Kathleen Bray

A recent 8th Circuit case reversed a Minnesota District Court that found<br />
that a parent company did not need to defend a harassment action against its<br />
subsidiary, holding that the parent’s involvement in the operations of the<br />
subsidiary were sufficient to potentially find liability. <br />
<br />
The 8th Circuit, following other cases, suggested that the service agreement between the<br />
parent company and the subsidiary required the providing of services by the<br />
parent to include accounting services, administrative services, electronic<br />
services, employee benefits, human resources, insurance, legal services,<br />
safety advice, and treasury services. <br />
<br />
Although the subsidiary’s employees were supervised by persons not employed by the parent, <br />
the executive officers were generally all the same, and the Court noted most importantly<br />
that the parent owned all of the issues of outstanding stock of the<br />
subsidiary. Employers who desire to use subsidiaries to limit liability<br />
should keep this case and discrimination statutes in mind. Sandoval, et al,<br />
v. American Building Maintenance Industries, Inc. (8th Cir. 2009)<br />