A great case came down earlier this year that I’ve been meaning to blog about. Employee rights attorneys’ like myself are hesitant to take cases against small employers. This is true even when the employer is a franchisee (e.g. your local McDonald’s). Generally, franchisor’s (e.g. McDonalds corporate) isn’t liable for franchisee’s labor practices. Attorney’s like myself fear that we might litigate a case for two years, win a trial, but be unable to recover the full judgment because the local franchise doesn’t have very much money.
A recent case changes this in certain situations. Patterson v. Domino’s Pizza, LLC held a franchisor can be held liable for alleged sexual harassment of an employee of the franchisee by a supervisor employed by the franchisee and for related claims.
The facts of the case are fairly common. Patterson was a teenage employee of Sui Juris, a Domino’s pizza franchisee. Renee Miranda was the assistant manager of that restaurant. Patterson claimed Miranda sexually harassed and assaulted her at work.
Patterson filed an action against Miranda, Sui Juris, and the franchisor Domino’s, alleging causes of action for sexual harassment in violation of Fair Employment and Housing Act (FEHA), failure to prevent discrimination, retaliation for exercise of rights, infliction of emotional distress, assault, battery and constructive wrongful termination. She claimed Sui Juris and Domino’s were Miranda’s employers and were vicariously liable for his actions under the legal doctrine of respondeat superior.
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Many companies try to sidestep California’s law by hiring “independent contractors” instead of employees. If legitimate, independent contractors are not “employees” covered by the wage and hour laws, and therefore companies don’t have to pay them overtime. Legally, companies are not allowed to hire an “independent contractor” if the worker qualifies as an “employee” under California’s economic realities test.
This test looks to see whether the worker is dependent on the company to which they render their services to. In determining whether workers qualify as employees under the Fair Labor Standards Act, courts look at a number of factors, including:
- the degree to which the employer has the right to control how the work is performed,
- the degree to which the worker’s opportunity for profit or loss depends upon the worker’s managerial skill,
- the worker’s personal investment in equipment, labor, or materials required for the job,
- whether the service at issue requires a special skill,
- the degree of permanence of the working relationship; and
- whether the service rendered is an integral part of the employer’s business.
The importance that the court gives each factor depends on the totality of the circumstances; however, the right to control the means and manner of job performance is generally the most important consideration.
On the other hand, if the worker is classified appropriately as an independent contractor, he or she is not a “employee” under California law, and are therefore not entitled to overtime.
Sadly, abuse of this system is rampant. According to one study, tax audits done by the Economic Development Department from 2006 to 2008 show that 29% of audited employers misclassify workers as independent contractors when they should be employees. This comes from the National Employment Law Project (October 2011) Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, p. 4, 5, fn. 5.
If you have been misclassified as an independent contractor, and therefore denied overtime, give an employment attorney a call. You might be owed a lot of money.
Branigan Robertson is a California employment lawyer who exclusively represents employees in workplace disputes. He focuses his practice on sexual harassment, wage & hour, wrongful termination, and retaliation. Visit his website at BRobertsonLaw.com or call his office at 949.667.3025.