Every European and American who runs a business on either side of the pond needs to understand where and how the legal and cultural systems are at odds. The book “Conducting Transatlantic Business – Basic Legal Distinctions in the US and Europe” by August G. Minke aims to help European and American businesses and their business partners understand each other’s business law. It provides insights to better understand the differences by putting the law in a cultural context.
What do German and American companies have to consider when running a business in the other country? The author is intimately familiar with what can go wrong, and how to do it right.
August G. Minke has worked as a corporate lawyer and business manager in the Netherlands, Belgium and Germany before moving to the United States. Mr. Minke is an adviser to European companies conducting business in the United States and to U.S. law firms involved in international litigation with a European touch.
The following excerpts* give you an idea what his book has in store for you:
What are the Employers’ duties?
When hiring employees, employers must fulfill certain duties. In Europe, they must comply with national labor laws. EU member states have incorporated harmonized European rules in their national legislation. As an illustration, rules pertaining to occupational health are very “European” but certain requirements remain country-specific.
In the US, employers must comply with federal as well as state labor law. Some rules overlap, some federal rules provide minimum conditions for which states may impose more stringent regulations, sometimes federal law leaves gaps which are filled in by state law or vice versa.
How long are the standard working hours?
In the USA the federal work week standard is 40 hours, but in practice it is sometimes considered part-time. Yet in many states, working more than a certain number of hours brings overtime pay into play. Practical standards vary widely. In California every minute after the 8th hour in any given day is subject to overtime pay. In New York, overtime begins after the 40th hour worked in a week.
Consequently, New York employees may work four 10-hour days and not be paid overtime, whereas in California this results in eight hours regular pay plus two hours overtime for each of the four days. Overtime in the USA is calculated as ‘time and a half’, or 1.5 times normal wages (plus 50%).
In Germany the situation is different: Germans work between 36 and 39 hours a week, capped at 48 hours including overtime. Overtime pay is to be paid a 25% premium, night work 10%.
What are the minimum wages?
American minimum wage is based on hourly earnings. Federal minimum wage is currently $7.25 per hour. Where federal law does not apply, state minimum wages do. Most states adhere to the federal standard but among the ones that don’t, the range is between $5.15, in Georgia and Wyoming, and $8.67 in Washington State. In some cities the rate approaches $10. A few Southern states do not have minimum wage requirements. Downward adjustments also apply.
In Germany minimum wage is based on monthly earnings. German employees are covered by collective bargaining agreements, which set wages by industry. In practice the minimum hovers around above €1.400, or over €8 per hour. The German ‘mini-job’ program offers work at around €5 per hour.
What kind of workers’ compensation does the employer have to provide?
Workers’ Compensation is an American statutory scheme to provide compensation for an employee’s injuries he sustained on the job. ‘Workers’ comp’ holds employers strictly liable even when the employer has been merely negligent. The employee does not need to prove fault.
Workers’ compensation is an exclusive remedy –meaning that it prevents employees from suing their employer or co-workers for job-related injuries. The insurance does not provide for pain and suffering, nor for torts claims or punitive damages. It does not cover 100% of lost wages. Yet it may not be excluded or replaced by a better plan. The exception is that an officer who is also a controlling shareholder of a business can seek approval to exclude himself from the policy.
What about workplace harassment?
American and European cultures don’t understand harassment in the same way. In general, Europeans have a broader view of what behavior is acceptable. Harassment based law suits are often seen as frivolous. In the US the norm is more stringent.
Different cultural perspectives also lead to different interpretations of the law. On both continents it is the responsibility of an employer to safeguard the workplace against harassment and discrimination, but the consequences of misconduct are felt differently. In Europe, the person guilty of misbehavior is eventually punished. In America, it can also be the employer.
Are there any differences regarding discrimination and equal opportunities?
Equal opportunity in principle means prohibiting employment discrimination on the basis of race, color, religion, gender, nationality or birth, et cetera. The difference between Europe and the US can best be explained with the example of age discrimination. In the US, it is illegal to discriminate against older employees at the hiring stage. In Europe, it is illegal to discriminate against older employees at the firing stage.
While European résumés, or curriculum vitae, include the age and gender of an applicant – and in some countries a photograph – American employers are prohibited from inquiring about a job applicant’s gender or age at any stage during the application procedure. American federal law prohibits discrimination based on age with respect to employees aged 40 years or older. The same applies to medical disabilities (except for drug abuse), union membership or prior bankruptcy. The system is most rigid in the first stage of the process, when no interview or phone call has taken place yet and a true unbiased selection based on merits can take place.
An exception to the above is ‘affirmative action’, which is promoted in the US. In Europe this practice is no longer valid. It is known as ‘positive discrimination’.
Of course, there are a lot more things to consider when it comes to employment law in the US and Germany. If you are curious to learn more about transatlantic business regulations, take a look at the book Conducting Transatlantic Business on bookboon.com. It is free to download.
Further information on the topics mentioned in this post can also be found on the Germany-USA Career Center’s main website, here: Recruiting & Hiring in Germany and Personalbeschaffung in den USA (in German)
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