In a small corner of American labor law: the test in “Radio Union”.

I want to make a special blog post about this one, because it keeps coming up in expat discussions concerning what American civil rights and employment laws cover for Americans living in Japan. The issue has been bounced around both at Debito’s, like so, and of course here at Hoofin to You.

The Equal Employment Opportunity Commission discusses coverage here.

American civil rights laws apply to companies operating within the United States. But additionally, they apply to American companies for the actions of their “controlled” subsidiaries overseas. (Overseas can be Mexico and Canada, too. There need not be a “sea” in between.)

I keep putting control in quotes, because it is a term of art. The criteria to determine control come from a 1965 Supreme Court case, popularly known as Radio Union. Radio Union was case involving the National Labor Relations Board (NLRB) where a union sought to apply collective bargaining via NLRB to an Alabama radio station. The station made all sorts of objections as to why it was not an “integrated enterprise” (so that it would fall below the $100,000 yearly gross receipts limit of the NLRB). The union argued that the various pieces of the company were one and the same.

The Supreme Court agreed with the union. In order to lay down a rule for “control”, the court said that four criteria–having been used in prior NLRB decision making– were relevant:

1. interrelation of operations,
2. common management,
3. centralized control of labor relations; and
4. common ownership.

Later cases expounded on these four to say that not all four were required to be present. Any one item, in fact, might be dispositive.

So it isn’t simply a matter of an American parent company saying, “we have no control over what those folks are doing over there!!” There is an actual test.

So here is the problem: ever since Congress began writing the test from Radio Union into federal civil rights statutes, no one has been making it clear to overseas Americans that the laws extend to them while overseas. It is one of these situations where you have to know to look, and know where to look. A lawyer who doesn’t do his/her research on the issue will end up giving smacked advice or writing a deficient complaint in federal court.

The cheap defense that multinational American companies put up, of course, is that their foreign affiliate is not a ‘controlled” subsidiary. So if you don’t know anything about Radio Union or the NRLB framework, you’re likely to be sent down a divergent path, arguing that all four of the criteria must be met. Additionally, some case law is out there which argues that non-Americans overseas are somehow entitled to civil rights protection of the Congress. So there are cases that work very heavily on the issue of where the decisions to hire and fire were made, with the focus on whether the decisions were made in America. That is another red herring.

The only reason those cases discuss where the decisions are being made is because the plaintiff is not a U.S. citizen. So the plaintiff’s attorney is trying to tie the case back to America. But if you are a U.S. citizen, it doesn’t really matter where the extended, integrated enterprise makes its decisions. The law covers you.

Another handful of cases focus on “centralized control of labor relations”. One series says that this is more significant than the other three criteria. But again, what does this really mean? The four criteria are coming out of an administrative labor board’s regulations. When Congress is applying these standards to companies operating outside of America, I think it’s clear that it means[:] does the parent have any say or influence in the hiring, firing, grade, rank and status of employees hired in the foreign countries[?] With the idea that, if there is even a small amount, it can be said that the relations are centralized—especially if the other three criteria are present.

Otherwise, the statutes wouldn’t make any sense. A company could put all its black workers in Tijuana Mexico, with the tacit understanding that they would be underpaid and fired at whim. But no overt control from the American parent, even though the parent owns the Mexican subsidiary, has interrelated operations, and influence over who is the management. The company could reasonably say, “no decisions about any individual hiring or firing in the Tijuana subsidiary happened with the input of the American office!”, and the question would be whether the statute still applied. It’s far fetched to say that it wouldn’t.

So for the people here in Japan who work for American affiliates: please bone up on this area of the law. The affiliate or the parent will make every excuse for why the Japan affiliate should just be able to do its own thing (which about 100% of the time involves discrimination against American workers). But you should know that Congress has made fighting back easy, and, in a sense, it is your patriotic duty to fight back.