What if the employer cannot pay our back wages?

(Liabilities of “joint employers”)

Q: I WORK as a manager for a fast-food franchisee with three stores in Los Angeles. While my title is “manager” I spend 70 percent of my time doing cashier and cook duties. I work 10 to 12 hours per day, 6- 7 days per week, but not paid overtime. The other hourly employees also suffer from unpaid overtime. I f we sue our employer, I am concerned that they cannot afford to pay all of us, and may just close the business. What should we do?
A: It would be smart to consult with an experienced employment attorney to discuss your options. This is because the employer whose name appears in your paystub may not be the only company liable for unpaid wages. An employment attorney will be able to evaluate whether the franchisor could also be liable for the franchisee’s labor violations. Consider the situation of the following McDonald’s workers:
Stephanie Ochoa, and others worked at a McDonald’s in San Francisco, operated by franchisee the Smith Family LLP. The Smith family operates 5 McDonald’s restaurants under a franchise agreement with McDonald’s Corp. The employees sued the Smith Family and McDonalds Corp in a class action, claiming that McDonald’s and Smith were jointly liable for violating several California employment laws. The employees claimed that they were not paid all earned wages because of errors in payroll data; that they were not paid daily overtime; they were not provided meal and rest periods; and the employer failed to reimburse employees for the time and money needed to iron and clean their McDonald’s uniforms.
McDonald’s objected to being included in the lawsuit because it did not directly employ the workers and its relationship and dealings were mainly with the Smith Family (the franchisees).
The court, however, ruled that the Smith Family is the “ostensible agent” of McDonald’s who should, therefore, be also liable for the unpaid wages to the workers. Instead of continuing to litigate the case, McDonald’s agreed to settle the case with the employees and pay the employees a total of $3.75 million in damages.
If there is more than one employer or company in the picture, several legal theories can be pursued to recover payment of wages for the employees. The companies may be joint employers, depending on the extent of control that one has over the other. They may also constitute a single integrated enterprise with interrelated operations, common management, centralized control of labor relations, and common ownership. One of the companies may be the agent of the other.
Although highly technical, various courses of action can be pursued with the creativity and persistence of the attorney representing the employees. If you, or someone you know, is concerned that back wages may not be paid, explore your options by inquiring with an attorney who had done this before.

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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no-cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. 

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C. Joe Sayas, Jr., Esq. is an experienced trial attorney who has successfully obtained significant recoveries for thousands of employees and consumers. He is named Top Labor & Employment Attorney in California by the Daily Journal, consistently Aselected as Super Lawyer by the Los Angeles Magazine, and is a member of the Million Dollar-Advocates Forum. 

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