business traveler or guest worker escapes the FLSA, the relevant U.S. payrolling state’s wage/hour law might reach abroad. This is the case, for example, in Pennsylvania (Truman v. DeWolff, Boberg & Assoc., 2009 WL 2015126 (W.D.Pa. 7/09)), but not in California (Wright, supra).

What about outbound business travelers and guest workers based outside the United States? For them, analyze the extraterritorial reach of home-country wage/hour laws. Brazil and Venezuela extend all their employment protection laws extraterritorially, so these countries’ wage/hour laws protect local staff traveling abroad on business. Taking Spain as another example, most Spanish employees are subject to a 40-hour capped week with only limited allowance for overtime. A Spanish employee traveling abroad for work carries this 40-hour cap with him—Spain’s labor code makes no exception for overseas trips. (Spain Workers’ Stat., Royal Decree 1/1995 of 3/24, at § 34.1)

Compliance With Host-Country (Inbound) Wage/Hour Laws

The tougher question as to business traveler and guest worker wage/hour compliance is how the wage/hour rules of a host country reach an inbound business traveler or guest worker whose principal place of employment and whose payrolling country, notwithstanding the trip, remain the home country. As a matter of public policy (the always-compelling policy of stopping low-wage and long-working foreigners from coming in and undercutting locals), many jurisdictions extend their wage/ hour laws even to temporary business visitors and guest workers visiting temporarily on short trips—travelers who, as mere visitors, do not fall under other host-country employment rules like local unionization, discrimination, mandatory benefits, and severance pay laws.

The United States falls squarely among these jurisdictions: Under the FLSA, a visiting alien who comes stateside for just 72 hours and works on non-exempt tasks is protected under U.S. wage/ hour law—and so must receive FLSA minimum wages and FLSA overtime pay. (DOL Handbook, supra, at § 10e01(c)) Or take Abu Dhabi. The temporary Abu Dhabi work visa (the “Work Mission Permit”) expressly subjects even short-term visiting inbound guest workers to local UAE wage/hour law. (Business travelers and guest workers, of course, always need any required visa or work permit.)

Compliance is a separate issue. Maybe lots of business travelers and guest workers the world over go off to work on trips to foreign countries but never see their pay (delivered via home- country payroll) bumped up to meet host-county (foreign) wage/ hour mandates. And maybe they work long hours on these trips in violation of host-country caps on hours. But any employer of international business travelers or guest workers concerned with full compliance needs to account for this compliance issue. To flout host-country wage/hour laws as to covered inbound business travelers and guest workers is illegal, a violation of most compliance policies—and a risk factor inviting pay disputes with both home- and host-country staff and local unions in both countries.

How does a host (payrolling) country employer comply with wage/ hours laws of the countries where it temporarily sends business travelers and guest workers? To answer this, ask four questions:

1. Who is exempt?
The first question in wage/hour compliance analysis should always be: Who is exempt? In the inbound business travel context, first check whether the host country happens to offer some targeted exemption for incoming business travelers or guest workers. Does the host country allow an exemption for short trips analogous to work visits shorter than the U.S. 72-hour cap? If no traveler exemption applies, then the exemption analysis shifts to the definition of “exempt” work under local wage/hour law.

A common mistake here is assuming that U.S. “exempt” workers carry their U.S. exemption everywhere they go. An outbound American business traveler may be FLSA-exempt when working domestically stateside, but U.S. exempt status stops at the border. U.S. exempt status tells us absolutely nothing about whether a traveler is exempt under wage/hour law in a host country.

In fact, America’s FLSA “exempt” category is unusually broad by international standards, which means that a given U.S.-exempt worker may well not be exempt abroad. For example, Mexico and Vietnam offer no statutory wage/hour law exemptions at all. Brazil’s wage/hour law (Labor Code art. 62) reaches even managers and supervisors, although Brazil does exempt high-level directors and executives with fiscal powers. Japan’s wage/hour law exemption reaches only what the Japanese call “true managers,” who are above mid-level supervisors. China’s overtime exemptions are complex and depend on whether the employer uses a so-called “standard working time system,” a “flexible working time system” or an “integrated calculation working time system.” (That said, China is less likely than other countries to extend its wage/hour laws to non-citizens working in-country temporarily.)

Some countries do offer broad U.S.-style wage/hour exemptions. Exempt status in Ethiopia, Indonesia and Peru, for example, is roughly similar to America’s FLSA-exempt status. Malaysian wage/ hour law exempts everyone other than manual laborers who earn less than a meager monthly pay rate of MYR 2,000 (U.S.$621). India offers exemptions for everyone other than usually low wage- earning “workmen.” In the UK, certain provisions in wage/hour law drop out entirely if the employee has signed a binding opt-out— and so an employer of business travelers and guest workers sent into the UK might consider having even travelers sign UK-style opt-outs.

2. What is the cap on hours?

Our second question is: What is the host country’s cap on hours? The United States does not impose any flat cap on hours worked (a stateside boss can legally assign, say, 100, 120 or more hours in a week). And so Americans are prone to missing the hours-cap issue entirely.

Many other countries impose flat caps on hours worked. Famous, of course, is France’s 35-hour capped workweek. The French cap has now become riddled with complex work-arounds, but subject to those work-arounds, most French employees’ workweeks really are capped at just 35 hours. In 2013, Venezuela implemented a tough new wage/hour law called the LOTTT that imposes a flat cap of 8 hours per day and 40 hours per week, with only a few exceptions.

Ontario’s Employment Standards Act 2000 imposes a flat cap of 8 hours/day and 48 hours/week (and exceptions require advance clearance from the provincial Ministry of Labour plus employee-signed revocable opt-outs). Mexico, Germany and Hungary impose weekly flat caps of 48 hours, although Hungary allows for 200 hours of overtime per year. Austria and Bahrain impose absolute weekly caps including overtime of 50 and 60 hours, respectively. Japan requires that hours caps be set out in labor/management agreements called saburoku kyoutei.

This said, though, distinguish a true hours cap from a mere target or reference period. Human resources staff in some countries may talk about legally mandated hours caps, but on closer examination these sometimes turn out to be mere reference periods. For example, Australia’s Fair Work Act 2009 at § 62(1) imposes a 38-hour standard workweek—but allows for “reasonable” “additional hours.”

3. What is the premium pay rate?

Our third inbound business traveler/guest worker wage/hour compliance question is: How does an employer compute pay for overtime and holiday time legally worked in-country? America’s time-and-a-half overtime rate is the general rule in some other countries—Luxembourg and Saudi Arabia, for example. But time- and-a-half is far from universal. In Argentina, Mozambique and elsewhere, some overtime work pays double-time. In Vietnam, holiday work can get paid as quadruple-time. Holiday work in Ethiopia pays at 250 percent.

Still other jurisdictions impose premium rates of less than time-and a-half: Peru’s overtime rate is 125 percent for the first two daily overtime hours, then 135 percent. Luxembourg has an alternate 140 percent rate applicable in certain circumstances. Japan has several rates, from 125 percent to 160 percent, depending on when the overtime gets worked. Denmark, Germany and Hong Kong impose no statutory overtime pay premiums at all— but many local collective bargaining agreements in these jurisdictions do.

4. What other issues arise under local wage/hour law?

Finally, when analyzing overseas wage/hour compliance, be sure to find out: Beyond overtime pay and caps on hours, do any other host-country wage/hour rules reach inbound business travelers and guest workers? For example:

• Travel time: In the business-trip context, always check how travel time gets compensated, and whether local travel time rules reach inbound business travelers and guest workers.
• Night work: Check regulations on night work, which can be especially strict in some jurisdictions (for example, Turkey). Japan imposes a pay premium on “late night” work (10:00 p.m. to 5:00 a.m.) which reaches even “true managers” who are otherwise overtime-exempt.
• Women: Countries like Saudi Arabia still impose protective legislation limiting work hours of women—and these laws rarely exempt inbound female business travelers.
• Breaks and rest periods: Check local rules on break time including mandatory prayer breaks in Muslim countries, and rest periods between shifts. These rarely exempt inbound business travelers and guest workers. For example, Mexico has a restrictive mandate as to paid meal breaks, and Poland requires 11-hour rest periods between shifts plus one weekly 32-hour rest period. Across the European Union, staff must get a break during each shift of six or more hours. (EU Directive 2003/88/EC, art.4) Brazil prohibits most work on Sundays. (MTE Portaria #375 of 3/21/14), as do many other countries.
• Minimum wage: Because staff at the bottom end of the wage scale rarely travel on overseas business trips, minimum wage is rarely a compliance issue in the international business travel context. But sometimes minimum wage comes into play, such as when a multinational services company based in a low-wage country wins a contract performed in a high-wage country. Occasionally this issue reaches American employees traveling abroad, because minimum wages in some countries outstrip the U.S. minimum. In 2015, Germany will introduce an hourly minimum wage of €8.50 (U.S. $11.50). In May 2014, Switzerland held a national referendum to impose a new Swiss national minimum wage of 22 francs (U.S.$24.65). This would have been the highest minimum wage in the world, but Swiss voters rejected it.
• Collective agreements: Check applicable local collective bargaining agreements, which can impose tougher wage/hour rules. For example, the Luxembourg Collective Bargaining Agreement for Bank Employees 2014 – 2016 contains seven pages of wage/hour provisions (articles 6 – 8), including a rule requiring triple-time pay for work on public holidays. Unions do not want visitors to come in and steal work away from their members, so wage/hour clauses in collective agreements are likely to reach even inbound business travelers and guest workers outside the “bargaining unit.”
• Payroll: Check whether local payroll laws, like those in Belgium, force an employer to “migrate” even guest workers onto a local payroll, and then to make local withholdings.