After setting up the U.S. subsidiary, most companies choose to send over an experienced employee to develop the U.S. business. This works better than recruiting an American manager who knows neither the corporate culture nor the product. Later, you can still adjust to a local workforce, especially in the sales area, which is hardly manageable without American natives.
The German employee assigned is then subject to the employment law of the respective state, since the German contract is temporarily suspended as part of the assignment (Expat Arrangement).
In order to avoid disputes, written employment contracts are recommended. They can be divided roughly into three groups, based on American employment laws:
- Letter of Employment for ordinary workers and employees on the basis of existing U.S. employment regulations
- Management contracts on the basis of existing U.S. employment regulations
- Postings, so-called expat contracts on the basis of existing U.S. employment regulations.
If a certain company size is reached—the guideline is five employees and one million in sales—the company is advised to draft employment policies. At this size a 401(k) plan and a medical plan are also needed, the American equivalents of the German pension and health insurance program.
Employment law in the U.S. always means the law of the state in which the employee works. Ultimately, one has to deal with 50 different legal systems.
After product liability cases, most lawsuits in America are within the field of labor law. It is therefore advisable to sufficiently train the managers dealing with U.S. labor law, which is for them a new and complex subject. This is a large part of our seminars.