US decision finds franchisors not employers

DLA Piper attorneys John A. Hughes and Stephanie Zosak reported last Friday that under the economic reality test, courts consider whether the alleged employer: (1) possessed the power to hire and fire employees; (2) supervised and controlled employee work schedules or conditions of employment; (3) determined the rate and method of payment; and (4) maintained employment records.

The attorneys state that although Plackis met with the franchisees and provided advice on improving the franchisee’s profitability, the appeals court held that the franchisor did not possess the power to hire or fire the kitchen employee.

The U.S. Court of Appeals for the Fifth Circuit also concluded that the employee failed to present evidence that Plackis supervised and controlled employee work schedules or conditions of employment in support of the second element of the economic reality test.

Read more on the latest decision.

Read more on the NLRB ruling about McDonald's employer status.