In a wage suit against the owner of three separate franchise entities operating a total of 19 McDonald’s restaurants, a restaurant employee overcame the initial hurdle for conditional certification of an FLSA collective alleging that he and similarly situated employees should have been compensated for the time spent attending a mandatory orientation session upon hire. However, a federal court in Indiana narrowed the scope of his action, finding he lacked standing to sue the other entities in which the franchise owner was a principal. He could pursue claims only on behalf of class members who had worked at one of the six restaurants that were owned by the same entity that employed him (Heuberger v. Smith, September 7, 2017).
Minimum wage claims. The employee worked at a McDonald’s restaurant in Indiana, earning the federal minimum wage of $7.25 an hour. He alleged that at the time of his hire, he was required to participate in an unpaid orientation session, which involved filling out paperwork and reviewing the employer’s policies. Other hourly workers underwent the same orientation. He also asserted that employees were told they would have a “crew uniform clothing fee” of $2.00 deducted from every paycheck. Contending that he and the other hourly workers should have been paid for the time spent in the mandatory orientation, and that the uniform deduction dropped their pay below the federal minimum wage, he sued his employer—a McDonald’s franchisee. He also sued the owner of the franchise entity—and the owner’s two other business entities that operated McDonald’s restaurants in the state.
The defendants moved to dismiss the action in its entirety as to the owner’s other two business entities, and to dismiss the uniform deduction claim as to all defendants. Also before the court was the employee’s motion to conditionally certify two separate FLSA subclasses: an unpaid orientation subclass and a uniform deduction subclass.
Unpaid orientation subclass. The employee proposed a subclass made up of employees of all three of the owner’s McDonald’s franchise operators. However, he only presented evidence of mandatory unpaid orientations as to the single entity that he worked for; he offered no proof that the other entities also required employees to attend unpaid orientation sessions. Consequently, the proposed class was overbroad; the workers employed solely by other two entities could not be part of this subclass. However, the evidence did support certification of a smaller subclass of hourly workers who were employed at one of the six restaurants operated by the same business entity that employed the plaintiff. Although the plaintiff failed to assert that other employees were required to attend orientation, his employer’s affidavit attested that those seeking employment at one of these six restaurants were asked to attend pre-hire orientation. This admission could support a finding that the employees were subject to a common policy that violated the FLSA.
Therefore, the court conditionally certified the narrower class of employees as to the unpaid orientation claims. It also ordered the employer to provide the employee with a list containing the names of all hourly employees in the revised class who worked during the relevant time frame for purposes of notice. However, the court refused to compel the employer to post the notice in restaurant break rooms.
Uniform deduction subclass. The court refused to certify a uniform deduction subclass, finding that the employee was not similarly situated with his coworkers in this regard. The employee’s paychecks demonstrated that he was not a member of the class he sought to represent because no uniform deductions were actually taken from his paychecks. Thus, he made no showing that he and the putative subclass members were victims of an illegal policy. Moreover, because he never presented any evidence that a uniform fee had ever actually been deducted from his pay, the court dismissed the employee’s individual uniform deduction claim as well.
standing to sue other entities. Finally, the court held the employee lacked standing to bring his remaining claims against his employer’s other two business entities, and dismissed his claims as to these defendants. The employee made no specific allegations against either entity. Rather, he attempted to include them by repeatedly pleading in the collective, even though his own allegations indicated that the practices he challenged were hisemployer’s only.
Moreover, contrary to the employee’s contention, the other entities were not joint employers jointly operated the chain of McDonald’s restaurants with the owner and the entity that employed him. These entities were not involved in supervising or paying him, or any other activity which might make them joint employers. Nor was the court swayed by the employee’s alternative argument that the other entities were his statutory employers because they formed a single integrated enterprise together with the entity he worked for, rendering them jointly liable. These entities were operated independently and there was no evidence the owner used these different business entities for fraudulent purposes.
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