The wages we earn and the hours we should work are determined by the Fair Labor Standards Act. This federal statute requires that employees must receive at least the minimum wage and may not be employed for more than 40 hours in a week without receiving at least one and one-half times their regular rates of pay for the overtime hours.
States can have their own wage and hour laws
Each state has the option of establishing its own wage and hour laws, but at the minimum, they must comply with the FLSA. Alabama has not established any wage and hour provisions different from the FLSA requirements. However, some states like California have their own laws which are often interpreted by their courts when a dispute arises.
Lawsuit against McDonald's for wage and hour violations
This lawsuit was filed on behalf of more than 1,200 current and former employees at Northern California franchise locations. These employees claimed they were underpaid, denied rest breaks and meal times, and denied reimbursement for uniform expenses. All of these allegations, if true, would constitute violations of California's labor laws.
Federal court ruling in favor of McDonald's in a wage and hour case
In a recent federal case out of California, the court was asked to determine whether the fast food giant McDonald's was guilty of wage and hour violations alleged by employees at its numerous franchises. The gist of the decision was that, because McDonald's does not actually control any of the wages paid to employees of its franchisees, it cannot be held responsible any alleged wage and hour violations. Generally speaking, according to the court, California's wage and hour laws only apply to the employers who in reality control wages and workplace conditions.
McDonald's not considered an "employer" under the law
According to the court, McDonald's is not an "employer" under the law because it does not exercise either direct or indirect control over the employee's working conditions. That includes determining their wages. The court rejected the argument that the franchise agreement between McDonald's and the franchisees created a general right to control the terms and conditions of the worker's employment. Under this most recent case, however, the court went further by rejecting the argument that McDonald's "ostensibly" controlled employee wages through an agent (the franchisees).
Why franchise businesses are different
With the franchise business model, the franchisor (like McDonald's) has a trademark, for which it sets certain standards, however, the franchisee is solely responsible for employment decisions and overall operation of the franchise. That includes employment matters such as hiring, firing, salaries and wages. In most cases, the
franchisor is not held liable as a joint employer unless they exert substantial control over the franchisee's day-to-day operations, which if often not the case.
If you feel you have been the victim of wage and hour violations, or if you have any other questions regarding your employment rights, please contact Wrady & Michel, LLC, either online or by calling us at (205) 265-1880.