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Franchisor as Co-Employer Continues to Emerge as Major Issue

BY Kevin Adler
October 02, 2013

During a period when state legislatures wrestle with the issue of when a franchisor is the employer or co-employer of employees of an individual franchisee, lawsuits continue to arise addressing the same complicated issue.

“The motives behind these efforts are rather clear. From the perspective of franchisee employees, adding a 'deep pocket' as a defendant in their Fair Labor Standards Act (FLSA) actions only expands their possibility of recovery for claims of improper employment classification, unpaid overtime and other wage-and-hour violations, especially if the subject franchisee is bankrupt,” commented David J. Kaufmann, senior partner of Kaufmann Gildin & Robbins, in an article in the New York Law Journal.

Kaufmann pointed to Cano v. DPNY d/b/a Domino's Pizza, 287 F.R.D. 251 (S.D.N.Y. 2012), as a recent example. In this case, current and former employees of Domino's franchisees commenced an action against their franchisee-employers to seek damages and injunctive relief under the FLSA and the New York Labor Law. The employees then moved for leave to file an amended complaint naming the franchisor as additional “joint employers” (Domino's Pizza, Inc., Domino's Pizza LLC and Domino's Pizza Franchising LLC, collectively “Domino's”). The motion was granted.

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