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A male recruiter for a U.S.-based software company flies to India to interview a young female engineering graduate from a prestigious university. They meet over dinner to discuss employment opportunities. The young engineer is excited and anxious about the opportunity to travel to the United States and earn a high American salary. The recruiter closes the dinner by announcing that his company will be happy to sponsor an H-1B visa application for the engineer — if she will sleep with him. Does the female engineer have any recourse under U.S. laws? Had this scenario played out in, say, New York, the answer certainly would be “yes.” The applicant could sue under Title VII of the 1964 Civil Rights Act for quid pro quo sexual harassment. But a legal loophole exposed by two recent federal court decisions would leave the alien applicant entirely unprotected by U.S. anti-discrimination laws. In an era in which recruitment of foreign workers is at an all-time high, this provides a disturbing opportunity for U.S. employers to victimize foreign applicants. In the first case, Mendonca v. Tidewater Inc., decided in March 2001 in the U.S. District Court for the Eastern District of Louisiana, the plaintiff was an accounting manager employed by a U.S. company in the United Arab Emirates. He alleged that he was wrongfully denied a promotion and was subjected to unequal housing, benefits and wage increases because he was the only East Indian working in his division, according to the opinion. He filed a charge of discrimination with the Equal Employment Opportunity Commission in New Orleans and subsequently sued in federal district court. The employer moved to have the suit dismissed on the grounds that Title VII does not apply extraterritorially to aliens, according to the district court. Previously, the U.S. Supreme Court had held in EEOC v. Arabian American Oil Co. (1991) that Title VII did not apply to U.S. citizen employees working abroad for U.S. companies or their subsidiaries. Congress responded by passing the Civil Rights Act of 1991, which among other things amended Title VII to protect certain U.S. citizens working in foreign countries for U.S. employers. The amendments did not, however, extend to aliens. As drafted, Title VII does not apply to an employer “with respect to the employment of aliens outside any State.” In Mendonca, the district court held that this barred the manager’s discrimination claim. As an alien, the law simply did not shield him from alleged discrimination by his American employer. Although Mendonca by itself is only moderately disquieting, the reasoning behind it was carried a step further on May 22 by the 4th U.S. Circuit Court of Appeals in Reyes-Gaona v. North Carolina Growers Association Inc. The Reyes-Gaona case establishes that foreign nationals are not protected by U.S. anti-discrimination laws even when they are applying for work in the United States. In Reyes-Gaona, the plaintiff was a Mexican citizen who applied for work with the North Carolina Growers Association (NCGA). According to the opinion, NCGA is an American corporation that assists agricultural business in North Carolina with recruiting and hiring farm labor through the federal H-2A visa program for agricultural workers. The NCGA allegedly used an agent, Del-Al Associates, to perform recruiting functions in Mexico. When Reyes-Gaona applied for work at a Del-Al office in May 1998, he was allegedly told that NCGA would not accept workers over the age of 40 — like him — unless that person previously had worked for NCGA, the opinion noted. Reyes-Gaona responded by filing suit under the Age Discrimination in Employment Act (ADEA). The U.S. District Court for the Middle District of North Carolina dismissed the case, holding that Reyes-Gaona was not protected by the ADEA because he did not posses a current employment visa when he was denied employment. This followed a 1999 decision, Chaudhry v. Mobil Oil Corp., in which the 4th Circuit held that Title VII does not protect alien applicants who do not possess work authorization at the time of the application because the applicant is not considered “qualified” for the job. It’s a ruling that made little sense because most visa programs require a job offer prior to applying for a visa. Reyes-Gaona appealed to the 4th Circuit, but to no avail. The court observed that, with respect to extraterritorial application, the ADEA had evolved in much the same way as Title VII. Prior to 1984, federal courts consistently held that the ADEA only applied within the United States. In 1984, the ADEA was amended to prohibit U.S. companies from discriminating against U.S. citizens employed in foreign countries. However, as the 4th Circuit wrote, “notably missing” from the 1984 amendment was any provision protecting aliens applying for or performing work abroad for U.S. companies. The 4th Circuit understood this silence to be deliberate and held that the ADEA did not protect foreign nationals who file overseas applications for U.S. employment. Consequently, the district court’s dismissal of the case was upheld. HARSH RESULT? The Reyes-Gaona decision was unnecessarily harsh. First, it is not clear that a decision favoring the alien applicant would have required the “extraterritorial” application of the law. The allegedly discriminatory policy was that of a U.S. company, was likely developed and communicated to the recruiting company in the United States, and the effect would be to limit the number of older employees hired by the NCGA in the United States. Therefore the traditional concerns about trying to enforce U.S. laws in other countries were inapplicable because this decision solely affected a U.S. workplace. The policy considerations would be the same if Reyes-Gaona had applied for work in Dallas rather than Mexico. So why the harsh result? The judges provide the answer: “Expanding the ADEA to cover millions of foreign nationals who file overseas applications for U.S. employment could exponentially increase the number of suits filed and result in substantial litigation costs.” Translation: This would mean a lot of work for the judges. These recent rulings create a real opportunity for the exploitation of foreign applicants. Under these decisions, a U.S. recruiter presumably is free to recruit only members of a certain religion, gender or age group. Or, as in the example above, they can condition job offers on unlawful demands, such as exchanging visa sponsorships for sexual favors. But do we want to tell U.S. recruiters that all bets are off once they land on foreign soil? In a self-conscious concurring opinion in Reyes-Gaona, 4th Circuit Chief Judge J. Harvie Wilkinson III reminded everyone that this decision did not otherwise affect the employment rights of foreign workers: “Had Reyes-Gaona been hired by NCGA, once he began work in this country, the ADEA would have protected him from unlawful employment discrimination.” Of course it would have. Trouble is, the court’s decision made sure that he never was going to get here in the first place. R.S. Ghio practices law in Dallas.

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