French Parent Company Potentially Subject to Age-Discrimination Claim brought by Employee of its US Subsidiary

The World in U.S. Courts: Spring 2017 - Labor & Employment

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Downey v. Adloox Inc., US District Court for the Southern District of New York, February 28, 2017

Lawyers from Orrick's Cross-Border Employment Law Practice have written a note on Orrick’s Employment Law and Litigation Blog about a recent federal court decision in New York which adds greater uncertainty to the question whether a non-US parent company may be sued directly by an employee of its US subsidiary for age discrimination.  In summary, the Court concluded that a discrimination claim against the parent can proceed if the relationship between the parent and its subsidiary was so close that it satisfied the so-called "single-employer" test.  The factors to be considered in making this determination include (1) interrelation of operations between the parent company and subsidiary; (2) whether there is a centralized control of labor relations; (3) common management; and (4) common ownership or financial control.  This standard is far easier to satisfy than the demanding one necessary to "pierce the corporate veil" and hold a parent directly responsible for the liabilities of its subsidiary.  And it is a fact-specific inquiry leaving much room for discretion.  Compounding the uncertainty, other courts have reached a different conclusion, rejecting efforts to subject non-US parents to age-discrimination claims.  A copy of the complete note may be found here.

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