On July 30, we blogged about the recent efforts of the National Labor Relations Board to hold corporate franchisors, such as McDonald’s, liable for the acts of individual franchisees toward employees under the theory that the “parent” company is a “ joint employer.” We opined that this effort was a “stretch” to deviate from traditional principles on the part of the federal agency, and which threatened the viability of franchising as a business model.
On August 28, 2014, the California Supreme Court provided a dose of fresh air, clarity, and common sense to this issue by holding that Domino’s Pizza could not be the joint employer of a worker who accused a franchisee operator of harassment. The opinion upheld the granting of summary judgment in favor of Domino’s. It also reaffirmed the decades-old analysis which focuses on the degree of real control the corporate franchisor may exercise over the employment practices of the franchisee in light of the “totality of the circumstances.”
The Supreme Court reversed the opinion of the Court of Appeals (which we lamented in this June 2012 post), and sent a clear message to trial courts that it’s permissible to summarily dismiss claims of “joint employment” where the plaintiff lacks sufficient facts to demonstrate “control” on the part of the franchisor parent. As the court stated:
A franchisor [may] impose comprehensive and meticulous standards for marketing its trademarked brand and operating its franchises in a uniform way. To this extent, the franchisor ‘controls’ the enterprise. However, the franchisee retains autonomy as a manager and employer. It is the franchisee who implements the operational standards on a day-to-day basis, hires and fires store employees, and regulates workplace behavior.
This sensible opinion from the high court of California will likely influence other state and federal courts, including those federal circuit courts that may hear appeals from the NLRB on the issue of “joint employment.” You can read the opinion here (pdf).