Work for California franchisee, sue the franchisor for sexual harassment?

What to do when you as a California employee are sexually harassed, a victim of retaliation or wrongful termination at the store in which you work, but which is itself a franchisee of a major corporation? Can you sue the franchisor for sexual harassment, retaliation or other California Government Code or Labor Code causes of action? 

  Overturning a well-reasoned decision by the California Court of Appeals which found that a triable issue of fact existed as to whether Domino’s was an “employer”, the California Supreme Court determined as a matter of law that the franchisor was not the joint employer. Patterson vs. Domino’s Pizza LLC, Cal. Supreme Court N. S204543 (8/28/14). 

   Because the franchisor did not control the day to day operations, and primarily licensed its name, methods, customer goodwill, and commercial image, the court held that Domino’s was not legally liable for employment practices such as preventing sexual harassment. It distinguished an earlier case(“Nichols”) which came to the opposite conclusion based on the complete control that franchsior had over most areas of the business and denied the franchisee any indpendence in managing the business. Relying on a case involving the wrongful death of a teenager at a 7-11 store, the Cislaw vs Southland Corp, 4 Cal App4th 1284 (92) decision spoke to franchisor control of “means and manner” of day to day operations and determined that there was no such control and Southland would not be liable for the boy’s death. Here’s a few questions for California employees to ask in determining whether their claims for sexual harassment should be presented to the franchisor:

1. Does the franchisor control the day to day operation?

2. Does your franchisee/employer have the sole right to employ and discharge staff?

3. Does the franchsior have the power to supevise, discipline, and compensate employees or to regulate your work schedule?

4. Does the franchisor have the contractual power to control the work place and to have prevented sexual misconduct?

Most issues involving franchisor control will be found in the contract between the two entities and its not usually until well into the lawsuit that formal discovery will reveal the contents of this critical document. Joint and several employment will not be found where the franchsior does not have the right to direct employees and states “sole responsibility” is with the franchisor. If there’s no sexual harassment training provided by the Franchisor, that’s another negative. Similarly, not consulting with the franchisor on hiring, firing, etc., and simply providing handbooks to the franchise may not be enough to make the franchisee liable. 

Finally, if the franchisee appears to take sexual harassment training and prevention seriously, courts will not look beyond that level. In this case, the franchisee owner asked that sex harassment complaints be directed to him personally. Domino’s had no policies or procedures for complaints by employees.

In conclusion, we believe this decision is wrongful and that a jury should have been allowed to determine whether the franchisor was an employer of the victim. Evidence revealed that Domino’s told the employer that he should “get rid” of an employee. The strong and well-reasoned dissent by Justice Werdegar properly emphasizes the fact-intensive issues here. Retention of control by a franchisor including employee selection, training, personal appearance, interacting with customers and compliance with store procedures; regulat inspection or the threat of noncompliance leding to a defalut, all present reasons for the franchsior to act as an employer. In fact, a manager testified that she was told she would need to “fire” an employee. A franchisor manager actually told a franchisee mgr “if you have anyone that works for you that is damaging the brandor going to cause you to lose your freanchise agreement, that person is not the person you want forking for you.”

If the franchsior has the power to force a franchise to fire employees, then there is joint control. Whether or not such power is contained in the franchise agreement is no proof of how it “went down” in the real world. Enormous circumstantial evidence existed in this case to let the jury make the decision. Given that the Department of Fair Employment and Housing requires a liberal construction of the law to protect employees, this decision taking away the jury’s right to determine who is the employer is wrong.

    If you have any issues concerning your employment, whether sexual harassment in Los Angeles or elsewhere in California, we’d be happy to discuss the issues with you. Call now! Be safe out there. Steve Danz 877 789 9707.