Not So Happy Together? How Expanding Employers Can Avoid Single or Joint Employer Liability

摘要

Corporate expansion is often a good thing, resulting in new opportunities and financial growth. However, corporate expansion can also result in the unintentional shouldering of liability and legal risk, particularly when one company becomes a parent to subsidiaries or enters into relationships with franchisees. When companies in such relationships become sufficiently intertwined, the parent or franchisor may be held liable for the federal employment law violations of a subsidiary or franchisee, even if the parent/franchisor had no involvement in the violation itself.1 With proper structuring and delegation of authority, however, expanding entities can protect themselves from the actions of their relatives-and from plaintiffs seeking deeper pockets during litigation. This Questions-and Answers column defines single and joint employer liability, explains when it can attach to companies that have expanded to include subsidiaries or franchisees, discusses the ramifications the doctrines pose, and prescribes several strategies on how to reduce exposure and risk.