This is a case that shows business should be careful and not play loose the concept of separate legal entity.

Parties: A-One Company and Alternative Company

Background: A-One Company ( " A-One" ) is interested in buying Alternative Company ( " Alternative " ) because Alternative processes a county specific Certificate of Needs. With this certificate A-One could expand into the county. However Alternative does now have a Medicare Provider Certificate which A-One processes. Therefore the owners of both companies agreed to a Buy/Sales after which A-One transferred 2 patients and nurses to Alternative. A-One then supervised Alternative's services and helped Alternative obtain the Medicare Provider Certificate.

Question 1: What would be the problem if both companies agree to do such profitable business together?

Answer: The problem came at an unexpected angle. The Labor department sued the companies over " missing overtime pay" because some the employees were working for both companies and combined would have overtime pay issue.

Question 2: Can the companies argue they are 2 separate employers?

Answer: The companies argue that there are some formal separations between the companies. The companies were, on paper, separate companies. There were no formal arrangements for the companies to share employees. All employees complete separate applications for employment and sign separate agreements for employments. All employees receive pay checks from the 2 companies. The hourly wages of the 2 companies were on a different scale.

Question 3: How can the Labor department argue the 2 companies are one employer?

Answer: However the Labor department showed the following:

(1). A-One supervised the patent care for Alternative
(2). A-One contracted accounting services and other vendors for Alternative
(3). A-One answered Alternative's calls
(4). The 2 companies shared the same office
(5). A-One supervised Alternative's paper work to comply with government requirements.
(6). The receptionist was shared
(7). The same supervisor supervises nurses of both companies

Question 4: What is the result of the case?

Answer: Therefore the court finds that the companies owe overtime wage to the employees. The reasons are:

(1). Common control A-One and Alternative were controlled by the same owner after the sales of Alternative to A-One. The actual control of ownership was more important than the formal paper separation of the companies.
(2). The employees were joint employees: (a). The employers were under same control, and (b). Employers are not completely disassociated

REMARK : Important Concept

The facts are more important than what appears on the paper.