August 18, 2019

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U.S. Court Holds No Foreign Law Exception to the ADEA and Title VII in GM Bias Case

On January 30, 2018, Shawn Wang (“Plaintiff”), filed suit against GM (China) Investment Co., Ltd. (“GMCIC”) and General Motors (collectively, “Defendants”) alleging, among other things, age discrimination in violation of the Age Discrimination and Employment Act (“ADEA”) and race and national origin discrimination under Title VII. Plaintiff, a naturalized U.S. citizen, was a GMCIC employee in Shanghai, China until he was terminated. Defendants filed a motion to dismiss arguing that it was required to terminate Plaintiff in order to comply with China’s mandatory retirement age law. On March 5, 2019, the Eastern District of New York denied the motion to dismiss the suit.

Background

Title VII and the ADEA contain a “foreign law” exception that shields employers from liability for actions involving an employee in a workplace in a foreign country. The exception applies where compliance with Title VII and the ADEA would otherwise cause the employer, or a corporation controlled by the employer, to violate the laws of the country where the workplace is located. To receive protection, the employer’s conduct in question must be necessary in order to avoid violating a foreign law.

Chinese law creates a mandatory retirement age of sixty years old for male employees. Upon reaching sixty years of age, an employee’s labor contract is terminated.

Decision

After reviewing Chinese case law, the Court noted that, although an employee’s labor contract is terminated on his sixtieth birthday, the law permits the individual to continue his relationship with his employer as an independent contractor. The Court continued by pointing out that, under Chinese case law, contracts entered into by parties to create independent contractor relationships are not subject to the statutory retirement age. Accordingly, under Chinese law, the Court found that it would have been lawful for GMCIC to maintain a working relationship with Plaintiff as an independent contractor.

Next, the Court turned to GMCIC’s retirement policies which expressly stated that the company could, at its discretion, continue an individual’s employment after reaching retirement age on a year-to-year basis until the age of sixty-five. Indeed, in response to Plaintiff’s EEOC charge, Defendants indicated that, in rare instances, where GMCIC’s business needs require the services of a former employee, the company will enter into independent contractor relationships for those services.

Ultimately, the Court held that Defendants did not meet their burden in demonstrating that they would have violated Chinese law by continuing a working relationship with Plaintiff beyond his sixtieth birthday. The Court held that, contrary to GMCIC’s contentions, the law would have permitted GMCIC to maintain an independent contractor relationship with Plaintiff.

Implications

In light of this decision, employers should review applicable foreign laws thoroughly to determine whether compliance with those laws can be accomplished consistently with Title VII and the ADEA.

© 2019 Proskauer Rose LLP.

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About this Author

Erika C Collins, Labor, Employment, Attorney, Proskauer Rose, LAw Firm
Partner

Erika Collins is a Partner in the Labor & Employment Law Department and co-head of the International Labor & Employment Law Group, resident in the New York office. Erika advises and counsels multinational public and private companies on a wide range of cross-border employment and human resources matters throughout the Americas, Europe, Africa and Asia.

212-969-3555
Daniel Ornstein, Litigation Attorney, Proskauer Law FIrm
Partner

Dan Ornstein leads our London labor and employment team and is a co-head of our International Labor & Employment Group. He has over 15 years of experience dealing with a broad range of UK and international employment issues. Dan is a go-to advisor for clients who rely on his sophisticated advice both on day-to-day matters and high-stakes situations. Dan is ranked in Chambers UK, which describes him as "incredibly analytical", "incredibly intelligent and an excellent sounding board” and someone who “displays both empathy and an assured knowledge of the best way to treat cases." He is also recognized in Legal 500 UK and International Who's Who of Management Labour & Employment Lawyers.

20-7539-0601
Law Clerk

Tony Martinez is a law clerk in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration and Employment Counseling & Training Groups.

Practices

Labor & Employment, Employment Counseling & Training, Employment Litigation & Arbitration

Education

Rutgers University School of Law, Newark, J.D., 2018

Rutgers University, New Brunswick, B.A., 2015

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