A designer working for a U.S. firm in one of its
overseas offices became pregnant and expected to have the same maternity
benefits that she would have had in the United States. She discovered, though,
that the Family and Medical Leave Act, which grants up to 12 weeks of unpaid
maternity leave and requires that the employer have an equivalent job for the
returning employee, does not apply to workers outside U.S. territory.
In a global economy, in
which people increasingly work in foreign countries, the ethics of employee
rights becomes complicated. As this designer discovered when she became
pregnant, the Family and Medical Leave Act (FMLA) does not cover
“extraterritorial” situations, and so she had none of the job protections that
the American firm she worked for would have had to provide her in the U.S. Many
American companies, of course, extend these laws to all of their employees, but
no American law requires them to apply FMLA protections beyond U.S. borders.
Some who advocate for the
minimal regulation of the marketplace may see no ethical problem here. Libertarians
might argue that this employee made the decision to work for this firm and she
has the freedom to walk away and find employment in another one. Or pragmatists
might say that she can always make arrangements for childcare so that she can
return to work as soon as she is medically able to do so, taking personal
responsibility for the consequences of her becoming pregnant.
Such positions, though, do
not look very far ahead to the real consequences of such hard-nosed and rather hard-hearted
arguments. Consider the effect such behavior has on a firm’s reputation. I
heard this story at a dinner party from someone who had heard it from someone
else in the city in which this firm has its home office. While such story
telling has real value in warning people about which employers to avoid, it can
have a devastating effect on the firm in question, making it hard to attract
the best employees and, even worse, creating a negative impression of the firm
among prospective clients and within the communities in which it practices. A
decision that might have given the firm a short-term business advantage – not
extending FMLA to its overseas employees – can have terrible long-term
implications for its business worldwide.
Inside the firm, employees
will not want to work in the firm’s overseas offices if that means a loss of
benefits. Firms, instead, should incentivize workers to take posts in foreign
countries, given the inconvenience and disruption this can cause in a
employee’s private life. Also, having dramatically unequal treatment of staff
within the same organization can create all sorts of tensions that lead, in
turn, to a discouraged and disgruntled workforce – not a formula for success in
an increasingly competitive global economy. If anything, firms with overseas
offices should offer as many benefits and perks as possible to find the very
best employees as possible, regardless of what the law allows them to avoid.
You could argue that governmental
requirements that a firm obey a law like FMLA or marketplace incentives that it
does so in order to compete and to protect their reputation both lead to the
same outcome, raising the question of whether it matters how we achieve such a
goal. But there is a difference: depending on the marketplace alone does not
guarantee that a firm will see what is in its best interest. Nor does it
prevent a lot of individuals, like this designer, from suffering the
unfortunate consequences of a firm’s shortsighted and self-destructive
decisions.