The Odd Couple: Does the Department of Labor and Subway Compliance Agreement Necessarily Mean Increased Joint Liability For Subway?
- Written by Jacquelyn E. Larson
On July 26, 2016, Subway, known for its franchise of sandwich restaurant chains, entered into an agreement with the Department of Labor’s (“DOL”) Wage and Hour Division (“WHD”), with the hope that the Agreement will result in an increase in wage compliance at Subway franchises. The DOL anticipates that this Agreement will signal a new dedication to address significant wage compliance problems by cooperating directly with the employer. Employers, on the other hand, are holding their breath, waiting to see if such an Agreement will result in increased liability under the National Labor Relations Board’s (“NLRB”) joint liability standard.
The Agreement essentially only commits Subway, which the DOL states is the world’s largest franchisor, to compliance under the Fair Labor Standards Act (“FLSA”) laws that all employers are already bound to follow: laws including overtime and minimum wage requirements. The Agreement also provides that the WHD will provide compliance training materials; that Subway will share with the WHD its annual disclosures; and that both will meet quarterly to discuss compliance and ways to improve compliance, including using technology to improve aspects of payroll. Subway also agreed to “emphasize consequences” for non-compliance with its franchisees, and stated that it may “exercise its business judgment” in deciding how to address non-compliant franchisees.
- Written by Rebecca Hause-Schultz
In a blow to employers, on August 22, 2016 in Morris v. Ernst & Young, the Ninth Circuit held that class action waivers are unenforceable in California. Deferring to the opinion given by the National Labor Relations Board (“NLRB”), the Court said that since the National Labor Relations Act (“the Act”) gives employees the right to seek to improve working conditions by initiating a lawsuit or some other type of action against their employer, and also provides that employees may act together or “in concert” for the purpose of collective bargaining or other mutual aid or protection, class action waivers are not enforceable.