A lawsuit recently filed against the owner of several convenience stores in the Princeton, New Jersey area claims violations of state and federal minimum wage and overtime laws. Lopez et al. v. 7-Eleven Inc. et al., No. L-000418-16, complaint (N.J. Super. Ct., Mercer Co., Feb. 26, 2016). The three plaintiffs, who are suing on behalf of a putative class of employees and former employees, allege that their now-former employer required them to work exceedingly long hours and unlawfully withheld their pay, which was less than both the state and federal minimum wage. The former employer is a franchisee of a national chain of convenience stores. The lawsuit names both the owners and operators of the franchisee and the national franchise owner as defendants.
This lawsuit demonstrates a common problem in employment law claims when the employer is part of a franchise. Many well-known businesses with multiple locations, such as McDonald’s restaurants, do not actually share common ownership or management. The owner of the brand—which includes the logo, menu, business model, and so forth—enters into franchise agreements as the franchisor with other companies, the franchisees, to operate one or more facilities. A typical franchise agreement contains numerous requirements regarding the operation of the worksite, in the interest of maintaining consistency among all franchised locations. This is where the tricky part for employment claims comes in.
An employee or former employee can only assert a claim for violations of minimum wage and overtime laws, anti-discrimination laws, and other employment statutes against their employer. It is often relatively easy to determine who is a person’s employer, based on an employment contract or the issuance of paychecks. In the case of a person who works at a franchised location, the franchisee is probably their employer, at least on paper. The franchisee is not, however, in full control of their own business, since they have to run their operation in accordance with the franchise agreement. How much control must a franchisor exercise over a franchisee before the franchisor begins, in a legal sense, to look like the actual employer?
The minimum wage in the state of New Jersey is $8.38 per hour, while the federal minimum wage is $7.25 per hour. N.J.A.C. § 12:56-3.1(a), 29 U.S.C. § 206(a)(1)(C). Under both federal and state laws, employers must compensate non-exempt workers for any work performed over 40 hours in a week at a rate of time-and-a-half. N.J. Rev. Stat. § 34:11-56a4, 29 U.S.C. § 207(a). New Jersey law requires employers to keep records of employee wages, with an itemized record of deductions, and to provide a statement of deductions for each pay period to each employee. N.J.A.C. § 12:56-4.1, N.J. Rev. Stat. § 34:11-4.6(c).
The plaintiffs’ complaint alleges that the franchisee defendants required them to work 60- or 70-hour weeks, but that they were only paid between $6 and $6.50 per hour. Wages were allegedly paid in cash on a highly irregular basis, with no itemized statement as required by state law. The lawsuit asserts claims under both state and federal wage and hour laws, and it seeks to hold the national franchisor liable along with the franchisee. It also asserts causes of action for breach of contract and unjust enrichment, and it demands restitution and both statutory and punitive damages.
If you need to speak to a wage violation attorney in New Jersey or New York, contact the Resnick Law Group today through our website, at 973-781-1204, or at 646-867-7997.
More Blog Posts:
U.S. Department of Labor Issues Guidelines on “Joint Employment” Under Federal Law, The New Jersey Employment Law Firm Blog, April 5, 2016
Supreme Court to Decide Case that Could Substantially Affect Employee Class Actions, The New Jersey Employment Law Firm Blog, March 1, 2016
Proposed New York City Legislation Would Protect Independent Contractors from Wage Theft, The New Jersey Employment Law Firm Blog, January 21, 2016