Workforce Bulletin

In a win for businesses, the Massachusetts Supreme Judicial Court (“SJC”) has ruled that individuals in true franchisor-franchisee relationships are independent contractors. In Patel v. 7-Eleven, Inc., the SJC found that defendant franchisor 7-Eleven, Inc. (“7-Eleven”) did not misclassify certain franchisees in violation of the Commonwealth’s independent contractor statute, M.G.L. c. 149, § 148B, which presumptively considers an individual “performing any service” for a putative employer to be an employee of said putative employer, rather than an independent contractor, unless: (1) the individual is free from control and direction in connection with the performance of the service; (2) the service is performed outside the usual course of the business of the employer; and (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature at that involved in the service performed.

In a long saga to determine whether 7-Eleven properly classified certain franchisees as independent contractors, the United States Court of Appeals for the First Circuit (“First Circuit”) certified two questions to the SJC. On the first question back in 2022, the SJC ruled that where a franchisee is an “individual performing any service” for a franchisor, the independent contractor statute applies to the relationship between the franchisor and the franchisee. The decision here involved a second question that the First Circuit certified to the SJC related to the threshold determination of the independent contractor statute:

Do the plaintiffs perform any service for 7-Eleven within the meaning of the independent contractor statute, where, as here, they perform various contractual obligations under the Franchise Agreement and 7-Eleven receives a percentage of the franchise’s gross profits?

Our colleagues Adam Abrahms, Steven Swirsky, and Martin Stanberry at Epstein Becker Green have a Management Memo blog post that will be of interest to many of our readers: "NLRB Issues 13 Complaints Alleging McDonald’s and Franchisees Are Joint-Employers."

Following is an excerpt:

While the General Counsel’s actions are alarming, particularly for businesses that rely upon a franchise model, the issuance of these complaints comes as little surprise because, as we reported in July of this year, the General Counsel had previously announced the decision to take this ...

By Amy Messigian

On October 11, 2012, the California Supreme Court granted review of Patterson v. Domino's Pizza to address the circumstances in which a defendant franchisor may be held vicariously liable for tortious conduct by a supervising employee of a franchisee.

Like many fast food chains, Domino’s Pizza (“Domino’s”) is a franchising operation in which individual franchisees operate storefronts under the Domino’s name.

In Patterson, the plaintiff, a sixteen-year-old employee of a Sui Juris, a Domino’s Pizza franchisee (“Sui Juris”), alleged that she ...