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Court Watch

By Michael W. Tyler
November 02, 2014

The federal Fair Labor Standards Act (FLSA), 29 U.S.C. ”201-219 et. seq. , allows employees to sue their employers for various employment-related causes of action. While the FLSA applies only to “employers,” the Supreme Court has noted that the FLSA's definition of an “employee” has been characterized as “the broadest definition that has ever been included in any one act.” U.S. v. Rosenwasser, 323 U.S. 360 (1945). Consequently, it is not surprising that courts in two recent cases have ruled that actions brought, pursuant to the FLSA, by franchisees and franchisee employees, sufficiently alleged that franchisors were “employers” to withstand motions to dismiss under Federal Rule of Civil Procedure 12(b)(6).

Naik v. 7-Eleven Inc.

In Naik v. 7 Eleven Inc., Bus. Franchise Guide (CCH) '15, 332 (D.N.J. 2014), four franchisees of franchisor 7-Eleven Inc. contended that, despite being designated by the operative franchise agreement as “franchisees” and “independent contractors,” the economic reality of the relationship was that they were employees of 7-Eleven and, therefore, entitled to the protections of the FLSA; thus, they argued, they were authorized to assert claims for unpaid wages, minimum wages and overtime wages per this statute.

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