In Salazar v. McDonald’s Corporation, the Court held that a franchisor (McDonald’s) cannot be classified as an employer of its franchisees’ workers, and also is not an agent of a franchisee who can be held liable for wage-and-hour violations under an ostensible-agency theory.  The plaintiff class members worked at McDonald’s franchises operated by the Haynes Family Limited Partnership. They sued alleging that they were denied overtime premiums, meal and rest breaks, and other benefits in violation of the California Labor Code. They named McDonald’s Corporation. The issue was whether McDonald’s corporate was also liable, not just the franchise owner.  The Court held that McDonald’s was not an employer under the “control” definition, which requires “control over the wages, hours, or working conditions.”  Martinez v. Combs, 231 P.3d 259, 277 (Cal. 2010).  The Court also held that McDonald’s did not meet the “suffer or permit” definition of employer under California law.  It then looked at the common law test, and held that McDonald’s would not be the employer.  The Court held there was no evidence that McDonald’s had the requisite level of control over plaintiffs’ employment to render it a joint employer under applicable California precedents. In short, it held none of the tests were satisfied to find liability as an employer. Lastly, it held that that McDonald’s cannot be held liable for wage-and-hour violations under an ostensible-agency theory.

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