The employment laws and practices in the U.S. and China exhibit significant differences across various aspects. Chinese investors, when conducting business in the U.S., frequently encounter challenges stemming from the application of Chinese employment ideas and experience to their labor and employment practices in the U.S. This newsletter aims to assist Chinese investors in understanding the below key differences in employment laws and practices between the two countries, thereby enabling them to avoid potential problems and issues.
Basis of employment law
I. U.S.
The U.S. employment law framework is predominantly state-based, allowing for diverse labor standards across different regions. This decentralized approach results from the federal system of government, where states have significant autonomy in legislating employment matters. Consequently, laws concerning wages, hours of work, leave policies, and termination vary widely from one state to another. For instance, California has some of the most stringent labor laws in the country, offering extensive protections to employees, while other states might offer less protections to the employees. This diversity necessitates businesses to have a nuanced understanding of each state's legal environment in which they operate, ensuring compliance across multiple jurisdictions. For Chinese-invested corporations or businesses operating nationally, this can mean juggling a myriad of regulations, requiring diligent legal and HR efforts to maintain compliance.
II. China
China, with its centralized legal system, provides a more uniform framework for employment law. Governed by national legislation, such as the Labor Law and Labor Contract Law, these regulations are applied consistently across all regions and provinces. The national laws cover a wide array of employment aspects, including contracts, wages, working hours, and termination, ensuring a consistent approach to employment practices throughout the country. However, as regulations and guidelines at the central level are relatively brief, many difficult issues are left to be resolved. A considerable number of these issues are regulated at the local level by local laws and regulations and other local policies or normative documents instead; and at the same time, a significant portion of those issues are resolved by local adjudicative bodies in a public or internal manner, resulting in the obvious territorial differences of the practices. There are some labor disputes that brings different viewpoints at the regional level, or even within the same court district, but depend more on the case-by-case discretion of the adjudicators. Read more
If you have any questions regarding this publication, please contact:
Mike Chiang
Han Kun LLP
620 Fifth Avenue, 2nd Floor, Rockefeller Center, New York, NY 10020, USA
T: +1 646 849 2888
M: +1 415 269 5589
Email: mike.chiang@us.hankunlaw.com
Xiu Pei
Han Kun Law Offices
Tel: + 86 10 8516 4230
Email: xiu.pei@hankunlaw.com
