Franchisee as Independent Contractor or Employee?

Franchisee as Independent Contractor or Employee?

This noteworthy California WCAB panel decision will be added to the LexisNexis Services.

Employment Relationships; Employees; Franchisees. California WCAB reversed WCJ’s finding that applicant was a janitorial franchisee/independent contractor pursuant to franchise agreement with defendant at time of injuries, and held that based upon factors in S.G. Borello & Sons, Inc., applicant was an employee of defendant on date of her injuries, notwithstanding that franchise agreement expressly stated that applicant was an independent contractor, when WCAB looked beyond label placed on parties’ relationship and analyzed applicant’s actual job duties and parties' conduct, and found that (1) there was a significant disparity in bargaining position and sophistication between parties, (2) defendant retained pervasive control over business operation as a whole and limited applicant’s ability to manage any aspect of business, (3) franchise agreement contained many “manner and means” provisions for carrying out tasks of cleaning offices as well as negative consequences if these tasks were not complied with, (4) defendant had right to audit applicant’s personal and business tax returns and was allowed full access to list of applicant’s cleaning customers, (5) defendant retained right to discontinue applicant’s  services, (6) there was no opportunity for applicant to use her own initiative, judgment or managerial abilities to create a profit, (7) contract between parties was for a term of 20 years which WCAB found reflective of an employee relationship, and (8) numerous provisions of franchise agreement limited applicant’s independence in all aspects of the business. See Moreno panel decision.

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