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McDonald’s can’t be sued as joint employer in lawsuit alleging sexual harassment at franchisee’s restaurant

By Marjorie Johnson, J.D.

The court rejected an applicant’s reliance on the franchise agreement as a basis for holding McDonald’s liable as a joint employer, ruling that she failed to plausibly allege it exercised a “high level of control” over the franchisee.

McDonald’s USA will not face a 16-year-old applicant’s employment-discrimination lawsuit asserting that she was subjected to sexually inappropriate conduct during a job interview at its franchisee’s restaurant since she failed to plausibly allege joint employer status, a federal district court in Pennsylvania ruled in dismissing all of her claims against the company. She also could not advance her claim for intentional infliction of emotional distress against the franchisee’s owner since the store manager was not acting within the scope of his employment when he allegedly forced her to allow him to search her cellphone and showed her sexually graphic images on his own phone, including a nude picture of himself (Doe v. McDonald’s USA, LLC, December 3, 2020, Robreno, J.).

Ordered to hand over phone. The applicant interviewed with the store manager for a “crew member” position at the franchisee’s restaurant. After advising her that he intended to hire her, the manager purportedly asked her to unlock her cellphone so he could view its contents. After she reluctantly complied, he searched her device while asking increasingly personal questions, including about her sexual activity.

Shown sexually graphic photos. The manager then handed his cellphone to her and asked her to review its contents. She began to scroll through images and saw sexually graphic pictures, including photographs of nude women and what appeared to be the manager’s exposed genitals. He ended the interview by demanding that she provide him with her phone number and informing her of her start date at the restaurant. She quickly left and was so disturbed by his behavior that she did not accept the position. She subsequently filed the instant action against both McDonald’s and the franchisee.

Franchisor not joint employer. McDonald’s was entitled to dismissal of all of the applicant’s claims against it, which included Title VII and tort claims, since she failed to establish the existence of a joint employment relationship in which the entities exercised “significant control over the same employees.” A review of the relevant factors considered in the Third Circuit led the court to reject the applicant’s assertion that McDonald’s exercised a “high level of control over the franchisee.”

Lacked sufficient authority. First, she failed to plausibly allege that McDonald’s exercised “authority to hire and fire, promulgate work rules, and set conditions of employment.” Her lawsuit only asserted that under the franchise agreement, the franchisor “maintained significant control” over the franchisee’s daily operations and “controlled the means of conducting business and supervising employees, including areas of business operations, inventory, booking and accounting.” These conclusory allegations were insufficient to state a cause of action.

She also alleged that McDonald’s “provided explicit detail in their operations manuals” and instructed the franchisee as to the hours of operations, required it employ adequate personnel, and required employees to wear certain uniforms. These actions, even if true, “fell short of setting conditions of employment.” Furthermore, the applicant dd not claim that McDonald’s had the authority to hire or fire either her or the store manager.

No day-to-day supervision. Though the applicant claimed that McDonald’s “had the express control and ability to mandate business managers receive training specifically provided by… McDonald’s,” she did not allege that she and/or the store manager received any such training from the company. Additionally, she did not assert that it engaged in employee discipline at the franchisee’s store, where the alleged conduct occurred.

Control of records “neutral.” The applicantdid allege that McDonald’s “maintained the right to inspect all aspects of the [restaurant location] including bookkeeping, accounting and tax records to ensure compliance.” But while this provided some support for a finding that McDonald’s exercised control over employee records, she did not assert that the company had any authority to “review payroll, personnel files, or other records not pertaining to sales of [its] products.” This factor was therefore “neutral.” However, considering all relevant factors and other circumstances surrounding the work relationship, the applicant failed to plausibly allege that McDonald’s and the franchisee were joint employers.

No vicarious liability for IIED claim. The court also granted the franchisee’s motion to dismiss the applicant’s IIED claim against it because she failed to plausibly allege vicarious liability under the theory of respondeat superior. As an employer, the franchisee could only be vicariously liable for the manager’s wrongful acts if they were “committed during the course of and within the scope of employment.” Here, even if the manager’s alleged conduct rose to the level of “extreme and outrageous,” the applicant failed to state an IIED claim against the franchisee because the conduct did not plausibly occur within the scope of his employment.

While conducting interviews may well have been part of his job, she failed to plausibly allege that the particular conduct at issue—showing her sexually graphic photographs on his cellphone—was conduct that he was “employed to perform” or that was “actuated, at least in part, by a purpose to serve” the franchisee. Accordingly, because she failed to plausibly allege that his misconduct occurred within the scope of his employment, she could not hold the franchisee vicariously liable.