Sacramento, CAA California labor lawsuit that claimed McDonald's is responsible for how its franchisees manage their pay has been given the go-ahead to proceed as a class action lawsuit. Workers at five McDonald's restaurants in California filed the lawsuit, alleging the franchise owner - who owned all five restaurants - violated wage and hour laws, failed to pay overtime, and failed to pay minimum wage.
The franchisee has already settled its portion of the lawsuit for approximately $700,000, but McDonald's has argued it is not responsible for how franchisees operate their businesses or manage working conditions. Plaintiffs, however, argued McDonald's provides franchisees with overtime tracking software that is purposely reduces overtime pay.
Here's how plaintiffs allege it works: some employees work a shift that starts late in the evening and carries on into the next morning, covering one shift but two separate dates. They might then start another shift later on that second date, after a few hours off. The software reportedly assigns all hours worked on a shift to the date the shift started, not the date the hours were worked. So while they may work more than eight hours in a 24-hour period, because the hours from the first shift were counted towards the first day, the employees aren't paid overtime for that second day.
In allowing the motion to continue as a class action lawsuit, the Judge James Donato found that employees reasonably believed McDonald's was their employer, according to The New York Times (7/28/16).
Certification of the class means between 400 and 500 employees will be part of the action against McDonald's. Parts of the class action were dismissed, and the judge ruled that under some theories, McDonald's is not a joint employer of workers at franchise restaurants, but overtime claims were granted class action status and the judge did find McDonald's could be liable as an "ostensible agent."
This means that, given the circumstances, even though employees were mistaken about McDonald's being their employer, they may have had valid reasons for believing the franchise owners operated under McDonald's authority. The judge found that the plaintiffs showed the ostensible agency argument could be made on a classwide basis.
Plaintiffs allege the pay violations go back to 2010 and are currently in effect.
The lawsuit is Ochoa, et al. v. McDonald's Corp., et al., case number 3:14-cv-02098, in the US District Court, Northern District of California.
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