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MNC staffing practices and local anti-discrimination aus The U.S. legal landscape is full of lawsuits by minorities and women claiming discrimination at the hands of whites and men. And in recent years there also have been many claims by whites claiming “reverse discrimination” against preferential treatment with affirmative action. But the case against Marubeni America. the New York subsidiary of a big Japanese trading company. involves a different sort of alleged prejudice U.S.-based foreign-owned company discriminating against people who fall outside of their ethnic group or national origin. This pattern of discrimination is a growing concern due to the increasing presence of MNCs in the United States. Though the Marubeni case isn’t unprecedented, the e-mails and other evidence cited in this case offer a rare inside look into the employment practices of an MNC operating in a host country where local law conflicts with employment practice The plaintiffs in this case-two Caucasian executives-accused the local subsidiary, general manager, chief financial officer, and head of human resources of discriminating against Americans, non-Asian minorities, and women. The suit alleges that non-Asians are promoted less frequently and paid less than Asians. The two- hundred-worker company has no African Americans or females and just one Hispanic among its 121 top officers and managers, the suit says, and just three African-American lower-level employees. The suit also claims that weekly meetings were conducted in Japanese, effectively excluding non-Japanese-speaking employees, and that some executives frequently used racial and ethnic slurs. The suit was brought by Kevin Long, a senior HR employee, and Ludvie Presto, the company’s top internal auditor, both of whom were placed on paid administrative leave a move their lawyers claim was retaliation for complaining about discrimination. The two men are asking for a minimum of S4 million each in severance payments, plus pension and other benefits, and $55 million in damages and legal costs. Two current female HR workers also filed similar complaints with the U.S. Equal Employment Opportunity Commission. Although Marubeni strongly contests the validity of these claims about discrimination, damning e-mail records suggest otherwise. Mr. Long received the following e-mail from Yuji Takikawa, a vice president of the U.S. company’s textile unit, requesting help hiring a salesperson: “I want a person who has aggressiveness, high IQ. We prefer male and 25 to 30 years old. Asian, like Chinese, Japanese, of course American or others is fine. As you know, in case of American guy, once reach high income, all of a sudden stop working. This is my feeling.” On another occasion, an executive wrote in an e-mail to Mr. Long that two other top company officials had discussed replacing a pregnant employee because they were worried about her unstable situation after the delivery.” Mr. Long replied that their grounds for wanting to replace the woman. who had been with the company for fifteen years, were “inappropriate and considered pregnancy discrimination in this country.” The head of human resources of the local operation, in a were worried about her unstable situation after the delivery.” Mr. Long replied that their grounds for wanting to replace the woman, who had been with the company for fifteen years, were “inappropriate and considered pregnancy discrimination in this country.” The head of human resources of the local operation, in a farewell e-mail upon retirement, wrote that the company’s outside lawyers had done a masterful job” at protecting the company from litigation from groups that he described using racial slurs. Marubeni isn’t the first Japanese-owned U.S.-based company accused of national-origin discrimination. In 1980, thirteen female American secretaries sued Sumitomo Shoji America, Inc., alleging it hired only male Japanese nationals for management jobs. The company claimed it was immune from the suit based on a 1953 treaty with the United States that gave both countries’ corporations limited immunity from each other’s employment discrimination laws so they could make sure that only their own citizens held targeted positions in operations based in the other country. But the U.S. Supreme Court rejected this argument, ruling that all foreign- owned subsidiaries in the United States are subject to U.S. employment laws. Sumitomo agreed in a settlement to pay more than $2.6 million to current and former employees and to accelerate efforts to recruit and promote qualified women Source: Adapted from K. Scannell, “Lawsuit Charges US Unit of Japanese Company with Bias, ” Wall Street Journal, January 20, 2005: B1, B2. QUESTIONS FOR CASE ANALYSIS AND DISCUSSION 1. What message does this case have for MNCs as they plan and carry out staffing and other workforce management activities in their foreign host operations? 2. What evidence does this case provide that local management was guilty of unfair discrimination according to U.S. labor laws? 3. Do you believe that the behavior of local Marubeni managers would be acceptable in other counties where it is not specifically prohibited by local labor laws? 4. Besides avoiding legal costs, can you think of any other reasons to avoid discriminatory behavior when making staffing decisions in global workforce management?