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Fast Food Employee Cannot Sue Franchisor for Sexual Harassment

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 Court decision.

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 operational control."

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.

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