When cultures clash: applying Title VII abroad - Title VII of the 1964 Civil Rights Act is against job discrimination

Business Horizons, Sept-Oct, 1995 by William Scheibal

Title VII of the 1964 Civil Rights Act was certainly one of the most significant pieces of business legislation in this century. Its passage made it illegal to discriminate on the basis of race, color, religion, sex, or national origin in any of the terms and conditions of an individual's employment. With its passage, many jobs that had been routinely "off limits" were opened to minorities, especially women and blacks.

Until recently, however, one of the unanswered questions about Title VII was whether it applied internationally as well as within U.S. borders. Was an American company barred from excluding women and blacks from overseas job assignments? With the increasing globalization of business, this question has taken on added importance. More and more, international experience is becoming critical for promotion into higher-level management positions. If women and blacks can be denied critical overseas assignments, their long-term potential may be limited.

When Congress passed Title VII, it made no mention in the statute of its intent to apply U.S. employment law outside the country's boundaries. With no direct statement from Congress, the Courts were forced to "guess" whether Title VII was meant to protect U.S. citizens working for American companies abroad. The lower courts initially found that U.S. citizens abroad were protected by Title VII. But when the Supreme Court finally decided the issue in 1991, it held that Title VII did not protect American employees working for U.S. companies abroad. The potentially limiting effect of this ruling was, however, short lived. When Congress passed the 1991 Civil Rights Act, it specifically extended Title VII coverage to U.S. citizens working for U.S. employers overseas. Congress did give companies a limited exemption when complying with Title VII would require the employer to violate domestic law in a country where the employer is located. This does not provide a broad defense to employers to discriminate based on cultural preferences or other variables, but only when there is a conflict with foreign law.

Application of Title VII's employment discrimination provisions abroad will require careful examination of its practices by a U.S. company employing Americans abroad. In many countries the attitude toward women and other minorities may be significantly different from that in the United States. Some companies have allowed those cultural variables to determine staffing for particular jobs or to affect benefits, job assignments, or other terms of employment. With the extension of Title VII protection overseas by the 1991 Civil Rights Act, those employers may pay a heavy penalty. The problem could be avoided by using only non-U.S. citizens in overseas jobs, but that approach often presents its own problems.

CULTURAL BARRIERS ABROAD

Although U.S. law embodies a clear policy of providing equal opportunity in the job market for women and racial minorities, such may not be the beliefs of foreign cultures. Differing views of the role of women illustrate this point. Because of cultural perspectives in both developed and developing countries around the world, women are often viewed as less able to participate in business activities.

Ferraro (1994) uses the example of Kenya, where, she says, "the picture that emerges unquestionably shows women to be subordinate to men." Couple this perception with the fact that 97 U.S. companies, including GM, Ford, Exxon, Union Carbide, and Xerox, have branch offices in the capital of Nairobi, and we have a dilemma when a new position opens in one of these branch offices. Other countries may have legal restrictions that make working in business more difficult for women. In Saudi Arabia, for example, a woman is not allowed to drive a car. And such legal restrictions may be even less significant than the overall view of women in Saudi Arabia. One female expatriate remarked that she couldn't conceive of Saudi men as being willing to conduct business with a woman.

The effect of these cultural roles can be seen even outside the home country. In one case, reports Snowdon (1986), a woman bank executive was assigned to meet an arriving sheik at the airport. Officers at the bank "were unaware that by sending a woman to the airport we were, in keeping with his custom, offering the company of the woman to him during his stay." Not surprisingly, the result was an unhappy customer.

Even in highly developed countries, such cultural variables can make a company reluctant to send women or African-Americans abroad. Japan, with the world's second largest national economy, is often seen as being prejudiced against black Americans. This perception has been heightened by comments from senior Japanese officials. Former Prime Minister Nakasone commented that intelligence in the United States is low "because there are many blacks, Puerto Ricans, and Mexicans" (McCoy 1994). More recently, Michio Watanabe, who later became foreign minister, linked black Americans to financial instability, saying "they do not mind going bankrupt because they take the position that 'now we don't have to pay anything back'" (Brown 1989). Such comments are also reflected in Japanese business practices in this country. Reports on hiring of blacks by Japanese auto manufacturers in the U.S. have revealed systematic discrimination against black Americans, says Brown (1989). Blacks have also met resistance in obtaining dealerships for Japanese cars.