European companies recruiting for their US subsidiaries in the US assume that, because it is notoriously easy to lay off employees in the U.S., it is also easy to comply with labor laws. This is far from the truth. U.S. employers must comply with far more regulations than in centralized countries such as France. Here, employers must comply with laws on the federal, state, county, and even city levels.” explains Myriam Le Cannellier, the co-founder and director of DSML Executive Search. It is also important to keep in mind that U.S. employees know their rights very well. Foreign-owned companies are at a disadvantage if they are not aware of those rights and violate them, even unintentionally.
“The absence of a strong social net in the United States encourages disgruntled employees to look for compensation or severance by bringing lawsuits”, explains Anne Pansard, a French American business attorney. Employees often have nothing to lose. They have access to success fee attorneys who only get paid if they win the case. For all these reasons, it is very important to understand the basics of the labor legal system, even at the hiring stage.”
This article explores 4 major areas of compliance that Europeans need to understand when recruiting executives for European subsidiaries in the USA. Compliance starts as early as when you draft or publish the job posting. This article also explains how working with a team like DSML Executive Search can help you comply with US legal requirements and find the best fit for your team.
Four Areas of US Laws That European Companies Need To Know
Not sure where to begin with your US hiring process?
Here’s a checklist you can use to hire C-suite executives in compliance with US labor laws.
As most European companies know, employees are hired “at-will” in the United States. That means that employees can be terminated at any time, with or without any reason or notice. The only limit is that employers cannot terminate (or fail to hire) for a discriminatory reason. The at-will system, and the weak social net, encourage individuals to argue that discrimination was the real reason behind their rejection, termination, or discipline.
It is important to be aware of the characteristics that are protected by US federal and state laws. In our experience, Europeans tend to be familiar with some of them such as age, disability, race, sex, or color. But they are not always familiar with other US-specific categories and run the risk of violating them unintentionally: veteran status, religion, nationality, sexual orientation, gender identity, or pregnancy. State laws are also creating new categories based on diverse things such as caregiver status or criminal record.
For all these reasons, it is important to make sure that your job description and interview questions do not create the impression that you favor or discriminate against a group. DSML can help you draft US job descriptions and assist your team with the art of interviewing US candidates in compliance with all these laws. We provide lists of ‘illegal” questions that could get you in trouble before you even hire someone.
2. Employee Citizenship
Because it would be discriminatory, European companies cannot specifically target US citizens or lawful permanent residents for most executive positions. According to the Immigration Reform and Control Act of 1986 (IRCA), job descriptions and postings must avoid language such as:
- ‘US citizen only’
- ‘Citizenship requirement’
- ‘Limited to Green Card Holders’
- ‘Only H-1Bs should apply’
- ‘Must have a passport or green card’
Unless your affiliate is legally required to hire a US citizen because of some specific need, such as a government contract or sensitive US technology, citizenship-biased language in job postings may result in legal action or hefty fines. “Our suggestion is to require in your job description that the candidate be ‘legally authorized to work in the US’,” Myriam says. “This ensures you are in compliance but meet your executive recruitment goals.”
3. Salary History Ban and Ban-The-Box Laws
In several states, it is prohibited to ask questions about a candidate’s current salary. This is because this practice was seen as perpetuating lower wages for certain classes of workers.
Another type of state law that you must know is what is sometimes referred to as ‘fair chance laws,’ or ban-the-box laws. According to these laws, employers cannot ask about an applicant’s criminal history during their initial recruitment process. The idea is to reduce employment bias for persons with criminal records that are often old or unrelated to the position.
If you hire in a state that has adopted a ban-the-box law, you may not be able to run a background check or ask questions about criminal or arrest records until:
- The applicant’s first interview with you
- You have made a conditional offer of employment
The following US states have adopted ban-the-box laws:
Keep in mind that ban-the-box laws do offer some exceptions. You may be able to ask about criminal records and conviction histories for roles that encompass:
- National security or government contracts
- Access to funds
- Proximity to children
4. Local Laws
US labor laws don’t disappear after you’ve hired a candidate. Federal laws usually provide a minimum level of protection in terms of minimum wages, safety, and benefits. State, county, and city laws provide more generous benefits. In particular, in the past 10 years, more and more states and cities have passed protections and granted more generous benefits such as mandatory paid leave. Other states are passing new laws prohibiting or limiting non-competition and non-solicitation agreements. Local laws change regularly so you need to stay up to date.
“We strongly suggest European companies work with a business law or employment lawyer who can help them navigate that system,” says Myriam Le Cannellier. “We also recommend companies become members of the Society of Human Resource Management (SHRM) members. SHRM is probably the largest publisher and network addressed to human resources professionals. For a nominal annual amount, SHRM members get access to updates and important information: SHRM – The Voice of All Things Work
Navigate The US Employment System With DSML Executive Search
US labor laws can be difficult to navigate for organizations expanding to the US. European companies must keep close attention to detail, as well as retain a seasoned executive recruitment team that can navigate these laws with confidence.
DSML Executive Search, an executive search recruitment firm with offices in Boston and Chicago, is dedicated to serving European subsidiaries hiring executives in the US. Combining our familiarity with American labor laws with a European DNA, we’ve assisted dozens of organizations in sourcing quality candidates. We take pride in raising awareness around sensitive recruitment topics for our clients and can recommend lawyers who assist with hiring laws before, during, and after your recruitment decisions.
To learn more about US hiring laws affecting executive searches in the US, you can get in touch with DSML Executive Search by calling +1 312 268 6166 today. We look forward to supporting your growing businesses with a cross-cultural approach to executive recruiting for European Companies in the USA with offices in Chicago and Boston.