In addition to managing the relationship between employer and employees, employers are forced to carefully monitor relationships with independent contractors and contingent workers. Where the relationship between an employer and an independent contractor, contingent or temporary workers, or franchisees begins to resemble that of an employer and an employee, employers are exposed to misclassification penalties and liability as a joint employer. This complex area of the law is widespread and growing, and the definition of who may be responsible as a joint employer is constantly changing, and expanding in some cases, to cover more of the contingent workforce and independent contractors. Therefore, it is vital that employers understand the latest standards, tests, and factors when defining the employment relationship. The firm monitors this quickly changing and high-stakes landscape and helps employers, particularly franchisors, avoid joint employer liability.
The firm keeps employers informed about changes in the law regarding independent contractors and joint employers and works with clients to develop policies and practices that assist in decreasing exposure as a joint employer. We advise clients when making decisions that affect the employment relationship in order to ensure employers recognize when their actions can cause them to be considered a joint employer, or cause an individual to be considered an “employee” under the law. The firm understands the stakes when joint employer issues arise, and our attorneys have specialized experience defending employers against joint employer liability.
In an important opinion later cited by the California Supreme Court, the firm obtained summary judgment for a franchisor in a wage and hour case alleging that the franchisor was a “joint employer” with its franchisee. The case involved claims under the Fair Labor Standards Act (FLSA) and the California Labor Code. The court rejected the claims, upholding the independent contractor relationship. Singh v. 7-Eleven, Inc. [PDF – 117 KB], 2007 WL 715488 (N.D. Cal. 2007).
In a published decision, the California Court of Appeal, Fourth District affirmed the summary judgment decision that our firm obtained on behalf of its franchisor client. The Court of Appeal held that that the franchisor could not be liable for the alleged state-wide class action wage and hour violations of its franchisees’ employees under California Business and Professions Code Section 17200 or breach of contract claims because the franchisor was not an employer of the franchisees’ employees. The case was litigated in the Superior Court for Imperial County, California for three years before the trial court dismissed all claims against our franchisor client on summary judgment. Kimberly Aleksick v. 7-Eleven, Inc. [PDF – 179 KB], No. ECU03615 (Imperial County Superior Court, California). In 2012, the firm was successful in defending the summary judgment on appeal before the California Court of Appeal, Fourth District. Kimberly Aleksick v. 7-Eleven, Inc. [PDF – 175 KB], No. D059236 (California Ct. App., 4th Dist.).
Eric Welter represented a staffing company in a lawsuit brought by a bank customer alleging that a temporary employee placed at the bank’s call center was a joint employee of the staffing firm and for breach of contract. Mr. Welter obtained a directed verdict in favor of the staffing company on the joint employment claim during the jury trial, and successfully argued before the Virginia Supreme Court to overturn the breach of contract claims on appeal.
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