By: Richard Carlson
The small firm exemption is a provision of Title VII and the
other major federal employment discrimination laws that exempts
very small firms from coverage as “employers.” Under the Title VII
version of the exemption, for example, an employer is exempt as
long as it employs no more than fourteen employees. However, a
small firm might be affiliated or integrated with other firms,
which collectively employ more than the number of employees
required for coverage.
The single employer doctrine is a rule for treating affiliated
but separately organized firms as if they were one employer, for
purposes of meeting the statutory threshold for coverage. Lately, a
number of critics lead by Judge Posner have questioned the
doctrine’s place in discrimination law. The critics charge that the
collective bargaining cases in which the doctrine first evolved are
not valid precedents for the doctrine’s use as a rule of coverage
in discrimination cases, and that the doctrine defeats the purposes
of the small firm exemption. Judge Posner and other critics would
treat affiliated but separately organized firms as a single
employer only if it would be appropriate to pierce the corporate
veil or hold the firms jointly liable under traditional rules of
corporate law.
In this article I explore the origins of the single employer
doctrine and its vivid presence in the background of the
Congressional debates leading to the small firm exemption. I also
find support for the doctrine in the text of Title VII, and I show
that the doctrine is not only consistent with the purpose of the
small firm exemption but is necessary to fully achieve the
exemption’s purpose.