Top 10 US Workplace Surprises Japanese Companies Must Prepare For – and Action Steps to Address Concerns Japanese businesses expanding into the United States often focus on customers, site selection, and supply chains. But the greater shock usually comes from US workplace law. Labor and employment law in the States is decentralized, aggressively enforced, and often counterintuitive to Japanese executives accustomed to centralized and consensus-driven practices. And missteps can quickly escalate into costly litigation or reputational harm. Here are 10 critical employment law differences, each with a real-world example and a practical action item you can take to help ease your organization’s transition. 1. “At-Will” Employment Doesn’t Always Mean You Are Free to Terminate Workers What to Know: Most US workers are employed “at will,” meaning they can be terminated at any time for almost any lawful reason. But exceptions – such as alleged discrimination or retaliation – create frequent lawsuits. Example: In Brown v. Daikin America, a US employee sued his employer in New York claiming race and national origin discrimination after his employment was terminated during a reduction-in-force. He claimed that Japanese employees received preferential treatment over him and that he was fired because he wasn’t Japanese. The appeals court not only allowed his claim to proceed to trial but ruled that the employer’s Japanese parent company could be liable as well. Action Item: Draft offer letters and handbooks confirming that your employees are serving “at-will” while clearly respecting the many legal exceptions that might restrict your ability to fire employees (or at least could create legal risks). 2. The US Has a Patchwork of Federal, State, and Local Rules Across the Country What to Know: Federal law sets the floor, but states and cities add their own rules. And this is true across the country, where traditionally progressive states like California, New York, Massachusetts, and Washington have strict and complex laws, while conservative states like Texas, Florida, North Carolina, and South Carolina are much more flexible for employers. For this reason, compliance in California looks nothing like Texas, just as one example. Example: A Japanese-owned restaurant chain with operations in the US faced a consolidated California class action covering unpaid wages, meal and rest period violations, unreimbursed expenses, and PAGA (Private Attorneys General Act) penalties. In 2023, the company agreed to a $700,000 class settlement to resolve these claims, covering multiple lawsuits coordinated in Los Angeles and Orange County. Action Item: Before selecting the location of your operations, work with your employment counsel to build a compliance “heat map” showing all relevant labor laws in your target jurisdictions. 3. Overtime and Other Wage and Hour Laws Can Create Strict Rules What to Know: Overtime pay – where you are required to compensate workers at 1.5 times their regular pay – generally applies after the employee works 40 hours/week. Only a narrow set of
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