In the franchise model, fast food companies typically contract with franchisees to set various standards for selling food under their brand, but leave wages, hours, and working conditions to the franchisees.
The model has offered many minority entrepreneurs an intrusion into business ownership, proponents say.
But critics say companies like McDonald’s and Domino’s are allowed to profit while distancing themselves from responsibility for how restaurant employees are treated.
Co-employer?
The question of franchisor-worker relations remains unresolved at the federal level. The National Labor Relations Board has oscillated between three presidential administrations on whether to automatically consider franchisors and franchisees “co-employers.” Courts, including the California Supreme Court, have generally dismissed the idea under current law.
“These franchise models are both a means and a way for companies to avoid the liability of being an employer,” says Emily, Director of Education, Labor and Workers Justice at the Center for Law and Social Policy. Andrews says. organization.
Research has shown that franchisors can exert a great deal of pressure and control over owners of franchised businesses.
In a paper published last year, law professors at the University of Miami and Cornell University examined 44 franchise agreements from 2016 and found that more than three-quarters gave chains exclusive authority to terminate the agreements. It found that it was “putting the franchisee in a position of financial dependence.” ”
“Franchisees can respond to franchisor intensive scrutiny and tight profit margins by illegally chopping up wages as the only cost variable not directly monitored by the franchisor,” the law professor wrote.
The International Franchise Association disagrees, arguing that the business model is defined by the franchise owners’ independence in labor decisions. Large companies will curtail their opportunities in California if they are required to reduce and monitor compliance with labor laws.
Jeff Hanscom, spokesman for the Washington, D.C.-based association that includes franchisors and franchisees, said, “It’s about holding entities accountable or assigning responsibility for things they can’t control. “You’re taking a franchise and turning it into a corporate entity.”
cheesecake factory incident
That argument has some weight among state senators.
During hearings on the fast food bill in June before the Senate Judiciary Committee, some Democrats questioned whether an automatic extension of liability was necessary. Under the law, the judge noted that they could already find the franchisor responsible for labor violations if proven on a case-by-case basis.
Representatives of some franchisors, including McDonald’s, Jack in the Box and Burger King, did not respond to requests for comment on California’s fast food bill.
For workers’ advocates, expanding accountability is key to enforcing wage and labor laws.
Yardenna Aaron is Executive Director of the Maintenance Cooperation Trust Fund, a center for cleaning workers who called for collective responsibility in the cleaning industry in 2015.
Aaron said before that law was passed, contractors, when faced with allegations of wage theft, could close their stores or declare bankruptcy and later take on another name or business. It often restarted with the body.
A new law allows state labor commissions to issue subpoenas against larger and more prominent companies when they suspect wage theft.
In a highly publicized 2018 lawsuit, the California Labor Commission said The Cheesecake Factory was jointly liable with a cleaning service company, claiming that 559 cleaning workers who cleaned the chain’s eight Southern California restaurants. owed about $4 million to Mr. This was his one of the largest wage theft cases in the state.
The state has slapped electric-car maker Tesla, whose contractors allegedly underpaid janitors at its San Jose factory, and e-commerce giant Amazon for contractors who allegedly failed to pay delivery drivers overtime. I have filed a similar lawsuit against
power of wallet
Labor experts said it was too early to tell whether the collective liability made it easier for states to collect back wages. The state investigation into wage theft will take months. Also, when a state cites an employer and seeks unpaid wages and penalties, the employer typically appeals and initiates an administrative hearing process that can take years.
Four years later, the Cheesecake Factory case is still awaiting hearings. Aaron said his supporters hoped it would be resolved by the end of the year. The Sustainability Cooperation Trust Fund represented the workers interviewed in that case. The director at the time, Lilia Garcia Blower, is now a member of the California Labor Commission.
In 2020, Labor Relations Commission officials noted that liability laws have become increasingly complex due to significant delays in processing individual wage claims filed by tens of thousands of workers each year.
Still, legislative staff predicted that joint and several liability would “almost certainly” improve fast food labor compliance by forcing large companies to monitor the behavior of their franchisees.
Aaron says that’s been evident in the cleaning industry since the 2015 legislative change. The Labor Center meets with client companies that hire cleaning contractors and educates them on labor laws.
“Typically, clients want to avoid the liability a contractor might bring in a wage theft case,” said Aaron. “The power of the wallet is real.”