Ninth Circuit Rules That a Franchisor is Not the "Employer" of a Franchisee's "Em

The United States Court of Appeals for the Ninth Circuit has held that a corporate franchisor is not an “employer” of a franchisee’s employees under California common law; a franchisor also is not an “agent” of a franchisee who can be held liable for wage-and-hour violations under an ostensible-agency theory. (See, Salazar v. McDonald’s Corporation - filed Dec. 11, 2019 - 2019 S.O.S. 17-15673.

Indeed, the Ninth Circuit held that the district court properly ruled that McDonald’s was not an employer under the “control” definition, which requires “control over the wages, hours, or working conditions.” (Martinez v. Combs, 231 P.3d 259, 277 (Cal. 2010).) The panel also held that the district court correctly concluded that McDonald’s did not meet the “suffer or permit” definition of employer. The panel held that under California common law, McDonald’s cannot be classified as an employer of its franchisees’ workers. The panel concluded that although there was arguably evidence suggesting that McDonald’s was aware that Haynes was violating California’s wage-and-hour laws with respect to Haynes’ employees, there was no evidence that McDonald’s had the requisite level of control over plaintiffs’ employment to render it a joint employer under applicable California precedents. The panel held that McDonald’s cannot be held liable for wage-and-hour violations under an ostensible-agency theory.


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