When an employee files a discrimination or retaliation claim, it is important to identify the correct employer. Sometimes an employee works for a business which has a parent corporation. A dominating parent corporation may use a subsidiary corporation to hide engaging in illegal, fraudulent or wrongful conduct in an attempt to avoid liability. In other situations, even when the parent company is not willfully and knowingly engaging in wrongful conduct, the parent company may be held liable for the actions of the smaller company under one of two legal doctrines: the “Integrated Employer Doctrine” or the “Joint Employer Doctrine.” The “Integrated Employer Doctrine” is when both the parent and smaller company are upon examination of certain facts, one single employer. The “Joint Employer Doctrine” is when there are two companies that are each responsible because they are two joint employers of the plaintiff under the totality of the circumstances.
Don’t sit on your rights. If you think your employer is discriminating against you, has fired you, or is considering terminating you for am illegal reason, you should contact this law office immediately for a free consultation. I have represented employees who were illegally discriminated against by their employer and was successful in recovering financial compensation for their emotional pain and suffering, and moneys for lost wages, both for past lost wages and projected future lost wages. See New Jersey Employment Attorney, Age Discrimination Layoffs, Practical Implications for Tech Industry Product Developers, Managers and Executives. This law office accepts cases from all over New Jersey and has locations in Southern, Central and Northern NJ to meet with clients. Call today for a free consultation.
Each of these two distinct doctrines, the “Integrated Employer Doctrine” or the “Joint Employer Doctrine”, have distinct factors and legal tests which must be met for that particular doctrine to apply in assigning liability. For the purposes of today’s article, there is a discussion of the factors needed for the “Integrated Employer Doctrine” to apply when a case brought under the New Jersey Law Against Discrimination. Employment/Civil Rights Law. [A discussion of the factors and tests to determine when the distinct “Joint Employer Doctrine” applies, will follow in the next article.] There has not been a single, universal definition of "employer" issued by the U.S. Supreme Court. Instead, the Court generally defines and interprets the scope of "employer" and “employee” status depending on the specific federal statute involved such as Title VII of the Civil Rights Act, the Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act of 1988 (Warn Act), See NJ Employment Attorney, Am I Entitled to Severance Pay under NJ WARN Act?, or the National Labor Relations Act, etc.
The Integrated Employer Doctrine - Agency or Control applies to the New Jersey Law Against Discrimination
For cases brought New Jersey’s state discrimination statute, the employment analysis is substantially similar to the analysis under the federal discrimination statute, Title VII of the Civil Rights Act of 1964. Courts look to federal law Title VII precedents as a key source of interpretive authority when construing provisions of the New Jersey Law Against Discrimination (NJLAD). This is true whether the NJLAD case is heard in State Court, Federal District Court or the 3rd Circuit Court of Appeals. Courts consider a wide array of factors in assessing the degree of agency and control exercised by the parent company to determine if it is one integrated employer.
When there are two named companies, the US Supreme Court articulated a non-exhaustive list of 12 factual inquires to determine if the Integrated Employer Doctrine applies, so that both named companies are really just one employer. However, not all 12 facts must apply for a court to hold that two named companies are in fact one employer of the employee.
The US Supreme Court held that where a statute containing the term employer “does not helpfully define “employer”, the Court presumes that Congress means an agency law definition applied to that particular statute unless it clearly indicates otherwise.
The Integrated Employer Doctrine in Supreme Court Darden Case - an Integrated Approach to Determine Whether an Entity Is an Employer of the Plaintiff
The US Court of Appeals for the Third Circuit in the case Plaso v. IJKG, LLC, an unpublished opinion, applied a test that was applied by in an ERISA case, Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, (1992) to determine who is an employer. This analysis was later referred to as “the Darden test”. The Darden Court held that to determine whether an entity was an employer of the Plaintiff, the common-law agency doctrine was the test that should have been applied, but that the lower court had not done that. The Supreme Court in Darden remanded for a determination of whether Darden qualified as an employee under the common law definition. This test has an intergrated approach to determine whether one is an employer of the Plaintiff.
The Test for Integrated Employer Doctrine is a Multifactor Common-law Test, No One Factor Alone Being Decisive
In Darden, the Court held that all of the incidents of the employment relationship must be assessed and weighed with no one factor alone being decisive. The multifactor common-law test contains no shorthand formula for determining who is an "employee"; The Court stated that in determining whether a hired party is an employee under the general common law of agency, it had to consider the hiring party's right to control the manner and means by which the work product is accomplished.
The Court stated that among the other factors relevant to this inquiry are 12 factors that must be assessed, but not all we need apply. The court may consider the following non-exhaustive list of factors:
a) the skill required;
b) the source of the instrumentalities and tools used;
c) the location of the work;
d) the duration of the relationship between the parties;
e) whether the hiring party has the right to assign additional projects to the hired party;
f) the extent of the hired party's discretion over when and how long to work;
g) the method of payment;
h) the hired party’s role in hiring and paying assistants;
i) whether the work is part of the regular business of the hiring party;
j) whether the hiring party is in business;
k) the provision of employee benefits;
l) the tax treatment of the hired party.
Not All 12 Factors must Be Considered for the Integrated Employer Doctrine to Apply under Darden
In Plaso v. IJKG, LLC , the employee Plasco claimed the lower Federal District Court erred by focusing on only three indicia of a company’s employee control, e.g., (1) which entity paid plaintiff; (2) who hired and fired plaintiff; and (3) who "had control over the plaintiff's daily employment activities; instead of correctly applying and considering all twelve of the enumerated Darden factors, nine of which the Plaintiff Plaso, claimed were in her favor.
The Plaso Court did not agree with the Plaintiff, and reasoned that the Supreme Court stated in Darden itself: “Since the common-law test contains no shorthand formula or magic phrase that can be applied to find the answer of employment, . . . all of the incidents of the relationship must be assessed and weighed with no one factor being decisive.”
The Plaso Court held that in the context of determining whether an entity is an "employer" for purposes of Title VII of the Civil Rights Act of 1964, the essence of the Darden test is whether the hiring party has the right to control the manner and means by which the product is accomplished. Courts applying Darden may focus on three indicia of control: (1) which entity paid the plaintiff; (2) who hired and fired the plaintiff; and (3) who had control over the plaintiff's daily employment activities.
In another 3rd Circuit opinion, Pearson v. Component Tech. Corp., regarding the “Integrated Employer Doctrine”, the court in discussing whether a company is an employer, piercing the corporate veil and alter ego, used the integrated enterprise test looks to four labor-related characteristics of affiliated corporations:
1) interrelation of operations;
2) common management;
3) centralized control of labor relations; and
4) common ownership or financial control. No single factor is dispositive; rather, single employer status under this test ultimately depends on all the circumstances of the case.
The Superior Court of New Jersey, Appellate Division in DeRosa v. Accredited Home Lenders, Inc., 420 N.J. Super. 438 (2011) also utilized a four-factor test for establishing a single employer, integrated employer or integrated enterprise for various employment-law purposes. :
1) whether the various companies share common ownership or financial control,
2) common management,
3) an interrelation of operations, and
4) centralized control of labor and employment decisions.
As did the other courts, it stated that no single factor is dispositive.
You have certain legal rights as an employee. Employee Performance Evaluations must be utilized by employers in a manner that is not discriminatory. See NJ Employment Attorney, Is My Employer Discriminating with a Performance Improvement Plan, a PIP? Women and older workers are sometimes hesitant to bring claims when they believe their sex or age age is a factor in receiving poor evaluations. Bergen County, New Jersey Sex Discrimination Lawyer.
Illegal biases may influence and downgrade a supervisor’s perception of the quality of an employee’s work based on race, sex, age or other protected characteristic. New Jersey Race Discrimination Lawyer. Government statistics indicate that there has been a rise in age discrimination claims. See NJ Employment Attorney, Older Chief Executives and Senior Executives Fired Due to Age.
Note: This article is not legal advice and is not to be construed as giving legal advice in any situation or case. There are numerous changes and amendments in discrimination law and employment law that are mandated every year. If you have a legal question, you should consult with an employment attorney to discuss the specifics of your situation.
Don’t Sit on Your Rights
I have represented employees who were illegally discriminated against by their employers, and was successful in recovering financial compensation for their emotional pain and suffering and moneys for lost wages, both for past lost wages and projected future lost wages. If you think you are being discriminated against, you should contact this office immediately for a free consultation. I accept discrimination and whistleblower cases from all over New Jersey and have locations in Southern, Central and Northern NJ to meet with clients.
Contact Hope A. Lang, Attorney at Law today for a free consultation.
Hope A. Lang, Attorney at Law represents workers throughout the entire state, including Hackensack, Jersey City, Newark, Irvington, Orange, East Orange, Trenton, Paterson, Montclair, Elizabeth, North Brunswick, Cherry Hill, Vineland, Union, Plainfield, Hamilton Township, Lakewood, Edison, Parsippany-Troy Hills, Franklin, Lakewood, and every NJ County, including Bergen, Hudson, Middlesex, Essex, Monmouth, Somerset, Ocean, Union, Camden, Passaic, Morris, Gloucester, Atlantic, Burlington, Camden Counties.