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The Franchise Memorandum

Federal Court Dismisses Joint Employer Claim for Failure to Plead Facts Related to the Franchisor’s Purported Control of Franchisee’s Employee
Posted in Employment

A federal court in New York granted 7-Eleven’s motion to dismiss a franchisee’s employee’s complaint, which alleged that 7-Eleven was his joint employer, for lack of sufficient factual allegations to support the claim. Acharya v. 7-Eleven, Inc., 2019 WL 6830203 (S.D.N.Y. Dec. 13, 2019). Acharya’s complaint alleged that he was unpaid for, among other things, over 2,000 hours of overtime work and that, as a result, 7-Eleven and the franchisee, as his joint employers, had violated the Fair Labor Standards Act (FLSA) and the New York Labor Law.

In granting 7-Eleven’s motion to dismiss, the court held that Acharya’s complaint failed to adequately plead facts that would give rise to an inference that 7-Eleven exercised the formal and functional control over Acharya necessary to demonstrate an employment relationship for the purpose of federal or state law. Specifically, the court found that Acharya had failed to plead facts concerning which entity actually offered him his job, or whether 7-Eleven had hiring and firing power, or the ability to control his work schedule and employment conditions, including hours worked or pay received. Finally, the court held that a plaintiff must assert more than boilerplate allegations on “information and belief” to allege a viable claim against a franchisor under the FLSA or New York Labor Law.

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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