Overcoming Corporate Separateness: The Early Origins of Group Liability for Workers and Beyond

This Article documents and examines Brazil’s pioneering imposition of joint and several liability for labor obligations on parent companies since 1937, complicating existing narratives about the German origins of group law. We uncover evidence that nationalism and resistance to foreign corporate groups contributed significantly to this legal development. Central to Brazil’s groundbreaking 1937 reform holding parent companies liable for subsidiaries’ labor obligations was the concern about protecting local workers from foreign groups attempting to evade legal responsibilities through separate legal entities. This innovation has shown remarkable durability and contemporary relevance. A 2024 decision by the Brazilian Supreme Court applied the economic group doctrine to enforce its orders against X (formerly Twitter) by freezing the assets of the Brazilian subsidiaries of Starlink, also controlled by Elon Musk.

Our comparative analysis reveals a gradual, if contested, trend toward eroding corporate separateness to protect workers across jurisdictions. Moreover, this development appears to be more common in the Global South, with Portugal standing as the sole Global North country examined to converge with Brazil’s comprehensive statutory approach—and only after a 70-year delay. These findings suggest that challenges in state capacity and the geographic divide between capital and labor, often pronounced along North-South lines, can shape the evolution of limited liability and corporate separateness doctrines in ways that challenge conventional narratives in corporate and comparative law.