U.S. Tenth Circuit - The FindLaw 10th Circuit Court of Appeals Opinion Summaries Blog

Franchised Janitors are Employees, Maybe?

With all the different structures these days for all sorts of different forms of employment, one creatively formed janitorial services company is facing the same age-old question as every "sharing economy" company must at some point or another: Are their workers employees or independent contractors or something else?

Jani-King is a janitorial services company that requires some of its janitors to form their own corporations as franchisees. As a result of this novel structure, the Department of Labor brought a complaint alleging violations of federal record keeping requirements, among other things. The gist the DOL's claims is that a franchisee who actually performs the janitorial labor themselves is less a private company contracted by Jani-King, and more an employee of Jani-King.

Clean Up in District Court

The federal district did not agree with Secretary of Labor's claims and dismissed the matter. However, on appeal, the Tenth Circuit reversed, noting that the district based its dismissal on an incorrect determination of who qualifies as a Jani-King janitorial employee.

The appellate court stressed that it is more than just labels and structures that determine whether or not an individual employed by another is considered an employee for the FLSA.

Additionally, it explained that the district court erred in considering the fact that individual Jani-King "employees" weren't named, as the early stages of pleading, and the fact that injunctive class wide relief is sought, individual names are not necessary to put the company on notice of the claims.

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