ALJ Rules that Parent Company and its Subsidiary are a Single Entity for Purposes of OFCCP Jurisdiction

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In the case of OFCCP v. Manheim Auctions Inc. [DOL OALJ, No. 2011-OFC-00005, 6/14/11], ALJ Alan L. Bergstrom addressed the issue of whether Manheim Auctions Government Services LLC (MAGS) and Manheim Auctions Inc. (MAI) constitute a single entity for purposes of OFCCP jurisdiction. Click to view the ALJ's ruling. Bergstrom addressed the “employee-numerosity requirement” for establishing liability of employers to comply with EO 11246, the Rehabilitation Act, and the VEVRAA. More specifically, OFCCP regulations at 40 CFR-1.7(a)(1) states the following with respect to filing EEO-1 forms:

Each prime contractor and subcontractor shall file annually, on or before September 30, complete and accurate reports on Standard Form 100 (EEO-1) ... if such contractor or subcontractor (i) is not exempt from the provisions of these regulations in accordance with §60-1.5; (ii) has 50 or more employees; (iii) is a prime contractor or first tier subcontractor; and has a contract, subcontract or purchase order amounting to $50,000 or more.

The term “numerosity” refers to the requirement that contractors with 50 or more employees must file EEO-1 forms and should not be confused with the numerosity requirement for class action lawsuits.

The key issue in this case is that the parent company (MAI) has more than 50 employees, but no federal contracts, whereas the subsidiary (MAGS) has federal contracts, but has less than 50 employees. ALJ Bergstrom ruled that MAI, among other things, has a degree of “common ownership” over MAGS since they share common directors and officers. Therefore Bergstrom ruled that MAI and MAGS are a “single entity” for purposes of OFCCP jurisdiction, and that both companies must file EEO-1 reports.

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