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McDonald's, Joint Employers and the Law

Franchisors should be wary following fast food giant McDonald’s recent agreement to pay $3.75 million to settle a lawsuit for wage and hour violations allegedly committed by one of its California franchisees. Nemeth Law attorney Kellen Myers explains that a federal lawsuit filed in 2014 by franchisee employees alleged that McDonald’s was liable as a joint employer under California law. In a ruling in August 2016, the court agreed that McDonald’s was not a joint employer but allowed the lawsuit to proceed on an alternative legal theory of “ostensible agency,” meaning it appeared to the employees that they were employed by McDonald’s. Following the court’s decision, McDonald’s chose to settle the lawsuit rather than proceed to trial.

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