Employers in New York and throughout the country may struggle with how to label their workers. In a case filed in the United States District Court for the Central District of California, four 7-Eleven franchisees claimed that they were employees of the company. The case was filed in November 2017, and it claimed that all other franchisees were employees of the company. Therefore, they should be allowed to bring claims under the Fair Labor Standards Act.
The plaintiffs claimed that an employment relationship existed because of restrictive policies placed upon them by the company. However, the court found that each party failed to establish that such a relationship existed. For instance, they all admitted that they had the ability to hire or fire employees at their discretion. Furthermore, the franchise owners themselves did not need to be at their stores when they were open.
Therefore, although the stores were required to be open all hours for 364 days a year, the franchisees had no hour or workday minimums to meet. The court also found that the franchise paying employee wages on behalf of the franchisee is not indicative of an employment relationship. Ultimately, the language of the agreement that the company had with its franchise owners protected it from such claims. Other franchisors should review their agreements to ensure that they protect themselves as well.
If a company faces allegations that it violated wage or other employment laws, it may be beneficial to consult with an attorney. An attorney may review the relationship between an employer and its workers to determine if any laws were actually violated. As a best practice, businesses may want to review any agreements that they have with their workers to decrease the chances of facing such allegations.