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Ninth Circuit Rejects Attempt to Hold McDonald’s Liable as a Joint Employer

The Ninth Circuit has affirmed a summary judgment that dismissed claims against McDonald’s Corp. in a class action alleging various violations of the California Labor Code. The plaintiffs had claimed that McDonald’s was a joint employer with its franchisees. Salazar v. McDonald’s Corp., Case No. 17-15673 (Oct. 1, 2019), the Court rejected three theories that the plaintiffs had offered to support their claims, all based on definitions articulated in Martinez v. Combs, 49 Cal.4th 35 (2010).

McDonald’s was not an employer under the “control” theory, which looks to whether the alleged employer exercises control over the wages, hours or working conditions. The only control that it asserted over its franchisees’ workers was geared toward quality control. It did not retain a general right of control of the day-to-day aspects of working for the franchisees. In the words of the Court, “McDonald’s involvement in its franchises and with workers at the franchises is central to modern franchising and to the company’s ability to maintain brand standards, but does not represent control over wages, hours, or working conditions.”

McDonald’s was not an employer under the “suffer or permit” theory, because it did not have the authority to prevent the employees from working. Only the franchisees could do that.

McDonald’s was not an employer under the common law definition, which looks to “the right to control the manner and means of accomplishing the result desired.” McDonald’s exercise of control over the means and manner of work performed at its franchises is
geared specifically toward quality control and maintenance of brand standards. It did not have control over hiring, firing, discipline or day-to-day work.

Although the plaintiffs raised the California Supreme Court’s recent application of the “ABC” test in Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (Cal. 2018), the Ninth Circuit dismissed it out of hand as dealing with a contention that workers were independent contractors. In the instant case, the workers were employees. The question was whether they were employees of both the franchisees and McDonald’s.

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