Neon sign spelling `Not`Another case has been decided adding to the back and forth in the legal world on the issues of a joint employer relationship of a franchisor and its franchisee and vicarious liability and agency between a franchisor and franchisee.

In Harris v. Midas, (2017 WL 3440693 (W.D. Pa. Aug. 10 2017)) a federal court in Pennsylvania dismissed an auto repair service franchisor from a sexual harassment case brought by a former employee of one of its franchisees.  The plaintiff alleged multiple and continuing acts of sexual, emotional and physical harassment against multiple managers of the franchisee.  The plaintiff sued the franchisor, Midas, under theories of joint employment, agency and vicarious liability.  In particular, for the joint employment claim, they relied on Myers v. Garfield & Johnson Enters, Inc., 679 F. Supp. 2d 598 (E.D. Pa. 2010) where the Third Circuit stated that “a joint employer relationship may exist for the purposes of Title VII when two entities exercise significant control over the same employee.”

The Harris court went through a detailed analysis of various aspects of control in an employment situation which had been used by district courts within their circuit and found them to be lacking.  In this case, the court stated that the plaintiff did not plead facts sufficient to support that the franchisor “had any authority to: hire or fire her [the plaintiff], promulgate work assignments, control her compensation, benefits, or hours, supervise her day-to-day work, discipline her, pay her salary, or manage her employee records.”   This lead the court to believe that the local franchisee company retained almost all control over her employment and to reject the claim of joint employment.

The court followed a somewhat similar analysis for the agency and vicarious liability claims.  In this analysis, the parties agreed that the issue is whether a franchisor exercised control over the franchisee’s business operations.

In discussing the case Drexel v. Union Prescription Centers, Inc., 582 F.2d 781 (3d. Cir. 1978), the court pointed to the differentiation between controls that led to a legitimate agency/vicarious liability relationship and those that “evidence [the franchisor’s} concern with the ‘result’ of the store’s operation rather than the ’means’ by which it was operated.”  The court did acknowledge and allow for many of the usual controls exercised by a franchisor and the absence of daily control led them to rule that the plaintiff failed to allege a claim for agency or vicarious liability.