California Court Clarifies Franchise Liability in Harassment Case

October 05, 2012

California Court Clarifies Franchise Liability in Harassment Case

California franchise workers may now receive greater protection from harassment and discrimination in the workplace, thanks in part to a 16-year-old employee at a Domino's Pizza restaurant who had the courage to stand up for her rights.

The girl claims she was sexually harassed and assaulted by an assistant manager at the restaurant where she worked, a Domino's franchisee operating as Sui Juris, LLC. She filed a complaint against both the franchisee and the franchisor under the Fair Employment and Housing Act, claiming that they had failed to protect her from discrimination, assault, battery, retaliation, infliction of emotional distress, and constructive wrongful termination.

Employers May Be Liable for Employees' Wrongdoing

Under a legal premise known as vicarious liability, employers can often be held liable for the unlawful conduct of their employees. A primary issue in this case was whether the Domino's Pizza franchisor could be held liable for the actions of Sui Juris, the franchisee. Domino's argued that it was not the employer of either Sui Juris or its employees, and thus not vicariously liable for the assistant manager's actions.

Domino's claimed that Sui Juris was not its employee, but instead an independent contractor, and that it had no involvement in the store's employment decisions. To support this argument, Domino's pointed to its franchise agreement with Sui Juris, which states that the franchisee is solely responsible for supervising and paying its employees.

The California Court of Appeals disagreed with Domino's' claims and found that the franchisor could in fact be held liable for the employee's claims. In its written opinion, the court explained that the degree of control exercised by a franchisee over a franchisor is what determines the nature of the relationship and thus whether vicarious liability is appropriate.

In this case, although the franchise agreement indicated that Sui Juris was an independent contractor for Domino's, the court found that Domino's exerted sufficient control over the store's operations to justify holding the franchisor liable for the actions of store employees. For instance, Domino's sets standards for the appearance and demeanor of store employees and provides computerized training for store employees. In addition, Domino's controls numerous other aspects of operation at the Sui Juris store, including pricing, advertising and hours of operation.

Actions Speak Louder Than Words

The California court sent an important message with its ruling in the Domino's case. By establishing that "a franchisor's action's speak louder than words in the franchise agreement," the ruling makes it more difficult for franchisors to shield themselves from liability on the basis of a contractual provision alone. For franchise employees, this means increased protection from sexual harassment and other illegal behavior in the workplace.

California workers who have experienced on-the-job harassment or discrimination are encouraged to discuss the situation with an experienced employment lawyer who can advise them of their rights and options.

Article provided by The Law Office of Joel Larabee
Visit us at http://www.larabeelaw.com