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Common Legal Troubles for Global Businesses and How To Prevent Them

HR & Compliance

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Updated on:
February 20, 2024
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Updated on :

February 20, 2024
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Common Legal Troubles for Global Businesses and How To Prevent Them


Global business has never been smoother than in our current age. Today, thanks to the progressive remote work culture, companies can outsource talent from every corner of the world without border limitations. But as fruitful and convenient as remote work is, it has its fair share of legal setbacks that can impede or cripple your operations if you don’t get ahead of them.

The last thing you want is embroiled in knotty lawsuits in foreign countries. Navigating legal trouble in a foreign land is so costly and time intensive that you may end up rescinding your remote work policies in that country when you settle a legal dispute.

But this shouldn’t be the case. You can manage your remote workforce without legal challenges if you get your house in order before, during, and after hiring remote talent.

To keep you in the know and out of legal quagmires, we’ve researched the common legal troubles you’re likely to face when managing a distributed workforce and the best ways to stave them off.

Intellectual Property Violation Lawsuits

Your company’s intangible assets, such as new product ideas and inventions, logos, slogans, proprietary processes, and designs, count as intellectual property (IP). The World Intellectual Property Organization (WIPO) defines IP as “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce.”

IP is categorized under four main types:

  • Trademarks are commercial symbols such as logos, designs, and slogans that identify your company’s products and brand.
  • Trade secrets include insider and commercially viable information about your company’s work processes, such as product recipes, clientele lists, commercial methods, formulas, and internal research data.
  • Patents include technical and mechanical inventions and other inventions that introduce a new way of executing a process.
  • Copyrights include creative works such as ad copy, ebooks, graphics,  whitepaper, architectural drawings, media recordings, and other creative works you’ve recorded in a tangible format.

Types of IP Violations

The common instances of IP violations are:

Trademark Infringement

Trademark infringement happens when a second party uses your registered trademarks (logos, slogans, or designs) for commercial purposes without authorization. When managing a distributed workforce, a contracted employee may copy your logos or plans for their private projects or share them with another company. That would amount to trademark infringement.

Patent Infringement

Patent infringement happens when a third party uses, manufactures, or sells a device, system, or application that utilizes your patented techniques. It’s more common in manufacturing and tech industries.

For instance, if you’re an automotive design company with a remote team of design engineers, one of your engineers may leak your patented designs or use them for personal gain. That would be patent infringement.

Copyright Infringement

Copyright infringement is when third parties reproduce your creative works without your authorization. The most common instances of copyright infringement for global businesses involve ad copy, blog content, whitepaper, and ebooks.

Because you publish this content online, a random person may read and copy it for their use without referencing you as the source and without your consent. That would be copyright infringement.

What Determines the Consequences of IP Violations?

The consequences of IP violation vary depending on the country where the infringement has happened.

For instance, under U.S. intellectual property laws, copyright infringement is a felony that may result in up to three years imprisonment and a $250,000 fine if “a defendant willfully reproduces or distributes at least ten copies of one or more copyrighted works with a total retail value of more than $2,500 within a 180-day period.”

Does Working With a Distributed Remote Team Put Your IP at Greater Risk?

Because it’s impossible to supervise your distributed team directly, there’s a bigger risk of IP violations. The risk is even greater if you outsource contract employees or freelancers who are free to work with other companies that are most likely your competitors.

Tips To Avoid IP Lawsuits When Working With a Remote Team

If you’re wondering what the best way is to protect intellectual property when managing a distributed team, here are some actionable tips:

  • Register your trademarks, patents, and copyrights with the pertinent authority as soon as practicable.
  • Educate and sensitize your remote team on IP protection so they may not violate other companies’ IP or unknowingly or knowingly leak your IP assets.
  • Have your remote employees sign legally binding non-disclosure agreements (NDAs) before engaging them in work.
  • Fortify your system’s security protocols by conducting regular security audits to prevent hackers from accessing your IP assets illegally.
  • Restrict access to sensitive IP assets to only the most essential team members.

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Discrimination Lawsuits

The dynamic nature of remote work brings forth a new layer of challenges to solving typical workplace discrimination concerns and introduces fresh discrimination biases. Generally, most workplace discrimination cases violate protected characteristics defined by a country’s law.

For instance, Great Britain’s Equality Act 2010 outlaws discrimination against the following protected characteristics:

  • Sexual orientation
  • Pregnancy and maternity
  • Religion or belief
  • Race
  • Disability
  • Age
  • Race
  • Gender reassignment
  • Marriage and civil partnership
  • Sex

On top of these protected characteristics, remote work brings along new discrimination concerns such as:

  • Performance assessment
  • Promotion and career development
  • Vaccine and return-to-work mandates

Promotion and career advancement are the primary sources of discrimination concerns among remote workers, with 54% saying that permanent remote work would reduce the number of career opportunities in their paths.

Settlements for discrimination lawsuits often attract hefty fines depending on a country’s employment laws. A prime example is the case of Wise Staffing, where the said company overlooked a qualified pregnant applicant in favor of lower-skilled non-pregnant applicants. Resultantly, Wise Staffing paid back pay and compensatory damages totaling $40,000.

How To Avoid Discrimination Lawsuits

These tips will help you dodge discrimination lawsuits:

  • Treat your remote workers as you do your in-office workers
  • Consider protected characteristics, especially the sticky ones like gender reassignment
  • Allow your remote workers to communicate their issues freely without fear of retaliation
  • Train or retrain your HR staff on handling remote work discrimination issues

Breach of Contract Lawsuits

Once you enter a legal agreement with your remote employees, there’s the inherent risk of a contract breach from you or your remote team. The four types of contract breaches are:

  • Material breach of contract
  • Minor breach of contract
  • Actual breach of contract
  • Anticipatory breach of contract

The consequences of a contract breach may affect you or your remote team directly or indirectly. For instance, if your remote team abandons your project midway, you’ll experience direct financial and time losses. But if your remote team delivers the project a day late, you may not experience a direct economic loss worthy of compensation.

How To Avoid Breach of Contract Lawsuits

Ultimately, you can’t directly control the actions of your remote team nor predict future circumstances that may lead to a contract breach. The most practical way to avoid contract breaches is by drafting contracts with the best terms for you and your distributed team.

Your remote work contract should have dedicated clauses addressing essential issues such as:

  • Reimbursements for business-related costs
  • Working hours
  • Relocation provisions
  • Contract termination terms
  • Health, safety, and well-being of remote employees

Wage Law Violation Lawsuits

Improper compensation due to employee misclassification is a pain in the neck for many workers globally. The ensuing worker misclassification lawsuits often keep employers up at night, given the complexity and variance of international wage laws.

Employee misclassification happens when you fail to correctly identify a worker either as an employee or an independent contractor. This leads to substantial deviations in the amounts of wages paid and benefits to which the worker is entitled.  

You must classify your remote workers correctly to avoid being sued for wage law violations. Ensure each employee understands if they’re full-time employees or hired contractors. This way, it’s easy to settle for fair wages without negating international wage laws.  

Nonetheless, if you find out you’ve misclassified an employee later on, here’s how to correct employee misclassification:

  • Compensate the employee for the benefits missed in the entire period of the misclassification
  • Pay the relevant authority the taxes and fines applicable

When outsourcing global talent, the safest way to comply with international wage laws is by utilizing international employer-of-record services. The best employer of record (EOR) should comply with international wage laws and have a rich global payroll system for quick referencing. Partnering with such an EOR is the most convenient and effective way to avoid wage law violation lawsuits.

Wrongful Injury Lawsuits

Workers’ compensation for remote workers is a knotty subject with many gray areas. Workers’ compensation laws cover medical costs and compensate workers for work missed due to injuries sustained in the workplace.

Compensation insurance also covers employees working from home, but with a caveat — employees must prove the injury is work-related.

Most of the injuries reported by remote workers are cumulative injuries such as back pain, carpal tunnel syndrome, bursitis, and tendonitis. To avoid wrongful injury lawsuits from your remote employees, you may consider the following:

  • Allocating a remote-work allowance to purchase a quality ergonomic office chair for your employees
  • Having a written agreement with your remote team on which work-from-home injuries are claimable and under what presets
  • Require that your remote team reports all personal injuries

Because workers’ compensation laws vary from country to country, working with a knowledgeable EOR will help you avoid wrongful injury lawsuits or reach an amicable settlement in cases where workers prove work-from-home injuries.

How an EOR like Skuad Can Help Your Global Business Avoid These Legal Troubles

Imagine mastering the IP, compensation, wages, and equality laws of all the countries you’ve outsourced your team. Add that to your daily routines of managing your business, and you have too much on your plate. You should enjoy running your business without looking over your shoulder or limiting your reach.

An experienced EOR like Skuad takes care of all the legal, cross-border payment, tax processes, and other contractual requisites involved in managing a global team. This allows you to focus on your core business and comply with all pertinent international laws so you can employ anyone, anywhere.

Request a demo today.

About the author

Catalina Wang is a Human Resource Consultant. She manages recruitment, onboarding, and contract administration staffing for many organizations and remote teams. She’s passionate about efficient HR management and the impact of tech on hiring practices.

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