Codetermination's Moment of Truth: Overseas Workers

Abstract

The idea that employees of large corporations should be entitled to representation on corporate boards, a concept known as codetermination, is gaining ground.  Progressive politicians Elizabeth Warren and Bernie Sanders have proposed codetermination regimes that would allow employees to elect between 40% and 45% of board members.  Moreover, an increasing number of corporate law scholars are embracing the idea of giving employees a voice in corporate governance.

However, anyone endorsing codetermination must confront a critical dilemma: whether to limit representation to U.S.-based employees or whether to extend it to overseas workers as well.   The question’s practical importance is obvious given that the United States’ largest corporations often rely heavily on overseas workers—employed either directly or via foreign subsidiaries.  Nonetheless, scholars discussing pro-codetermination reforms in the United States have so far ignored this issue.

This Article fills that gap.  Drawing on doctrinal, economic, philosophical, and comparative arguments, it shows that there is no simple answer to the issue of overseas workers.  Including overseas workers of U.S. companies in a future codetermination regime would enhance some of codetermination’s key benefits but also exacerbate many of its costs. Crucially, since at least some of the relevant costs and benefits are incommensurable, the “optimal” solution depends on one’s normative priors.  This Article identifies and analyzes the costs and benefits of including overseas workers, clarifies the normative and empirical assumptions involved, and shows the tradeoffs associated with different policy approaches. It thereby provides a transparent analytical framework to inform future policy decisions.