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Appeals Court Rules That McDonald’s Is Not a Joint Employer of Franchise Workers

By Dan Combs

            A Ninth Circuit Court of Appeals panel rejected McDonald’s franchise employees’ attempt to hold McDonald’s Corp. liable as a joint employer for alleged wage and hour violations, reasoning that the franchisee alone exerted control over the employees.FN1 As with many franchise relationships, in this case McDonald’s Corp. set quality control and brand standards but had no right to control the day-to-day work of franchise employees. Specifically, the court emphasized that the franchise—not McDonald’s Corp.—selected, interviewed, hired, and trained employees; set employee wages and schedules, and paid employees. As a result, McDonald’s Corp. did not have “the requisite level of control over Plaintiffs’ employment to render it a joint employer” under California law.

Practical Takeaway:

            Franchise businesses operating in California and surrounding states may breathe a sigh of relief in light of the Salazar v. McDonald’s decision, which acknowledges that although franchisors may impose meticulous standards for marketing their brand and ensuring consistency and quality, they do not have the right to control daily work to meet the joint employer standard. That said, joint employer cases are heavily fact specific and the particular aspects of a specific franchisor/franchisee relationship—not the mere fact that a business operates under a franchise business model—will determine whether the company will be considered a joint employer.

Footnotes:

FN1:   Salazar v. McDonald’s Corp., No. 17-15673, 2019 WL 4892760 (9th Cir. Oct. 1, 2019). The Ninth Circuit Court of Appeals hears appeals from federal courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington State.