Franchisor did not become joint employer merely by recommending personnel policies

By Dave Strausfeld, J.D. — A window cleaning franchisor did not become a joint employer of its franchisee’s employees merely by recommending personnel policies, held a federal district court in Wisconsin.

To prove the franchisor was their joint employer, the employees needed to demonstrate more than that they received a copy of the franchisor’s employee manual and that the franchisee followed the franchisor’s recommendation to pay them on a commission basis. The “minimal control” exerted by the franchisor here was “nothing like” what would be necessary to demonstrate employer status, the court found, granting summary judgment in the franchisor’s favor in this wage-hour suit (Pope v. Espeseth, Inc., January 11, 2017, Peterson, J.).

Two window cleaners brought a collective and class action alleging they were compensated on a commission-based method that failed to pay them minimum wage and overtime, in violation of the FLSA and Wisconsin law. They named as defendants both the “Fish Window Cleaning” franchisee and the franchisor, Fish. Fish moved for summary judgment on the basis that it was not their employer.

Employee manual. Under the FLSA, a joint employer relationship exists when each alleged employer exercises control over the working conditions of the employees. The employees conceded that Fish did not have the power to hire and fire them and did not maintain employment records for them. Nonetheless, they contended that Fish supervised and controlled them. At the heart of their argument was the idea that they had each received a copy of Fish’s employee manual, the “Fish Window Cleaning Policy and Procedure Manual.”

At a deposition, the franchisee’s owner was asked “Did Fish require you to have employees sign off on that manual?” He responded “Yes.” Later he clarified that he meant “more like recommended, but yes.”

Deviation from recommended policy. Despite the owner’s deposition answer, it was clear that Fish was not the employees’ employer, the court found. The “critical issue here” was that the franchisee was not obligated to follow the manual as drafted by Fish. According to a Fish official’s testimony, franchisees were explicitly told during their training that all recommended personnel policies were optional and could be modified and customized.

Evidencing this, the franchise owner in the present case chose not to enforce the personnel policies exactly as listed in the manual Fish provided. For example, he sometimes required employees to report to the office every workday by 7:30 a.m., rather than every Monday, Wednesday, and Friday, as Fish’s manual stated. Thus the employees failed to show that Fish controlled their work schedule (or other aspects of their employment addressed in the employee manual).

Payment conditions. Nor could the employees prove that Fish controlled the method of payment. While Fish recommended that employees be paid on a commission basis, and suggested that to do otherwise would be financially unwise, this was only a recommendation, not a requirement—Fish never mandated the franchisee to pay by commission. “A recommendation regarding the method of employee compensation does not, on its own, amount to control over employees’ working conditions,” the court explained.

Only “minimal” control. All things considered, the “minimal control” exerted by Fish in the form of personnel policy recommendations was “nothing like” the control in cases where joint employment has been found, the court said. Because Fish did not exercise enough control to be considered a joint employer under either the FLSA or Wisconsin law, the court granted Fish’s summary judgment motion and dismissed all the employees’ wage-hour claims against the franchisor.

Source: Employment Law Daily Newsfeed