SINGLE ENTITY FIVE FACTOR TEST;
PIERCING THE CORPORATE VEIL
NOW WRAP YOUR MIND AROUND THAT....
CREATED by Lisa Stinocher O'Hanlon 02.28.2013
Using XMind Software
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WARNING; MAY CONTAIN OFFENSIVE LANGUAGE
Information for this map provided by
U.S. DEPARTMENT OF LABOR
Office of Federal Contract Compliance Programs
and medical facilities,
The test focuses primarily on whether the ownership, management,
and operations of the separate entities are, in fact, sufficiently
interrelated to warrant treating them as an integrated enterprise or a single entity.
A business or organization need not meet all five factors to be
considered a single entity with a covered Federal contractor.
However, there is growing recognition that centralized control over
labor relations and personnel functions is the most important factor.
By way of example, say that two entities are under common ownership,
with a common board of directors, and have a central corporate office
that determines and issues personnel policy for both entities, and
generally manages most personnel-related issues for both entities.
At the same time, the operations of the two entities are not
particularly dependent on each other. Despite the fact that one
of the factors did not apply, the four factors that did outweigh the
one that did not, so that the two entities being analyzed will most
likely be considered a single entity.
To assist you in your determination of whether your business or
organization will be considered a single entity with a Federal
contractor, OFCCP has developed a list of 27 questions to guide
you in your analysis.
The standards described in the five-factor, single entity test
do not generally apply to State or local governments.
Rather, OFCCP regulations at 41 CFR Sec. 60-1.5(a)(4)
provide that the requirements of Executive Order 11246
in any contract with a State or local government (or agency,
instrumentality, or subdivision thereof) are not applicable
to any agency, instrumentality, or subdivision thereof of
that government which....
does not participate in
or work on
the contract or subcontract.
In addition, State and local governments and their units,
except for educational institutions and medical facilities,
are exempt from the requirements of filing the annual
compliance report provided for by 41 CFR Sec. 60-1.7(a)
and maintaining a written affirmative action compliance
program prescribed by 41 CFR Sec. 60-1.40 and 41 CFR
Sec. 60-2. OFCCP regulations at 41 CFR Sec. 60-250.4(a)(4)
and 41 CFR Sec. 60-741.4(a)(5) contain similar language
regarding the applicability of VEVRAA and Section 503,
A separate business or organization without Government
contracts may be covered under the laws based on an
integrated relationship or "single entity" status with a
Government contractor. There is a five-factor test for
determining whether such a relationship exists. The test
requires the fact-finder to consider whether:
1. the entities have common ownership;
2. the entities have common directors and/or officers;
3. one entity has de facto day-to-day control over the other through policies,
management or supervision of the entity's operations;
4. the personnel polices of the entities emanate from
a common or centralized source; and
5. the operations of the entities are dependent on each other, e.g.,
services are provided principally for the benefit of one entity by
another and/or both entities share management, offices, or other services.
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