Traditionally, labor and employment laws have been looked upon as domestic issues emanating from the societal need to protect workers, while protecting corporations by defining reciprocal obligations. This is especially true when attempts are made to define what constitutes sexual harassment in the workplace. But with the globalization of corporations and the resulting enactment of international treaties such as NAFTA, labor is no longer solely a domestic issue.
Sexual harassment in the States.
In the United States, sexual harassment is recognized as a type of sexual discrimination prohibited by Title VII of the Civil Rights Act of 1964. Laws under Title VII make it illegal for “an employer ... to discriminate against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual’s race, color, religion, sex or national origin.”
The Equal Employment Opportunity Commission (EEOC) is the federal agency responsible for regulating and administrating Title VII cases. It has established three situations in which unwelcome sexual advances, requests for sexual favors, and other unwelcome verbal or physical conduct of a sexual nature can constitute unlawful sexual harassment:
- When submission to the conduct is an implied or express condition of employment.
- When submission to or rejection of the conduct is a basis for favorable or adverse employment decisions regarding the employee.
- When the conduct interferes with the employee’s work performance or creates an intimidating, hostile or offensive working environment.
The EEOC’s sex-discrimination guidelines, which don’t have the power or effect of law, have nevertheless been adopted by the courts to provide guidance in resolving sexual-harassment claims. These guidelines impose strict liability on the employer for unlawful sexual harassment by a supervisor or manager, whether or not the employer was aware of the unlawful acts of his supervisor.
The first two criteria serve as the basis for a quid pro quo sexual harassment claim, and most often occur when the employer’s supervisor or manager gives or withholds employment opportunities as a means of coercing sexual favors. The third element is often considered basis for a hostile environment sexual harassment claim and can occur when an employee is exposed to an environment rife with sexual, lewd or profane remarks, body touching, obscene or pornographic photos, or overall offensive conduct. In a typical hostile environment sexual-harassment claim, there is no direct link between offensive conduct and a tangible job detriment.
Sexual harassment in Mexico.
Since sexual harassment is a criminal offense in Mexico, legal protection is found in the penal code. The law essentially provides protection for people only if their jobs are put in jeopardy in exchange for sexual favors. The penal code basically states that anybody with lascivious intent who entraps a person of any sex because of his or her hierarchical position will face a pecuniary sanction. If the offender is a public employee, he will also be fired.
Punishment under this section is only forthcoming if a petition is filed by the offended party. Compared to the United States, however, few complaints are filed. In the first year the law was effective, just 10 sexual-harassment cases were filed in Mexico City, which has a population of 20 million.
In 1995, a class action Title VII case was brought into a NAFTA suit allowing Mexican workers to sue a Mexican subsidiary of a U.S. company in a United States court to enforce both United States and Mexican labor laws. In “Aguirre v. American United Global Inc.,” No. BC 118159 (California Sup. Ct.), approximately 150 women filed a sexual-harassment suit against CEO Hohn Shadid and the parent company, Bellevue, Washington-based American United Global, for his videotaping technique of a bathing suit contest at a company picnic held in Tijuana for the Mexican subsidiary. The plaintiffs in this suit were seeking to take advantage of both United States and Mexican labor laws in their complaint, requesting relief for a list of damages including sexual harassment.
The impact of NAFTA.
NAFTA doesn’t require plaintiffs to bring suit where the cause of action originated, even in cases where more than one NAFTA state is involved. Therefore, in the Aguirre case, the plaintiffs were able to bring their Mexican labor law claim into a United States court -- essentially enabling a United States court to decide how Mexican labor law ought to be enforced.
Included in NAFTA is an item called the North American Agreement on Labor Cooperation (NAALC) which allows workers in one country to turn to a governmental body in another to invoke claims of labor rights violations potentially affecting other discrimination suits involving trade-related industries. Thus, NAFTA essentially enables a plaintiff to “forum shop” -- the act of moving a claim from one jurisdiction to another to gain a legal advantage. For example, to bring a Mexican sexual-harassment claim into the United States, where sexual-harassment laws are more favorable toward plaintiffs and damages are larger, would be considered a strategic move.
Although the company settled this case before trial, this example illustrates the need for multinational corporations to take preventive measures to protect themselves against future suits.
Under United States law, companies must take an active role in the prevention of sexual harassment in the workplace. An employer may be able to avoid or lessen liability for a hostile environment sexual-harassment claim if it has placed and follows published policies against sexual harassment, along with grievance procedures that contain provisions against retaliation. It’s imperative for multinationals to take action and prepare their managers -- both local ones and those who are transferred from foreign jurisdictions -- by providing them with cross-cultural training.
Cross-cultural training will provide a foundation for executives in a multinational corporation that will help them understand both the importance of their conduct and attitudes, and the difficulties that may occur in the workplace arising out of inappropriate or insensitive behavior. Comparative HR training emphasizing issues of legal liability will help ensure that appropriate steps are taken by managers both before and after a legal claim arises, regardless of the country.
Mitsubishi Motors Manufacturing of America Inc., based in Normal, Illinois, is a recent example of a multinational company that utilizes cross-cultural training. Their program focuses on diversity, equal employment and sexual harassment prevention for employees in the United States and for rotating staff in Japan before they enter the United States. Unfortunately for Mitsubishi, this training wasn’t implemented before “EEOC v. Mitsubishi Motor Manufacturing of America Inc.” was filed. The case was considered one of the largest Title VII cases of sexual harassment in terms of potential damages. It resulted in substantial adverse publicity which depressed Mitsubishi Motors stock prices and set nationwide consumer boycotts in motion.
NAFTA has opened up the United States, Canada and Mexico to increased liability risk in the employment law area that didn’t previously exist. Thus, the need for multinational corporations to take proactive, preventative measures to mitigate these risks cannot be overemphasized.Mara Eleina Conway is the managing principal of Comparative Law Group in Menlo Park, California. Conway was formerly an associate attorney practicing international and domestic labor and employment law with Epstein Becker & Green. She held a professorship in cross-cultural communications at Nihon Fukushi University in Nagoya, Japan, prior to studying law.
Global Workforce, September 1998, Vol. 3, No. 5, pp. 8-9.