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Nov 03, 2016

Q&A: Do small businesses with some common ownership have to count combined employees for FMLA and other laws?

Q&ALeave Laws 

Question: I handle HR functions for four separate but related family-owned companies. Each company is fairly small, but altogether there are 65 employees. The companies have some overlapping ownership, but they aren’t owned by exactly the same people. Do I have to worry about family leave laws, since each company is well under the employee threshold to trigger coverage?

Answer: Possibly, depending on the particular law. The federal Family and Medical Leave Act (FMLA) uses an “integrated employer” test to determine if related companies should count their employees combined as one employer. Employers are covered under the FMLA if they employ at least 50 employees, so it would apply if all 65 employees need to be counted, rather than looking at each company individually. In one recent case, a judge found that a truck stop, catering business, convenience store, and two sports bars were sufficiently integrated that the employee could proceed to trial with her FMLA and age discrimination claims.

The court looked at four factors in the integrated employer test (Dodge v. JCJL Enterprises Inc. dba Witham Truck Stop Restaurant, D Or, Aug. 2016):

  1. common management;
  2. interrelation between operations;
  3. centralized control of labor relations; and
  4. degree of common ownership and financial control.

The fact that you handle HR functions for all of the companies would be one factor that suggests the businesses are integrated. However, none of the four factors are conclusive, and they don’t all need to be met to find the employees should be combined. Keep in mind this is the test used under the FMLA, but other employment laws may apply different factors to determine whether the companies are integrated. For a thorough analysis of how different employment laws apply to the companies, you should consult an employment attorney, and review our other posts related to FMLA, leave laws, and employee thresholds.

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