McDonald’s Corp. recently agreed to pay $3.75 million to settle a lawsuit filed by workers of one of its franchisees. Stop the presses! Isn’t that the opposite of what McDonald’s should be doing? Isn’t McDonald’s a leading player in fighting the idea that it is a joint employer of franchisee’s workers? Let’s back up a moment.
In 2014, employees of a California McDonald’s franchise sued both the franchisee and McDonald’s Corp. for labor violations alleging that, as joint employers, the franchisee and McDonald’s had failed to pay overtime, keep accurate pay records and reimburse workers for time spent cleaning uniforms. In late 2015, the franchisee settled with the workers for $700,000, leaving McDonald’s Corp. as the lone defendant in the case. During the case, the court had ruled that McDonald’s was not a joint employer, but that McDonald’s could be liable under the doctrine of ostensible (or apparent) agency, under which the workers must prove that they reasonably believed McDonald’s was their employer because, for example, they wore McDonald’s uniforms, served McDonald’s food in McDonald’s packaging, and received paystubs and orientation materials marked with McDonald’s name and logo. Few franchisee employees have prevailed on similar apparent agency claims. Continue Reading