Many franchisors take the attitude that their franchisees are independent contractors and so the franchisor is not liable for the acts of their franchisee. Domino’s Pizza just found out from a California court that they might be liable for sexual harassment arising from the acts of a franchisee’s supervisor against a 16 year old employee (see the court ruling from this case, Patterson v. Domino’s Pizza, LLC, here).
In general, in California an employer can be found liable for sexual harassment by a supervisor depending on the nature of the harassment. In the Patterson case, the franchisee declared bankruptcy and so no money could be recovered from the franchisee. The franchise agreement said the franchisee was responsible for supervising and paying its employees. However, the franchisee must hire employees that meet qualifications set by Domino’s; the franchisee is required by Domino’s to install a special employment training system; and Domino’s Manager’s Reference Guides contained numerous standards for franchisee’s employees to meet (i.e. dress code, working time reporting). The franchisee’s owner said Domino’s told him to fire the harassing supervisor. Domino’s had also allegedly instructed the franchisee to fire at least one other employee on another occasion. Domino’s also had numerous other controls on the manner of operating a franchise.
Domino’s contended this case should have been dismissed without a trial because its franchisee was an independent contractor and so Domino’s was not responsible for the acts of the franchisee. The Patterson court found that based on the above, there was enough evidence for a jury or judge to find that Domino’s exercised substantial control over the franchisee such that Domino’s could be found liable for the franchisee. Even if the franchise agreement stated the franchisee was responsible for operations and its employees, if facts exist that indicate that in truth, the franchisor was exercising substantial control, then the franchisor may have liability for the franchisee’s acts. Therefore, the court declined to dismiss the case and if this case does not settle, it will go to trial.
For more on this case, see this Metropolitan News-Enterprise article.
© 2012, LT Pacific Law Group LLP. All rights reserved.