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TJ, Esq.
TJ, Esq., Attorney
Category: Employment Law
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Experience:  Licensed to Practice Law
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litigating dissolved companies

Resolved Question:

ABC opened a new department to provide support for its operations, but chose for whatever reason (perhaps to raise funds) to incorporate it as XYZ.  XYZ had no other clients except ABC and was under contract with ABC to provide services.  I was hired by XYZ one month before XYZ was dissolved and I was 1 month into my 6 month probation.  Who's employee was I, XYZ's which, although dissolved, continued to operate, or ABC's , a company that took over?

Submitted: 1 year ago.
Category: Employment Law
Expert:  TJ, Esq. replied 1 year ago.
Hello and thank you for allowing me the opportunity to assist you.

Can you clarify what you mean when you state that ABC took over? Did you continue to work there after ABC took over? Did your employer act as though it was ABC after it took over, or did it continue to act as though it was XYZ even though it was dissolved? Also, what do you mean by dissolved? Do you mean that it just let its license lapse, or do you mean that it legally sold its assets to ABC?
Customer: replied 1 year ago.

We were told by the manager that XYZ has a new owner ABC. Yes, I continued to work for ABC. XYZ phones were answered as ABC, but my checks had XYZ's name on it and I received 1099 from XYZ the first year. The second year I was promoted to ABC and received checks from ABC, with W-2s, then I requested a transfer back to XYZ (still dissolved) and began again receiving checks and W-2s marked XYZ. I found a copy of the state document saying that XYZ was dissolved by proclamation/annulment of authority, they tried to restore XYZ 6 years later, but failed to submit necessary tax documents, XYZ/s status is still marked as "inactive" in NYS corporate documents. XYZ never sold its assets or stopped operating, it continued to operate under the same management.

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

It sounds like you are (or were, as the case may be) an employee of XYZ. The fact that XYZ was inactive does not mean that you became an employee of ABC merely because it owned XYZ. You would still be an employee of XYZ. Of course, it sounds like you were officially an employee of ABC for the brief period in the second year, but that you later became an employee of XYZ again.

Now, I won't say that you don't have an argument that you were employed by ABC as well. For example, if you are owed unpaid wages, then you would be wise to sue both XYZ and ABC. There is certainly a legal theory that you were employed by ABC. But I think that is the weaker argument. The stronger argument is that you were employed by XYZ.

Does that answer your question? Please let me know if you need clarification, as I am happy to continue helping you until you are satisfied. Also, your positive feedback is much appreciated.

Thank you for using our service!
Customer: replied 1 year ago.

My lawsuit is for discrimination, during my employment with XYZ and ABC. XYZ says they are not responsible because they were "closed".


Should we employ a joint employers strategy?


 


When a company is sued after it dissolves does it still legally exists, and for how long, in NYS specifically? Can it hire people under its name and make contracts with other companies? I know a dissolved company can pay penalties and be restored. Is there a prescribed statutory number of years in NYS before a company is considered to be closed for good?


 


It's been 0 years since XYZ was dissolved and its status it still inactive. Does it mean their license was revoked, do they have to prove that they "closed".

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

If I were you, I would sue both XYZ and ABC. You plead the claims against both. It is perfectly acceptable to plead alternative theories in a lawsuit.

I think that you should stop using the term "dissolve," as it does not sound like XYZ was dissolved. It sounds like XYZ was merely inactive. If it was dissolved, that implies that XYZ sold its assets and discontinued to operate. But everything you told me indicates the opposite. It sounds like XYZ was very much still in business, and merely allowed its corporate status to lapse. A corporation cannot avoid liability by merely allowing its corporate status to lapse. A corporation that allowed its corporate status to lapse can still be sued. There is no particular period of time in which lawsuits must be brought against an inactive corporation (other than ordinary statute of limitations which apply either way, of course). An inactive corporation would be in violation of the law by hiring people and continuing to operate ... but that violation of the law does not at all prevent liability. The law does not allow a corporation to benefit from its violation of the law.
Customer: replied 1 year ago.

Thank you, XXXXX XXXXX that answered the core of my concern, so should we sue them as joint employers, simultaneous employers, integrated businesses, or something else?

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

I would sue them both and claim that you were an employee of both simultaneously. The court may ultimately rule that you were employed by just one or the other, but there is no reason for you to make that determination yourself now.
Customer: replied 1 year ago.

If they decide that I was employed by one of these two companies, would that mean that the other would absolved from their liability?

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

Not necessarily. For example, if you were officially an employee of XYZ, but ABC controlled you while working and discriminated against you, then ABC could be held liable.
Customer: replied 1 year ago.


ABC controlled XYZ operations since XYZ corporate status lapsed,1 month after I was employed by XYZ. Nothing changed in the way these companies operated or interacted with each other since the lapse. The management in both departments stayed the same. The management told us that XYZ is under new ownership, ABC. I am a bit confused. We still sue both as simultaneous employers? Discrimination was present while I worked for both companies. Aren's both of them responsible?

Expert:  TJ, Esq. replied 1 year ago.
Hi again.

Yes, you should sue both, and yes, it's possible that both are liable.
TJ, Esq., Attorney
Category: Employment Law
Satisfied Customers: 9589
Experience: Licensed to Practice Law
TJ, Esq. and 5 other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.


Thank you very much for your expertise.

Expert:  TJ, Esq. replied 1 year ago.
You are quite welcome. Thank you for using our service!

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