Keith Markel and Alana Mildner Smolow Examine Joint-Employer Risks for Global Luxury Groups

Morrison Cohen Partner Keith A. Markel, chair of the firm’s Labor & Employment Practice and co-chair of the Luxury Brands Group, and Labor & Employment Counsel Alana Mildner Smolow recently published “When Luxury’s Global Power Structure Becomes a Liability” in The Fashion Law.

The article examines how the centralized operations and management structures increasingly used by global luxury groups to streamline business operations and reduce costs can create potential exposure under U.S. employment law, particularly when overseas headquarters exercises significant control over personnel decisions at U.S. subsidiaries.

Using a closely watched lawsuit involving Stella McCartney and former shareholder LVMH as a case study, Markel and Mildner Smolow explore the circumstances under which related corporate entities may be held liable as joint employers or treated as a single integrated enterprise. They examine the legal standards governing these theories, including the significance of centralized control over employment decisions, shared management, interrelated operations and financial relationships.

The authors also outline practical steps luxury groups can take to clarify corporate boundaries and mitigate potential liability, including defining decision-making authority, preserving local control over personnel matters, maintaining accurate organizational records, reviewing shared-services arrangements and ensuring employment documents accurately identify the employing brand.

As global luxury brands continue to rely on centralized HR platforms, shared services and cross-border management structures, the authors emphasize the importance of ensuring that documented corporate governance arrangements reflect how employment decisions are made on the brand level.

Read the full article in The Fashion Law here.