A company misclassified its workers as franchisees, denying them proper compensation, the U.S. Department of Labor (DOL) has alleged in a lawsuit.
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Jani-King of Oklahoma, Inc., a cleaning company, sold franchises to individuals to avoid hiring them as employees, according to the department. Contrary to typical franchise agreements, Jani-King controlled all aspects of the cleaning contracts held by the franchisee, DOL alleged. It set cleaning rates, collected payments from clients, and kept a share of the profits.
Given the characteristics of this business model and the franchisees’ economic dependence on Jani-King, DOL said that the individuals are actually employees entitled to minimum wage and overtime under the Fair Labor Standards Act (FLSA).