Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Sunday, June 23, 2024 | Back issues
Courthouse News Service Courthouse News Service

Appeal Promised as McDonald’s Ducks Wage-Theft Suit

A class of workers at eight McDonald’s franchises will likely take their employment claims before the Ninth Circuit, after a federal judge sided with the fast food giant in a ruling Friday.

SAN FRANCISCO (CN) – A class of workers at eight McDonald’s franchises will likely take their employment claims before the Ninth Circuit, after a federal judge sided with the fast food giant in a ruling Friday.

U.S. District Judge Richard Seeborg granted McDonald’s summary judgment for a second time in his latest ruling, saying McDonald’s cannot be held liable for workplace violations because it doesn’t meet the definition of an employer under California’s labor code.

Cashiers Guadalupe Salazar, Genoveva Lopez and Judith Zarate sued McDonald’s and franchise owner Bobby Haynes in March 2014, claiming they were denied meal and rest breaks and that McDonald’s miscalculated their wages through a flawed payroll system.

The Haynes Partnership, which has owned eight franchises in Oakland and San Leandro since 2010, settled with the workers in 2015.

Ruling on McDonald’s motion for summary judgment back in August, Seeborg observed that the Haynes Partnership controlled hiring, firing, discipline, wage-setting and the employees’ general working conditions, and that McDonald's was not a joint employer because it didn't make direct personnel decisions.

The workers then tried to proceed on an “ostensible agency” theory where a franchisor can be believed by the employee to be acting on behalf of the parent company.

But in January, Seeborg denied class certification, finding insufficient evidence to show a common set of circumstances classwide.

The Industrial Welfare Commission, which regulates wages, hours and working conditions in California, defines an employer as one who “‘directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.’”

In his ruling granting the food corporation’s motion, Seeborg rejected the workers’ argument that McDonald’s could be liable under ostensible agency because the commission’s definition includes the phrase “through an agent.”

He wrote, “Read in context, however, that phrase is explicitly limited. The wage order restricts the definition of an ‘employer’ to one who, through an agent, ‘employs or exercises control over’ the workplace environment. Because plaintiffs’ interpretation would render this added limitation meaningless, it must be rejected.”

In an interview, the workers’ attorney Michael Rubin said that the Ninth Circuit will either rule that McDonald’s is a joint employer, or send the case back for a jury to decide the issue.

“There were hundreds of pages of documentation submitted that show McDonald’s is able to not only control the terms and  conditions of crew employment but how it is specifically responsible for controlling portions of the timekeeping system that were directly responsible for causing the violations,” Rubin said.

“It really surprised us when Judge Seeborg concluded that McDonald’s was not a joint employer based on the facts, because there’s just so much evidence that it micromanages and tracks every activity of every crew member and every franchise, and dictates how the restaurants are operated, how many employees there are, what they do, and how they get paid.”

While terming the ostensible agency theory “a free bite at the apple,” Rubin said he always saw McDonald’s as a joint employer.

“We always saw this as a joint-employer case and we’re pleased finally to be up in front of the appellate court,” Rubin said.

Follow @MariaDinzeo
Categories / Employment

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.