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Can A Franchisor Be An Employer? Top Ohio Wage and Hour Lawyer Response

On Behalf of | Oct 6, 2014 | Wage: Minimum Wage, Wage: Overtime, Wage: Tipped Employees |

Best Ohio Overtime Attorney Answer: What are my wage and hour rights against a franchisee versus a franchisor? What should I do if I am not being paid minimum wage? Who can I sue if I am not being paid overtime?

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The Fair Labor Standards Act (FLSA) requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and one-half their regular hourly rates for hours worked beyond 40 per week. The FLSA provides that employers who violate the law are liable to the aggrieved employees for their back wages and an equal amount in liquidated damages, plus reasonable attorney’s fees and costs.

Recently, a federal court in the District of New Jersey has been examining the applicability of the FLSA in the context of a franchisee versus a franchisor. In Naik v. 7-Eleven, Inc., the Court recently denied a motion to dismiss that had been filed by 7-Eleven asking the Court to dismiss the FLSA claims brought by the plaintiffs on the account that the plaintiffs were franchisees of 7-Eleven, and therefore, according to 7-Eleven, were not “employees” entitled to protection under the FLSA. In denying the motion to dismiss, the Court rejected 7-Eleven’s arguments.

I am not being paid overtime. My boss says that I am an independent contractor and not entitled to overtime pay. What should I do if I am not being paid minimum wage. My manager is making me clock out and keep working so that I do not work more than 40 hours per week. What are the overtime laws in Ohio. Call Brian Spitz and the employment law attorneys at Spitz, The Employee’s Law Firm to find out about your wage and hour, wage theft, overtime, and minimum wage rights during a free initial consultation.

In having to accept the plaintiffs’ allegations as true for purposes of a motion to dismiss, the Court found that the allegations were sufficient, under the factorial test set forth by the Third Circuit to support a finding that the plaintiffs were in fact “employees” of 7-Eleven, thereby allowing their FLSA claims to survive. One of the important factors that the Court honed in on was that the plaintiffs alleged that 7-Eleven exerted a substantial amount of control over the plaintiffs including that 7-Eleven:

  • regulates vendors and supply, product pricing, advertising and promotional items;
  • processes Plaintiffs’ payroll via Defendant’s internal payroll system;
  • requires Plaintiffs to wear uniforms in store and at off-site events;
  • subjects Plaintiffs to intense daily oversight including installation of a security system to record Plaintiffs’ conduct;
  • controls the volume of their televisions, air conditioning or heat in Plaintiffs’ stores;
  • prevents Plaintiffs from owning active business interests in other business entities;
  • controls all bookkeeping and accounting, and requiring Plaintiffs to get approval before withdrawing money;
  • controls maintenance of the equipment in Plaintiffs’ stores and controlling marketing efforts and advertisements; and
  • imposes fines on Plaintiffs as a means of controlling their activities.

Based on these allegations, the Court held that there was enough in the pleadings to support a legal argument that the plaintiff franchisees were actually employees of 7-Eleven, which if true, would open 7-Eleven up to possible FLSA violations.

Moral of the story: the more control that a franchisor exercises over a franchisee, the more likely that a Court will adopt the view that the franchisee is actually an “employee” of the franchisor under the law, thereby exposing the franchisor to wage and hour and overtime claims, as well as discrimination and retaliation claims that arise out the employer-employee relationship.

If you believe that your employer is not paying you all of your wages for all of your lawfully earned overtime compensation at a rate of one and half times your normal wages as requires under the Federal Fair Labor Standards Act or Ohio Minimum Fair Wage Standards laws or you are an nonexempt employee that has been misclassified as exempt or independent contractor, contact the attorneys at Spitz, The Employee’s Law Firm today for a free and confidential initial consultation. The wage and hour lawyers at Spitz, The Employee’s Law Firm will provide you with the best options for your overtime pay dispute situation.  If you even think that you may be entitled to overtime pay that you are not being paid, call 866-797-6040.


The materials available at the top of this overtime, wage and hour web page and at this employment law website are for informational purposes only and not for the purpose of providing legal advice. If you are still asking, “Am I entitled to overtime?”, “Does my job have to pay me for …”, “My paycheck is not right…” or “What do I do if…”, the your best option is to contact an Ohio overtime attorney to obtain advice with respect to FLSA questions or any particular employment law issue. Use and access to this employment law website or any of the links contained within the site do not create an attorney-client relationship. The legal opinions expressed at the top of this page or through this site are the opinions of the individual lawyer and may not reflect the opinions of Spitz, The Employee’s Law Firm, Brian Spitz, or any individual attorney.

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