Daily Archive: June 8, 2017

DOL MOVES A RULE THAT COULD FAVOR FRANCHISORS

FROM THE ORLANDO SENTINEL, JUNE 8

Fanchise companies, including many restaurants in the Orlando area, are applauding a move by the Trump Administration’s Department of Labor on Wednesday that could reduce lawsuits against franchisors.

It could also mean less money for employees or customers who sue franchise businesses.

Franchise companies, such as McDonald’s Corp., faced more pressure regarding problems including workplace discrimination or injury in recent years. Under the Obama Administration, the labor department issued guidance that viewed such companies as “joint employers” with their franchise locations.

Wednesday’s labor announcement was terse, just three sentences. It reverses attempts by the department under the Obama Administration to attach greater liability to franchisors or contractors, referred to as joint employers.

The department announced “the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.”

“It is a favorable thing that the franchise industry would be happy to hear,” said Biff Godfrey, an Orlando attorney who previously served as general counsel for TGI Fridays restaurant chain.

Franchises like TGI Fridays are typically owned and operated by small, local businesses. There can be some exceptions to that situation, including if a franchisee owns dozens of locations. But suing a large corporation like McDonald’s is a much more wealthy target.

“It’s an attempt to reach into the deep pocket of the franchisor, rather than the company you actually work for,” Godfrey said. “That concept could potentially end the whole franchise business model.”

He said franchise companies offer basic advice to franchisees about the need to have policies addressing discrimination, harassment and other problems. But the big corporations generally don’t get involved in telling the smaller operators what they should do about such issues.

The news release from the Labor Department said it would continue enforcing the law, though: “Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction …”

CHIPOTLE IN MAY BE IN CLASS ACTION OVERTIME SUIT

FROM USA TODAY, JUNE 7

A lawsuit seeking class-action status was filed against Chipotle Mexican Grill alleging the fast-food chain failed to adequately compensate some employees for overtime work under a federal rule that went into effect late last year.

The lawsuit, filed this week in U.S. District Court in New Jersey, alleges the company failed to pay overtime to employees under the new overtime rule issued by the Labor Department last year — and that it’s not the only one. Joseph Sellers, a partner at Cohen Milstein Sellers & Toll, who represents the plaintiffs, said the issue may apply to other companies as well.

“For conscientious employers, a suit like this reminds them that the rule is in effect and that they should be paying overtime,” Sellers said. “I don’t fully understand the mind-set that has given rise to this broad belief that companies are not bound by this.”

At the core of the suit is the rule that made more employees eligible for overtime pay. It required employers to pay overtime to any worker who earned up to $47,476. Previously, the companies only had to pay overtime to workers making $23,660 or less. But in late November, shortly before the rule went into effect Dec. 1, a Texas court put enforcement of it on hold so employers didn’t have to pay overtime to workers who had the higher salary threshold. The lawsuit says Chipotle should be required to continue to pay overtime despite the injunction of enforcement of the rule by the Texas court. It contends the Texas injunction did not apply to private employers and the overtime rule would stay in effect until the court issues its final ruling.

The lead plaintiff is a worker named Carmen Alvarez, who was training to become a general manager at a Chipotle restaurant, known as an “apprentice” within the chain. She was working about 10 overtime hours a week and was earning a total of about $43,082 a year, but was denied overtime pay when the injunction was issued.

Chris Arnold, a spokesperson for Chipotle, said the company doesn’t discuss pending legal actions. He added, however, that Chipotle’s employment practices are compliant with applicable laws and specified that “a lawsuit is nothing more than allegations, and the filing of a suit is in no way proof of any wrongdoing.”

Tim Trujillo, a human resources consultant who founded Focus HR in Tehachapi, Calif., said even if the lawsuit was to win in court, it might not be around for much longer if the Trump administration chooses to roll back the rule.

The Labor Department “will probably be reviewing and deciding whether they want to go forward with the same regulations” that came during the Obama administration, Trujillo said.