A huge number of workers are employed by franchises such as fast food restaurants
or coffee shops. Are the franchisors, who are often based remotely from
their retail locations, liable for incidents of sexual harassment that
occur in those locations? No, according to a recent California Supreme
In Patterson v. Domino's Pizza, LLC, plaintiff Taylor Patterson was
employed by a Domino's franchisee in Ventura, California. Patterson
claimed that her supervisor subjected her to sexual harassment while they
worked together in the store. Patterson filed her claims under California's
Fair Employment and Housing Act (the "FEHA") against the franchisee,
her supervisor, and the franchisor.
The California Supreme Court addressed the question of whether the Domino's
franchise could be held vicariously liable for sexual harassment in one
of its franchise stores. In a 4-3 decision, the Court found that Domino's
did not exercise sufficient control over the day-to-day operations to
be held liable in a sexual harassment case.
The California Supreme Court reversed the appeals court
decision, finding that the company was not sufficiently involved in day-to-day
hiring, firing and supervision to warrant liability for Patterson's
claims. Writing for the majority, Judge Baxter reasoned that the franchise
agreement "would be violated by holding the franchisor accountable
for misdeeds committed by employees who are under the direct supervision
of the franchisee, and over whom the franchisor has no contractual or
The Court did leave an opening for some victims of sexual harassment at
franchisees. The Court's reasoning indicates that where a franchisor
exercises more control and is more involved in the franchisee's daily
operations, it would be possible to hold the franchisor liable in these
types of cases. Therefore, the factual circumstances of each franchisor-franchisee
relationship will be crucial in determining whether joint liability is feasible.
The Court states that "Nothing we say herein is intended to minimize
the seriousness of sexual harassment in the workplace, particularly by
a supervisor…..Nor do we mean to imply that franchisors, including
those of immense size, can never be held accountable for sexual harassment
at a franchised location. A franchisor will be liable if it has retained
or assumed the right of general control over the relevant day-to-day operations
at its franchised locations that we have described, and cannot escape
liability in such a case merely because it failed or declined to establish
a policy with regard to that particular conduct. Our holding is limited
to determining the circumstances under which an employment or agency relationship
exists as a prerequisite to pursuing statutory and tort theories like
those alleged against the franchisor here."
In other words, it comes down to the question of how much control the franchisor
has over the franchisee's operations. The Court said that "No
reasonable inference can be drawn that Domino's through Lee, retained
or assumed the traditional right of general control an "employer"
or "principal" has over factors such as hiring, direction, supervision,
discipline, discharge, and relevant day-to-day aspects of the workplace
behavior of the franchisee's employees. "
The takeaway: If you work at a franchise, and your human rights have been
violated, you may have a case against the franchisor depending on the
amount of control the franchisor has over the franchisee's employee
relations. This is a complex issue, and you should consult a qualified
employment law attorney before proceeding.