Embassies are not the sovereign territory of the country that occupies the premises; they are business offices protected under the Vienna Convention on Diplomatic Relations. They do not have police or courts on the premises.
Here is the section of the Convention that sometimes confuses people into believing that embassies are somehow the soverign soil of the country they represent:
1.The premises of the mission shall be inviolable. The agents of the receiving State may not enter them, except with the consent of the head of the mission.
2.The receiving State is under a special duty to take all appropriate steps to protect the premises of the mission against any intrusion or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity.
3.The premises of the mission, their furnishings and other property thereon and the means of transport of the mission shall be immune from search, requisition, attachment or execution.
Since they are actually business offices rather than teeny little countries, there is no application of 'laws of the land.' If an American employee violates US law (by, for example, selling visas) he or she can be ordered back to the US for prosecution, but can't be forced to go. If a local employee does so, he is prosecuted locally, under whatever laws exist in the host country - unless we can trick him into going to the US, where he can be prosecuted under US law.