Ninth Circuit says McDonald’s not joint employer of franchise workers
Workers will learn how the ruling affects joint-employer liability, what California tests courts use, and practical steps employees and franchisors can take next.
1. What the Ninth Circuit decided and why it matters
The court held that McDonald’s Corp. was not a joint employer of certain franchise employees, finding the company lacked the necessary level of control over day-to-day employment decisions. This ruling narrows a major route for holding franchisors liable for franchisee wage-and-hour violations and creates a roadmap for how courts evaluate franchisor-franchisee relationships going forward. For workers, the decision signals that responsibility for most store-level violations will often remain with franchisees unless evidence shows tighter operational control by the brand.
2. The first California test: exercise of control over wages, hours, or working conditions
This test asks whether the putative employer actually exercised control over core employment terms like pay rates, schedules, and workplace rules. The Ninth Circuit found McDonald’s brand controls, such as standards for product quality, marketing, and some operational directives, did not amount to the kind of direct control over wages and shifts needed to trigger joint-employer liability. For employees, that distinction means store-level payroll and scheduling practices are more likely to be the franchisee’s responsibility unless the franchisor actively sets those specifics.
3. The second California test: the “suffer or permit” definition
“Suffer or permit to work” is a broad statutory standard that can capture entities that allow labor to occur under their authority or benefit. The court examined whether McDonald’s “suffered or permitted” the work at issue, but concluded the record did not show McDonald’s authorized or tolerated the infringing employment practices at the level required. Practically, employees will still be able to point to brand involvement, but mere knowledge or indirect influence is often insufficient to meet this test.
4. The third California test: the common-law right-to-control analysis
Common-law right-to-control focuses on whether an entity reserved the legal right to control how work is performed, even if it did not exercise that right. The Ninth Circuit determined McDonald’s lacked the requisite common-law control over day-to-day employment decisions at the franchise restaurants. The decision underscores that written agreements or non-binding guidelines that maintain operational independence for franchisees can be pivotal.
5. Why ostensible-agency theories were rejected
Plaintiffs tried to use ostensible-agency theories to hold McDonald’s liable, arguing the brand’s public role and relationships made it appear responsible for store labor issues. The court rejected those theories, finding the evidence did not support an agency relationship that would bind McDonald’s to franchisee labor obligations. That ruling reduces one avenue plaintiffs might use to reach franchisors based on brand appearance alone.
6. Evidence of knowledge vs. the level of control required
The record did include indications McDonald’s could have known about some franchisee violations, but the court emphasized knowledge does not equal control. Liability requires proof of substantive power to direct employment terms, not just awareness that problems existed. For workers, that split matters: proving a brand knew of violations can bolster a case, but without evidence of direct control the franchisor may still escape joint-employer status.
7. Precedent implications for franchisors and franchise litigation
The decision is an important precedent signaling that brand-control activities aimed at quality assurance do not automatically create joint-employer liability under California tests. Franchisors will likely cite this ruling in future litigation to defend standard-setting and auditing practices that stop short of payroll or scheduling authority. Plaintiffs’ attorneys, meanwhile, may pivot to gathering more direct evidence of operational control or to pressing state agencies and legislatures for different standards.
- Use independent contractors or local managers for scheduling and payroll functions so authority sits with the franchisee.
- Document that audits and training are quality-control measures, not personnel-control mechanisms, and ensure corrective measures are implemented by the franchisee rather than imposed directly by the franchisor.
8. Practical takeaways for franchisors to preserve separation
Franchisors should structure agreements and oversight practices deliberately to reduce joint-employer risk. Keep franchise agreements clear about operational autonomy, avoid contractual language that reserves payroll, scheduling, hiring, or firing authority, and limit directives that could be read as controlling store-level employment decisions. Useful practices include:
9. How this affects workers and workplace dynamics
For crew members and shift leads, the ruling means that when wage or scheduling problems arise, the franchisee is more likely to be the direct target for claims and enforcement. That can complicate recovery: franchisees may have limited resources, and workers may face fragmented remedies across multiple franchises. Workers should be aware that proving franchisor liability requires showing concrete control, so cases against brands may be harder to win unless clear control evidence exists.
10. Why state-law tests, especially California’s, still matter
The court’s analysis rested on California’s three-part framework, and the opinion reiterates that state-law definitions remain pivotal in joint-employer litigation. Different states and federal circuits use varying tests, so outcomes can diverge depending on forum. Employees and franchisors should monitor state developments: a favorable ruling in one jurisdiction won’t automatically control elsewhere.
11. What to expect in future litigation and enforcement
Expect plaintiffs to refine strategies, collecting granular evidence of corporate directives, communications, and hands-on oversight, to try to meet the control threshold. Regulators and lawmakers may respond by clarifying standards or adjusting enforcement priorities, particularly in places where franchise labor issues are politically salient. Franchisors might increase compliance documentation to show separation; plaintiffs may push for statutory changes instead.
- File complaints with state labor agencies or the Wage and Hour Division if federal laws apply.
- Seek legal advice early; attorneys can help determine whether evidence supports naming the franchisor as a joint employer.
- Talk to coworkers and collect corroborating statements, pattern evidence can be critical in complex joint-employer claims.
12. Practical steps for workers who suspect wage-and-hour violations
If you suspect violations at a franchised restaurant, document everything: paystubs, schedules, written requests, and communications about hours or discipline. Identify whether your employer is the local franchisee or the corporate brand, employment paperwork and paychecks typically list the employer, and consider these next steps:
Closing practical wisdom This ruling reinforces that brand standards and quality-control regimes are not automatically the same as day-to-day employment control, but knowledge of violations and close operational ties can still create risk. Workers should focus on documenting who actually hires, fires, schedules, and pays; franchisors should document operational boundaries. In a landscape that’s shifting by case and by state, practical documentation and clear contractual lines are the best tools for both sides.
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