In Patterson v. Domino's Pizza, LLC, Ms. Patterson, an employee of a Domino's Pizza franchisee, alleged she was sexually assaulted by her store manager. She filed suit against the franchisor, Domino's Pizza, claiming Domino's was vicariously liable for the assault as her employer. Domino's argued that it was not Ms. Patterson's employer because the franchise agreement clearly stated that the franchisee was an independent contractor of Domino's and that Domino's was not involved in the "training, supervision or hiring of [the Franchisee's] employees." The Trial Court agreed with Domino's, finding that Domino's was not responsible for "supervising and paying the persons who work in the store." In an opinion many franchisors may find troubling, however, the California Court of Appeal recently disagreed.
The Domino's franchise agreement stated that the franchisee "shall be solely responsible for recruiting, hiring, training, scheduling for work, supervising and paying the persons who work in the Store and those persons shall be your employees, and not [Domino's] employees." However, other provisions in the franchise agreement vested Domino's with control over employee qualifications, demeanor, hiring and training. More importantly, though, the franchisee claimed that a Domino's area leader told him to fire the manager who had allegedly assaulted Ms. Patterson and threatened to put him out of business if he didn't follow other employment guidelines. According to the Court of Appeal, that was enough to amount to "substantial control."
Protection from liability to franchisees' employees is an important benefit franchisors have traditionally enjoyed from the independent contractor relationship. But, as the Court in the Domino's case reminds us, these protections may be lost, regardless of the language in the franchise agreement, if the franchisor "assumes substantial control over the franchisee's local operation, its management-employee relations or employee discipline."
Click here to see the Court's decision.