Labor & Employment Law Daily Wendy’s franchisee cashier plausibly alleged that fast-food giant liable under Title VII as joint employer
Tuesday, August 28, 2018

Wendy’s franchisee cashier plausibly alleged that fast-food giant liable under Title VII as joint employer

By Marjorie Johnson, J.D.

A Wendy’s cashier who claimed she was harassed and groped by a supervisor who later pled guilty to criminal assault advanced to the discovery stage of her sexual harassment claims against not only the franchisee restaurant, but also the Wendy’s corporate defendants. Denying dismissal of her Title VII and state law claims, a federal court ruled that she plausibly alleged both joint employer and agency theories of liability based on the contents of the franchise agreement as well as her own specific allegations as to Wendy’s exercise of control (A.H. v. Wendy’s Co., August 22, 2018, Caputo, A.).

Forcefully groped. In June 2015, the then 15-year-old employee was hired as a cashier at a Wendy’s restaurant operated by the franchisee, Quality Served Fast, Inc. (QSF). In early 2016, her male supervisor began making verbal sexual advances towards her. In June, his conduct turned physical and he forcibly fondled her against her will. Though a co-manager asked her about the incident, he did not report it to upper management.

Supervisor pleads guilty. After several more months of harassment, she reported the supervisor’s behavior to her father, who contacted the police. The supervisor was allowed to continue working despite knowledge of the police investigation and was ultimately criminally charged. In March 2017, he pleaded guilty to harassment and disorderly conduct. He had previous charges against him for assault and harassment and had a history of harassing at least three other Wendy’s employees.

EEOC communications. The employee filed a charge with the EEOC and the Pennsylvania Human Relations Commission (PHRC). In addition to the franchisee, the named respondents were Wendy’s Company, Wendy’s Restaurants, LLC, Wendy’s International, LLC, and Quality Is Our Recipe, LLC (collectively “Wendy’s”). In its letter acknowledging receipt of her charge, as well its subsequent Notice of Right to Sue, the EEOC identified the Respondent as “Quality Served Fact, Inc. D/B/A Wendy’s.”

Joint employer. Acknowledging that the employee may ultimately be unable to establish joint employment after discovery, the court found that she nevertheless asserted enough facts to state a plausible basis to find that the Wendy’s defendants were her joint employer for purposes of Title VII and or the Pennsylvania Human Rights Act. The court examined the following factors: “(1) authority to hire and fire employees, promulgate work rules and assignments, and set conditions of employment, including compensation, benefits, and hours; (2) day-to-day supervision of employees, including employee discipline; and (3) control of employee records, including payroll, insurance, taxes, and the like.”

Authority over conditions of employment. As to the first factor, the employee alleged that when she was hired, she was required to sign a conduct policy that identified activities which Wendy’s considered “to be a business abuse or contrary to acceptable business practice.” She also had to sign several additional policies identified as Wendy’s rules and regulations.

Additionally, the franchise agreement provided that “Franchisee shall operate the Restaurant in strict conformity with such methods, standards, and specifications as Franchisor may from time to time prescribe in the Manual or otherwise in writing.” QSF was also required to comply with certain rules and codes set forth by Wendy’s. Therefore, while her allegations did not establish that Wendy’s had control over hiring and firing decisions, there were sufficient facts at this stage in the litigation regarding its authority to set conditions of employment and workplace rules.

Day-to-day supervision. As evidence of employee supervision, she also alleged that upon hire, she was required to undergo a series of computerized training courses authored by Wendy’s, and that it provided continual in-service training of employees. Moreover, the franchise agreement authorized Wendy’s to conduct periodic inspections and to provide “as it deems advisable, periodic and continuing advisory assistance to Franchisee as to the operation, merchandising, and promotion of the Restaurant.”

Control of employee records. The franchise agreement also required Wendy’s to provide QSF with reporting forms for use in operation of the business. It also gave Wendy’s the right to examine QSF’s “the books, records, and tax returns,” which could be plausibly read to mean that Wendy’s exercised some control over employee records for purposes of a motion to dismiss. Finally, the employee also claimed that she signed a policy referring to an employment relationship with Wendy’s.

Agency theory. Similarly, the allegations regarding Wendy’s control over QSF’s employees also plausibly created liability under the agency theory. Significantly, the franchise agreement contained some “nebulous and generally phrased” provisions which suggested that Wendy’s “retained a broad discretionary power to impose upon the franchisee virtually any control, restriction, or regulation [they] deemed appropriate or warranted.” Moreover, she alleged that she was required to submit to Wendy’s training and to sign their employment policies.

Plaintiff not blamed for EEOC’s failures. Wendy’s also failed to convince the court that the employee failed to exhaust her administrative remedies since the EEOC’s identification of the Respondent as “Quality Served Fact, Inc. D/B/A Wendy’s.” meant that she only received a right to sue letter as to QSF. Significantly, she properly commenced her administrative action against the Wendy’s defendants by naming them in her original EEOC charge. Thus, the problem was not a deficiency in her charge, but a failure of the EEOC to carry out its Title VII responsibilities, which does not preclude a plaintiff’s Title VII claim.

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