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HR pro can pursue FMLA claim against parent company, subsidiary, judge rules



Dive Brief:

  • Astronautics Corporation of America failed to show that it was not a joint employer along with a subsidiary for purposes of the Family and Medical Leave Act, a federal district court judge ruled Jan. 23 (Duncan v. Kearfott Corp.).
  • An HR manager for Kearfott Corp. filed a lawsuit alleging she was terminated shortly after requesting time off to care for a family member. She sued both companies, claiming they were joint employers and therefore jointly liable for any violations.
  • The parent company asked the court to dismiss the claims against it, arguing that it wasn’t the plaintiff’s employer and, even if it was, it was not involved in the termination decision. A judge disagreed, saying the allegations — claims that the pair maintained “interrelated” HR operations and that a shared VP terminated the plaintiff, among other things — were enough to allow the employee’s claims to continue. Astronautics did not return a request for comment.

Dive Insight:

The FMLA, like many employment laws, allows for joint liability. DOL regulations implementing the law say this can occur when two or more businesses exercise some control over an employee’s working conditions. 

Joint employment may be found, the FMLA rules say, if: (1) there’s an arrangement between companies to share an employee’s services or interchange employees; (2) an employer acts in the interest of the other in relation to the employee; or (3) the employers aren’t completely disassociated with respect to the employee’s employment.

In Duncan, the two companies allegedly maintained connected HR operations and shared senior managers. According to the complaint, the VP of administration for Astronautics directly oversaw hiring of management at Kearfott. The shared VP of finance also oversaw a portion of the plaintiff’s work, she alleged. That was enough for the claims to survive the motion to dismiss, the judge said.

Joint employment claims can arise in a variety of situations, but often include staffing arrangements or franchise agreements. Complicating that area of compliance, various laws and enforcement agencies maintain differing standards and tests for joint employment. DOL enforces the FMLA and Fair Labor Standards Act, for example, and the National Labor Relations Board has its own test for National Labor Relations Act liability.

Those standards have been an active area of employment law in recent years: DOL changed its stance when President Joe Biden took office, and new NLRB regulations are slated to take effect next month. Some business advocates have urged Congress to step in and legislate a single joint employment standard.

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