When franchisor Panera won its motion for summary judgment in a Title VII case in an Ohio federal district court (McFarland v. Breads Of The World), DLA Piper associates Kevin Harlow and Daniel Lac say the court explained that franchisors were almost never considered employers in cases in which the plaintiff works for an independently owned franchise.
But does this “nearly uniform rule” mean franchisors have little to fear? Not always, according to Harlow and Lac. They say one reason Panera was safe was because it did not write or enforce employment policies for its franchisees, actions that have led select courts to deem a franchisor an employer. Another thing to avoid, they suggest, is employment-related training.
The attorneys say maintaining quality control and market reputation without crossing the “employer” line can be a difficult task, especially when varying jurisdictions and statutes apply different tests of liability.
To steer clear of problems, the two encourage franchisors not to control the hiring, firing, promotions/demotions, pay rates, classifications and conditions (scheduling, breaks, etc.) of franchisee employees. They also advise against running the payroll and benefits or maintaining employment records for those workers.