And Now, From the 'Full Employment for Lawyers' File...
Two McDonald's cases (with opposite outcomes) show the issue of ostensible agency is far from settled.
“The franchise world has watched joint employment cases with everything from concern to terror,” declared Heather Perkins, an attorney with Faegre Baker Daniels in Denver at the International Franchise Association’s Legal Symposium May 9.
She proceeded to update the audience about two key cases with conflicting outcomes.
First she discussed the topic of “ostensible agency,” or the idea that employees have reason to believe a company is their employer even when there is no direct control. “McDonald’s experienced both sides of this” in the past year, she said.
In Ochoa v. McDonald’s, a first-of-its-kind class-action case in California, the court cited four circumstances that could lead employees to believe McDonald’s corporate was their employer, rather than the franchisee who owned and operated the restaurant: the uniforms displaying McDonald’s logo; the ubiquitous branding in its restaurants; the pay stubs they received with McDonald’s name; and the McDonald’s website through which many had applied.
The court certified the case as a class action in July 2016, and three months later, in October 2016, McDonald’s settled for $3.75 million, she said.
“Meanwhile, there’s a glimmer of hope” for franchisors, Perkins continued, citing Salazar v. McDonald’s, a case with “very similar facts and holdings” as the Ochoa case, but with an outcome so far favorable to McDonald’s.
The court held there was no liability for McDonald’s based on the control test, but allowed the ostensible agency theory to go forward. Then in January 2017 the court denied class certification for the case. In other words, the court “reached the exact opposite conclusion of the Ochoa case,” she said. The individual case is going forward and McDonald’s is expected to appeal
She had more, much more, to say about many key cases she and other franchise attorneys are watching, each with nuances and outcomes that show the joint employer issue is alive and well. (She didn’t do so, but you could call the issue the lifetime employment plan for lawyers.)