Franchisor Liability: Federal Court Weighs in on the Definition of “Joint Employer”
When you are an employee working for a franchisee, determining who your actual “employer” is may be more difficult than it seems.
Ninth Circuit: McDonald’s Does Not Exercise “Control” Over Individual Franchise Employees
For example, if you work for a restaurant that is a franchise of a larger national chain, is the franchisor responsible for if the local restaurant engages in labor law violations? The U.S. Ninth Circuit Court of Appeals in San Francisco recently addressed this question in a case involving McDonald’s, in Salazar v. McDonald’s Corp., No. 17-15673 (9th Cir. 2019). In Salazar, the Court determined McDonald’s was not a “joint employer” with its local franchises in California.
As additional background on the case, the Haynes Family Limited Partnership operated eight McDonald’s franchises in northern California under an agreement with McDonald’s. Under this franchise agreement, Hayes paid McDonald’s fees and had to “meet certain standards, such as serving McDonald’s products.”
The plaintiffs in this case worked for the Hayes franchises. They filed a class action complaint against both Haynes and McDonald’s, alleging they were each liable for a host of employment law violations under California law. While Hayes eventually settled with the plaintiffs, McDonald’s moved for summary judgment, arguing it could not be considered a “joint employer” under the facts alleged by the plaintiffs.
A federal judge agreed with McDonald’s and granted the motion for summary judgment. The plaintiffs appealed, but the Ninth Circuit affirmed. A three-judge panel of the appeals court explained that under California law, an employer must “exercise control over the wages, hours, or working conditions” of an employee. By this definition, the Ninth Circuit said McDonald’s was not a joint employer of the Haynes employees. Although McDonald’s retained the right to oversee “quality control” under its franchise agreement, it did not have a “general right of control” over the day-to-day working conditions of the employees.
A majority of the Ninth Circuit panel further rejected the plaintiffs’ argument that McDonald’s should be considered a joint employer because it “suffers or permits” the employees’ to work, which is also an acceptable definition of an employer under California law. The plaintiffs introduced evidence before the trial court that McDonald’s “induced” Haynes to use a particular type of computer system to schedule employees in such a way as to violate California employment laws. Even if that was the case, the majority said the critical issue was not whether McDonald’s was responsible for the alleged labor law violations, but whether it was responsible “for the fact of employment itself.”
Get Advice from a California Labor Lawyer Today
If you have additional questions or concerns about your own legal relationship with an employer, contact a qualified California employment law attorney today.