From: Ned Help
To: Carrie Counselor
Date: May 4, 2016
Subject: Employment Agreements for Employees Working In High Risk Countries
Thanks again for your guidance over the past several weeks. Now that we’ve tackled updating our offer letters for employees working abroad, I’d like to look at our employment agreements. What provisions should our company consider including in employment agreements for employees who will be working in high risk countries?
From: Carrie Counselor
To: Ned Help
Date: May 4, 2016
Subject: Re: Employment Agreements for Employees Working In High Risk Countries
It’s great to hear that your offer letters are updated and ready to be used!
When someone has accepted an offer of employment to work, let’s say, in Afghanistan, it is important that they receive an employment agreement that takes into account the potentially dangerous work environment. Your company’s standard employment agreement used for U.S.-based employees will not work for this situation due to the sensitive nature of such locations.
Below please find specific key provisions your company should consider including in any employment agreement to be used for employees working in high risk countries:
- Acknowledgment/Assumption of Risk. This provision should include a non-exhaustive list of the risks of injury or death that are present in the host country, such as political unrest, war, or kidnapping. It should also require the employee to acknowledge that he or she has had sufficient time to research and ask pertinent questions about the living and working conditions in the host country, and risks of injury or death. Lastly, this provision requires the employee to acknowledge and assume the risks.
- Hazard Duty-Related Pay. This provision will explain the base rate of pay plus the amount/percentage of pay attributable to “danger pay,” “post hardship differential pay,” or any other hazard-duty related pay per federal regulations and/or company policies.
- Payroll Deductions. Since U.S. nationals sent to work overseas are still subject to U.S. taxes, this provision should clearly explain that the company will deduct United States income and payroll taxes and other required or customary deductions from the employee’s paycheck. It should also explain whether the company will pay the host country’s income taxes on the employee’s behalf, and if so, how such payments will affect the employee’s gross compensation.
- Work Schedule. This provision should explain the employee’s standard hours of work or shift length, particularly for employees who are not being paid on an hourly, “daily-rate” or some other non-salaried basis. Keep in mind that the Fair Labor Standards Act does not apply extra-territorially, so its minimum wage and overtime rules won’t generally apply to employees hired to work overseas. Therefore, it is important that the employment agreement clearly lay out, in detail, how the employee will be paid. For example, the agreement should explain what activities the employee will and will not be compensated for; g., “the company will not pay the employee for travel/wait time to and from the U.S. and the host country.” Also, consider whether you want to include language that will limit the availability of overtime pay, such as a statement that the employee will not be paid for pre- and post-shift activities or will not be paid if he or she works longer than the standard shift.
- Expense Payments and Reimbursements. This provision should explain what expenses the company will pay or reimburse the employee for, such as visa fees, work permits in the host country, and air travel.
- Housing and Meals. The company should explain whether it will provide the employee with housing and meals. If meals are provided, this provision should specify how many meals will be provided each day and the maximum amount to be paid per diem.
- Medical Treatment. In this provision, you should explain where the employee can obtain medical treatment in the host country and what services the company will provide if hospitalization is required (i.e., transportation to U.S., payment of uninsured costs incurred prior to return to U.S.).
- Not to belabor the point that the employee is working in a high risk area, but your company should explain the steps it will take should the employee die in the host country, such as paying expenses for transportation of remains. This provision should also encourage the employee to arrange personal affairs (i.e., designating beneficiaries in a last will and testament and for retirement accounts) before heading to the high risk country.
- Waiver of Claims Related to Injury and Death. This is a broad waiver by the employee of any and all claims against the company for injury, illness, impairment, disability or death resulting from or related to the employee’s work in the host country, including training and travel.
- Jurisdiction, Venue, Governing Law. Your company does not want to be hailed into court in the foreign forum of a high risk country to address an issue with an employee. For that reason, the agreement should clearly state where any action arising out of the agreement or any aspect of the employee’s employment or termination should be filed (i.e., the “venue” for “forum” for such a suit) and require the employee to consent to being subject to the jurisdiction of the courts in the identified venue. Usually, you will want to pick a venue with an obvious nexus to the company, such as where your headquarters are located. The agreement should also clearly inform the employee of the state law that will be used to interpret and enforce the agreement. This will usually be the state in which the company is located or incorporated.
Including the provisions above in employment agreements should help provide the company and its employees peace of mind in an otherwise stressful and dangerous working environment. These provisions will get you started with revising and thinking through the employment agreement template your company currently uses for employees working abroad. However, there are probably other contract/assignment-specific provisions that should also be included. Once you have a chance to review and update the employment agreement template, please feel free to reach out to me with any other questions. As always, I am happy to review any changes you make to ensure that the company is well positioned to address such agreements.