Work teams are becoming increasingly heterogeneous with respect to their team members’ ethnic backgrounds. Two lines of research examine ethnic diversity in work teams: The compositional approach views team-level ethnic heterogeneity as a team characteristic, and relational demography views individual-level ethnic dissimilarity as an individual member’s relation to their team. This study compares and contrasts team-level ethnic heterogeneity and individual-level ethnic dissimilarity regarding their effects on impaired well-being (i.e., emotional strain) via team- and individual-level emotional conflict. Fifty teams of retail chain salespeople (n = 602) participated in our survey at two points of measurement. Based on the ethnic background of team members, we calculated team-level ethnic heterogeneity that applied to all members, and individual-level ethnic dissimilarity within the team that varied according to each member’s ethnic background. Multilevel path modeling showed that high levels of team-level ethnic heterogeneity were related to high levels of emotional strain via team-level emotional conflict. However, the opposite was found for individual-level ethnic dissimilarity. We discussed this difference by contextualizing individual-level ethnic dissimilarity in the team-level heterogeneity and social status of ethnic groups in society at large. Our findings suggest that the social status of the ethnic group to which team members belong may impact how ethnic diversity relates to team processes and well-being.