Associate General Counsel Overseas Employment Jeff Goetz Associate General Counsel jmgoetz@iu.edu 812-855-1052

A Common Scenario An IU department has received a grant to do work in Kenya. The department now wants to hire an individual to work full-time in Kenya for two years to assist in administering the grant. The department wants to either employ a US resident and send that person to Kenya or employ a Kenyan resident. What legal issues does the department need to consider? INDIANA UNIVERSITY

Baseline Question: Kenyan Employee? Hiring a Kenyan resident – If the department hires a local, there is no question the department would need to comply with local employment requirements. Hiring a US resident – If the department hires a US resident and sends that person to work in Kenya full-time, there is also no question the department would need to comply with local employment requirements. On the other hand, if the department only sends the US resident to Kenya for a couple months at a time, the department has an argument the person is only on business trips; this argument breaks down, though, if the employee spends the majority of his/her time in Kenya (i.e., more than 6 months in any 12-month period). Foreign laws vary significantly when it comes to defining the thresholds that create a local employment relationship INDIANA UNIVERSITY

Kenyan Employment Requirements If the department has a Kenyan employee, the department would need to comply with a host of Kenyan laws, including, but not limited to: Business registration laws Tax laws Social welfare benefit laws Labor laws INDIANA UNIVERSITY

Options to Structure Overseas Work Given the significant resources required to comply with local employment requirements, the department might consider alternatives to direct employment in Kenya. Some options include: “Leased employment” - arrange for a collaborating organization in Kenya to hire the individual and then pay that organization a services fee Independent contractor - engage the Kenyan resident as a genuine independent contractor Business trip – hire the US resident to work from the US but arrange for that person to take business trips to Kenya (typically not to exceed 6 months in the aggregate in a 12-month period) INDIANA UNIVERSITY

Recording Primary Work Location If your department has any existing employees with a primary physical work location outside the US (such as in Kenya), please submit the relevant eDoc to indicate the work location is outside the US. INDIANA UNIVERSITY

Secondment What about faculty or staff who want to maintain their status at IU or continue to receive IU benefits? A secondment agreement may be appropriate – IU would “loan” the employee to a foreign affiliate. This may be particularly relevant in Kenya. INDIANA UNIVERSITY

Thoughts on Compliance IU does not flout US tax, social security, and employment laws. We should have the same standards when operating overseas. Not only should IU be acting as a good global citizen and protecting its reputation, but in many countries (including the US) violating these types of laws could create significant liabilities for IU (such as back-payments and civil fines). Also, in many countries, willful disregard of some of these laws is criminal. Please give me a call (812-855-1052) or send me an email (jmgoetz@iu.edu) if someone in your unit is contemplating hiring an employee overseas. INDIANA UNIVERSITY