In a renowned 2015 Pennsylvania case, a Philadelphia franchisee of the fast-food chain Saladworks had failed (illegally) to insure, and its employee, having sustained an accident, was unable to secure workers' compensation benefits.

David B. Torrey

He sought, as a result, to cast the franchisor as his "statutory" employer. While the Pennsylvania Appeal Board accepted that argument and imposed such liability, the Commonwealth Court reversed.   

The court declared, with some irony, that Saladworks, as franchisor, “is not in the restaurant business or the business of selling salads.”

I was intrigued by the dispute (not to mention the court's ironic, and perhaps unsatisfactory, declaration), especially in light of Dean Weil's characterization in his illuminating 2014 book, of franchising as often reflecting a type of "fissuring of the workplace" that leaves highly leveraged those at the bottom of the employment hierarchy.

The injured worker in the Gaudioso/Saladworks case seemed to be such a person.   

In a new article, the author, like the injured worker's lawyer in Gaudioso, is interested in a legal argument that would cast what she calls “the all-powerful brands — the franchisors” as employers — in her case with responsibilities under the Fair Labor Standards and National Labor Relations acts. She asserts, in this regard, that “franchisor brands, not their franchisees, set industry-wide standards and, thus, have the ability to offset rising wage inequality and improve working conditions.”

The author, a professor at Cornell Law School, has studied 44 contracts between fast-food franchisors and their franchisees. She asserts that her “contractual analysis reveals a new theory of joint employment via franchisor influence over franchisees’ managers. Unlike prior foci on franchisor-franchise relations, and franchisor-crew member relations, [I bring] a new party to light: franchisees’ supervisorial managers.”

She concludes, “In sum, the theory developed from this rare dataset postulates why some Goliaths of fast food may indeed be ‘employers’ with legal obligations to the workers in their franchised restaurants.”

David B. Torrey is adjunct professor of law at the University of Pittsburgh School of Law and a workers’ compensation judge with the Pennsylvania Department of Labor & Industry. This entry is republished from the Workers' Compensation Law Professors blog, with permission.