Cross Border Catch-Up: Employer Responsibilities in Global Business Travel

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Patty Shapiro: Hi, and welcome to the Cross-Border Catch-Up, the podcast for global employers who want to stay in the know about cutting-edge employment issues worldwide. I am Patty Shapiro, and I am here today with my colleague Maya Barba. We are cross-border attorneys here at Ogletree, and today we’re going to talk about what employers need to know when sending employees across borders for short-term business travel. Thank you for joining us today, Maya.

Maya Barba: Thanks for having me.

Patty Shapiro: Let’s dive right in. While business travel may seem low risk compared to long-term arrangements, what do employers need to know?

Maya Barba: So, employers often assume that short-term business trips are low risk and, oftentimes, they’re lower risk than other arrangements, but there’s still some key legal issues that can pop up. I’d say the risk really increases when employees begin to do productive work while on these trips, or when they extend the trip for personal reasons and continue to work while being outside of the U.S. And right now, there is an added layer to think about related to increased scrutiny when re-entering the U.S. That can be a little bit more complicated for some travelers, which is another factor that employers should be considering when thinking about international short-term business trips.

Patty Shapiro: That makes sense. So, what kinds of legal areas are triggered when some goes on a business trip internationally?

Maya Barba: So, there’s a few key points for true business travel. I’d say first is related to immigration. So, most countries differentiate between business activities and productive work. Business activities include things like attending meetings, touring facilities, and often does not require local work authorization. On the other hand, productive work would be the employee doing their regular job. So, productive work often and typically does require local work authorization. As a rule of thumb for short-term business travel, work activity is productive work unless it falls into the exception of business. So, when thinking about this, it’s important to verify the local immigration requirements to determine whether the employee needs a business visitor visa. Another consideration on this is related to permanent establishment. This is less of a tangible risk, but is just a unique area when we’re thinking about business travel compared to other sorts of international work arrangements.
So, anytime an employee is in another country on the company’s behalf, there’s a risk that the employee’s activity in that country will cause the company to create a permanent establishment, meaning that the employer or the company could be considered as conducting business in that country and become subject to taxes. Permanent establishment for business trips is interesting, specifically because business visitors are often in the country to meet with clients and execute contracts.
These are the sort of flags specifically for permanent establishment risk. So, in some countries, for example, India, there is a short threshold for permanent establishment compared to other countries, it’s 90 days, and it can be cumulative over the course of the year. So, for instance, a short-term business traveler who’s making multiple trips to India in a year and contracting with local market as part of those trips could be a potential trigger for a permanent establishment. Again, this is a bit more of an abstract risk, but just an interesting area, specifically in the context of business travel. But the key factor to keep in mind is the purpose of the trip. Other issues arise outside of a business trip if regular or productive work overlaps with the business activities. And that would change the analysis.

Patty Shapiro: Absolutely. And you made an interesting point about permanent establishment and the “deemed services” definition of that. So, of course, there’s these two buckets, right? The one being the activity itself, that’s the trigger for permanent establishment. And then these countries that have a deemed services definition where it’s the activity, but also there’s this time threshold, but it’s not always the time threshold, right? Depending on the activity that’s being done, even a shorter trip, less than 90 days, could create a permanent establishment and trigger corporate tax obligations. A very fact-specific and nuanced area of the law for sure. So, these are important areas that companies need to be mindful of. Are there other specific points that employers should consider for business travel?

Maya Barba: Yeah, another factor I think that’s worth talking about is the duty of care that employers owe to their employees. And this duty extends to business travel as well.

Patty Shapiro: Can you tell me more about the duty of care and how it applies in business travel?

Maya Barba: Zooming out, the duty of care is a legal concept that means employers have an obligation to take reasonable steps to protect their employees from foreseeable harm in the context of their employment. So, this can mean different things if work is conducted in an office, on a construction site, or even if they’re on an international business trip. In the U.S., the Occupational Health and Safety Administration, OSHA, and some state agencies require employers to keep the workplace free from known safety hazards. Even beyond OSHA applications, employers also have a broader duty of care. This means that employers must protect their employees from undue risk and take reasonable steps to protect their health, safety, and well-being. So, in the context of international business travel and short-term trips, this can extend to things like ensuring employees have insurance and sufficient medical coverage while they travel.

Patty Shapiro: A really great flag. And with the duty of care component of business travel, it really, I think, emphasizes why it’s important that employees volunteer in some ways or agree to go on these international business trips as opposed to being required to for the sake of their job. If there are these other potential risks, including things like the current political state in another country, or if there are particular diseases or something that they could be exposed to in that country, there are all sorts of risks that are kind of unique for international business trips that might not otherwise be presented in the context of somebody’s employment. And could you speak to that, a little bit, about how the duty of care can look different depending on the setting or the type of trip?

Maya Barba: Absolutely, Patty. So, generally speaking, with the duty of care, employers are responsible only during work hours. But in the context of business trips and international business trips, for our purposes today, employees could be considered to be at work 24/7. This could apply even during social events because the employees would not have been at that event or in that location if not for the business travel. This means that the employer could have a duty to the employee for things happening while the employee is technically off the clock. There’s a lot of nuance in this, but it’s just something to consider specifically for business trips. And there’s added factors related to international business trips. Also, the more dangerous or high risk the destination, the greater the employer’s obligation is to take proactive steps to ensure safety. That might mean providing specific insurance, arranging safe transportation, or ensuring that employees avoid specific areas.

Patty Shapiro: All great points. And with respect to insurance, what about different kinds of injuries or illnesses that occur during a business trip? Are those automatically work-related?

Maya Barba: So, that can get a little bit tricky. I think, in addition to thinking about an employee’s medical coverage or health insurance for international travel, we also need to touch on workers’ compensation. In the U.S., workers’ compensation typically covers claims for workplace injuries. For international business travel, workers’ comp can cover international claims, but only for a limited time. Many policies don’t cover trips longer than 30 or 60 days. So, we just recommend that employers confirm that their workers’ compensation policy covers international travel and ensure that business travelers have separate travel insurance for medical issues and emergencies, or that their health insurance plan in the U.S. covers them in some capacity while they’re outside of the US.

Patty Shapiro: Absolutely. And just to tack onto that point a little bit more, of course, it’s always debatable whether or not an injury is work-related, even if they’re abroad. But it’s really a much more difficult thing to establish if somebody is on a business trip and wouldn’t have been there otherwise, that it’s…whatever injury or illness is not work-related. And if they’re there for an extended period and your workers’ compensation coverage no longer applies just by virtue of them being outside of the US, then there’s really a risk to the employer of that employee incurring a tremendous amount of cost in medical care. And if their group medical insurance also doesn’t cover that, then the employer could be stuck with a big bill. So, lots of potential costs there and considerations to be aware of. So, in addition to planning and coverage, another aspect of duty of care is understanding the challenges employees may face when entering or returning to the U.S., especially under today’s heightened immigration scrutiny, wouldn’t you say?

Maya Barba: Absolutely. So, because the duty of care means that employers have an obligation to take steps to protect employees from foreseeable harm, this involves evaluating exactly what that foreseeable harm is. Right now, we’re seeing increased scrutiny at U.S. borders, and this has a significant impact on employees traveling internationally, especially for employees who are non-U.S. nationals, visa holders, or even green card holders. So, that’s a specific factor that we’re seeing a lot of questions come up about based on current events.

Patty Shapiro: What are some examples of how that scrutiny shows up in the current climate?

Maya Barba: Right now, what that looks like is people being subject to extra questioning when returning to the U.S. secondary inspection, which also involves additional questioning and potentially searches of devices and luggage. And there could also be a higher risk of scrutiny to travelers from certain groups. So, for example, we’re seeing more guidance coming out about cautioning travel for folks who are not U.S. nationals, especially if they’re from a country that’s been subject to a prior travel ban or even a contemplated travel ban. And another potential consideration is if the employee or the employer, if the field that they work in is something that could be perceived as politically sensitive in today’s climate or against the current administration.

Patty Shapiro: So, would you say right now even the return trip to the U.S. can become a part of the employer’s duty of care?

Maya Barba: Exactly. So, if an employer requires international travel for some sort of short-term business trip and the employees or an individual employee is part of a group that might face heightened scrutiny when returning to the U.S. or risk being denied entry to the U.S., that’s something that employers need to take seriously and really consider. So, U.S. citizens have a constitutional right to reenter the United States. Others, including lawful permanent residents and visa holders, do not have the same guaranteed protections. So, within the scope of duty of care, there’s no hard and fast rule, but it’s important to consider individual employee circumstances when assessing business travel. And there’s a few ways that this can show up. I think baseline is just preparing employees to be aware of these risks. So, that can mean a couple different things. Employers should encourage employees to bring documentation supporting the reason for their trip if they are going to require or encourage business travel.
Right now, this sort of documentation can look like conference agendas or letters from employer, just kind of validating employment, validating the purpose of the trip so that those are accessible if necessary, and just generally providing context to employees about what to expect during the trip and also when they return to the U.S., informing them about secondary inspection, about the fact that their devices may be searched. Just generally, the duty of care involves calculating or thinking about what the risks are, and part of the obligations within that means sharing those risks with the team. And I’d say, especially right now, especially in the context of what we’re seeing with travelers reentering the U.S., is like you touched on earlier, Patty, we recommend making international business travel optional, especially for employees and team members who may face increased scrutiny or discomfort.

Patty Shapiro: All great points, Maya, and all the more reason to make these kinds of business trips optional in the current climate to emphasize that the employees are not going to have some sort of adverse repercussions for not agreeing to go on a business trip and undertake these unique risks that exist right now.

Maya Barba: Absolutely agreed, Patty. I think the key here is to truly evaluate the potential risk areas in the context of what’s going on right now. That goes a long way to fulfill a duty of care obligations, to protect the organization, and to support employees.

Patty Shapiro: Totally agreed. I think that’s all the time we have today. Thank you so much for joining us, Maya.

Maya Barba: Thanks for having me.

Patty Shapiro: And that’s a wrap on this episode of the Cross-Border Catch-Up. Follow us to stay in the know about cutting-edge employment issues worldwide.

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