By W. Dan Lee, Esq.
(Admitted in California, Illinois, Washington D.C.)
The so-called “Yellow Envelope Act” (amendment to the Labor Union and Labor Relations Adjustment Act) recently passed in Korea holds both general contractors and subcontractors equally responsible as “employers.” Companies can no longer hide behind the excuse of “we didn’t hire them directly” to evade liability.
But this change is not confined to Korea. In the United States, the principle of joint employment has long been deeply embedded in the law, and it presents an unavoidable legal reality for Korean companies expanding into the U.S.
U.S. courts and the National Labor Relations Board (NLRB) treat a general contractor as an employer if it exerts direct or indirect influence over the working conditions of subcontractor employees. If the general contractor is involved in setting work hours, issuing job instructions, or managing workplace safety, it will be held jointly responsible in court alongside the subcontractor. Joint liability extends to all violations, including unpaid minimum wages, overtime, discrimination, and wrongful termination.
Union issues are even more sensitive. U.S. labor law gives unions strong bargaining rights. If subcontractor employees form a union, the general contractor cannot avoid the bargaining table. Claiming “that’s a subcontractor issue” carries no weight. As long as the general contractor retains authority to control working conditions, the NLRB recognizes it as a bargaining party.
Even more concerning is that Korean parent companies can also be drawn into U.S. lawsuits. If a class action is filed in the U.S., the Korean headquarters may also be summoned as a defendant. Moreover, Korea’s Yellow Envelope Act could be used as persuasive evidence in U.S. litigation to argue that parent companies should be held responsible. The reasoning would be: “If Korea itself recognizes general contractor liability, why should U.S. courts deny it?” This line of argument could gain real traction in American courts.
Korean companies must abandon the illusion that dividing responsibilities between general contractors and subcontractors reduces risk. In the U.S., joint employment does not dilute liability—it expands it. General contractors shoulder not only their own risks but also those of their subcontractors, exposing themselves to lawsuits, union demands, and reputational damage.
The solution for survival on the global stage is clear: not loopholes or structural tricks, but rigorous legal compliance and transparent labor-management relations. If a company exercises control over workers, it must also assume responsibility.
The message of Korea’s Yellow Envelope Act and America’s joint employment doctrine is simple: “The general contractor bears responsibility to the very end.”