Do U.S. Employment Laws Apply To Employees Overseas?

Recently, one of our government contracting clients called to discuss a harassment complaint they had received from an employee working overseas.  Employee relations issues can be tricky enough. Add an overseas work location into the mix and the normal employee communication and investigation process can be downright tumultuous.

However, the very first question our client asked was the correct starting point: “Do U.S. employment laws apply to Americans living and working overseas?” Given that our client is a U.S. company and its overseas employees U.S. citizens, you might think the answer would be a resounding “yes.” However, the answer actually depends on the law at issue.  Believe it or not, not all employment-related U.S. laws apply overseas…even to U.S. employed citizens.

Practice Tip:  An equally important threshold question is “what constitutes overseas employment?”  Most courts answer this question by applying what’s called the “primary work station” test.  Other courts prefer the “center of gravity test.”  But both approaches consider factors such as actual location of an employee’s desk or work station and the duration of work overseas.

As a general rule, federal employment laws do not apply to employees stationed overseas unless the law itself clearly and specifically states that it applies outside the boundaries of the United States. Below is a summary of major federal employment laws and how they may apply to your overseas employees.

Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. (Title VII):  Title VII prohibits discrimination with respect to employment on the basis of an individual’s race, color, religion, sex, national origin or pregnancy. After E.O.C. v. Arabian Am. Oil Co., 499 U.S. 244 (1991), Congress enacted section 109 of the Civil Rights Act of 1991 extending application of Title VII to U.S. Citizens employed abroad, if employed by a U.S company.

Americans With Disabilities Act, 42 U.S.C. §§ 12101 et seq. (ADA):  The ADA prohibits discrimination against a “qualified individual” with a disability. Similar to Title VII, the ADA applies to U.S. Citizens employed abroad by a U.S. company, unless doing so would cause the company to violate the law of the country in which its workplace is located.

Age Discrimination in Employment Act, 29 U.S.C. §§ 621-634 (ADEA):  The ADEA prohibits employers from discrimination against employees or prospective employees aged forty or older. By its terms, the ADEA applies to U.S. Citizens employed abroad by a U.S. company, unless doing so would cause the company to violate the law of the country in which its workplace is located.  Under the ADEA “the term ‘employee’ includes any individual who is a citizen of the United States employed by an employer in a workplace in a foreign country.” 29 U.S.C. § 630(f).

The Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (ERISA):  ERISA governs the provision of pension and welfare benefits to employees. ERISA will apply to overseas workers unless a corporation’s benefit plans are maintained outside of the U.S. and a very small percentage of the plan participants are U.S. citizens or residents.

Civil Rights Act of 1866, 42 U.S.C. § 1981:  The “original” federal civil rights law prohibits national origin/race discrimination and possibly citizen-based discrimination.  There is no extraterritorial language in the law itself; and U.S. federal courts have held that section 1981 does not have extraterritorial application.

Equal Pay Act, 29 U.S.C. § 206(d) (EPA): The EPA prohibits an employer from discriminating between employees on the basis of sex by paying lower wages to employees of one sex for jobs requiring equal skill, effort, and responsibility. But this law only applies within the United States.

Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (FLSA):  The FSLA regulates certain conditions of employment, including standards relating to minimum wage and overtime.  FLSA generally does not apply to work performed in a workplace within a foreign country.  However, if an employee performed work in both the U.S. and overseas in the same workweek, the U.S. Department of Labor has taken the position that the FLSA will apply to all time worked during that workweek.

National Labor Relations Act (and its Amendments), 29 U.S.C. §§ 151-169 (NLRA): The NLRA provides certain protections for collective bargaining rights of employees with employers through the labor organization of their choice. But if your unionized employees are stationed overseas, this law does not apply to them while they are there.  Note though, the NLRB has held that the law applies to employees on U.S. oceanographic vessels, notwithstanding the vessel’s indefinite and possibly permanent stay outside of U.S. territorial waters. Alcoa Marine Corp., 240 N.L.R.B. 1265 (1979).

Family and Medical Leave Act, 29 U.S.C. §§ 2601 et seq. (FMLA):  The FMLA requires employers with 50 or more employees to provide eligible employees with up 12 weeks of unpaid leave to tend to serious health conditions afflicting the employee or their family members.  The statute contains no express reference to its overseas application and is therefore routinely interpreted to be inapplicable to employees working overseas.

Occupational Safety and Health Act, 29 U.S.C. §§ 651 et seq. (OSHA):  OSHA requires employers to adhere to certain safety standards in the workplace. The statute’s express language limits its applicability to “employment performed in a workplace in a State, the District of Columbia, The Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, the Trust Territory of the Pacific Islands, Lake Island, Outer Continental Shelf lands . . . Johnston Island, and the Canal Zone.” 29 U.S.C. § 653(a) (1990).

The analysis as to when U.S. law will apply to overseas employees can be complex and may require adherence to the conflict-of-law principles where foreign labor codes and practices may clash with U.S. laws. In addition, even if a particular U.S. law does not apply overseas, it is advisable to check your prime or subcontract to see if adherence to U.S. laws has been incorporated into the contract or whether the U.S. and the countries where your employees are stationed are parties to a treaty that would require adherence to certain U.S. or local employment laws.


C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.