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Can an employee sue us and our parent company?

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in Discrimination and Harassment,Human Resources

Q. Our company is owned by a foreign parent company. A former employee who was discharged last year recently filed a suit against us and our parent, claiming age discrimination in violation of the Minnesota Human Rights Act. Will the court dismiss our parent company from the lawsuit?

A. Yes, the court is likely to dismiss the parent company from the lawsuit unless the former employee can establish that the parent company and your company are a single entity or a joint employer under established legal tests.

There is a strong presumption that a parent company is not the employer of its subsidiary’s employees, and courts have found otherwise only in unusual circumstances.

To keep the parent company in the lawsuit, the former employee would need to establish: (1) that the parent company so dominated the subsidiary’s operations that the two entities were essentially one; or (2) that it actually controlled the decision to discharge the employee. 

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