September 23, 2025|Franchise Frontlines
September 23, 2025 | U.S. District Court for the Central District of California | Unpublished Opinion
Executive Summary
In an unpublished opinion, Judge Fred Slaughter granted in part and denied in part a motion to dismiss claims brought in a putative wage-and-hour class action against two related staffing companies, Aequor Healthcare Services, LLC and Aequor Technologies, LLC. The Court explained that the plaintiff alleged both entities jointly employed him during a six-week assignment and that they operated as a single, integrated enterprise. The Court dismissed all claims against Aequor Healthcare on the ground that the complaint did not plausibly allege that it controlled the plaintiff’s wages, hours, or working conditions. The Court further held that conclusory allegations of centralized headquarters, shared corporate services, and common ownership were insufficient to plead an integrated enterprise. The Court denied the motion as to class allegations, concluding that Rule 23 issues were premature at the pleading stage. The plaintiff was granted leave to amend.
Relevant Background
According to the opinion, the plaintiff worked for approximately six weeks as a non-exempt hourly employee performing staffing support for Aequor Technologies. The complaint alleged that Aequor Technologies and Aequor Healthcare “jointly own and manage” a staffing company and share the same headquarters, executive leadership, and centralized administrative functions, including payroll, accounting, marketing, legal, human resources, and information systems. It further alleged that the defendants implemented uniform wage-and-hour policies, required employees to use their personal cell phones for business purposes without reimbursement, and maintained a consistent approach to meal and rest break practices across the organization.
The plaintiff claimed he was not paid for all hours worked, was required to work during meal periods, and was denied compliant meal and rest breaks. He also alleged inaccurate wage statements, unreimbursed business expenses, and violations of the Private Attorneys General Act. He asserted both entities were his joint employers or, alternatively, that they functioned as an integrated enterprise. The defendants moved to dismiss, arguing that the allegations failed to identify how Aequor Healthcare employed or controlled the plaintiff, and also moved to strike class allegations as inadequately pled.
Decision
The Court first addressed whether the plaintiff plausibly alleged Aequor Healthcare was his employer. The Court applied the California Supreme Court’s framework in Martinez v. Combs, which examines whether an entity employs a worker by exercising control over wages, hours, or working conditions, or by suffering or permitting the individual to work. The Court held that the complaint contained no nonconclusory facts showing that Aequor Healthcare controlled any aspect of the plaintiff’s work. The Court emphasized that allegations referencing shared headquarters, shared administrative functions, and overlapping corporate infrastructure did not demonstrate employer control. The Court rejected as insufficient generalized assertions that each defendant operated as the agent or joint employer of the other, concluding that such recitations did not satisfy the factual pleading standard. On this basis, the Court dismissed all claims against Aequor Healthcare with leave to amend.
The Court next addressed the plaintiff’s integrated-enterprise theory. The Court explained that treating two related entities as a single employer requires factual allegations supporting interrelated operations, common management, centralized control of labor relations, and common ownership. The Court emphasized the strong presumption that a parent or affiliated company is not the employer of another entity’s personnel. The Court found that the plaintiff’s allegations largely mirrored the enumerated test without providing specific supporting facts. As a result, the Court held that the integrated-enterprise allegations were conclusory and insufficient to withstand a motion to dismiss. The Court noted that allegations of shared headquarters and centralized administrative services do not, by themselves, establish an integrated enterprise or overcome the presumption of corporate separateness.
The defendants also sought dismissal or striking of the class allegations. The Court denied that portion of the motion, concluding that Rule 23 issues are typically addressed after discovery and that class sufficiency questions were premature at the pleading stage. Because the Court could not determine that amendment would be futile, the plaintiff was granted leave to amend.
Looking Forward
This decision offers several observations relevant to franchisors and multi-unit systems, while grounded in the specific factual allegations before the Court. The Court’s analysis underscores that allegations of shared headquarters, shared administrative services, or unified corporate branding are generally insufficient to establish joint employer status unless tied to concrete assertions showing control over wages, hours, or day-to-day working conditions. Under different facts or in other jurisdictions, courts may evaluate these questions differently; however, the decision reflects a consistent judicial reluctance to accept generalized or boilerplate allegations that two entities jointly employed a worker without detailed support.
The opinion also serves as a reminder that integrated-enterprise theories require more than conclusory references to common ownership or overlapping functions. Plaintiffs must allege specific facts showing that an affiliated entity is involved in labor-relations decisions or directs the operational details of the work at issue. This reflects a broader trend in which courts maintain a strong presumption of corporate separateness unless detailed factual allegations demonstrate otherwise.
Finally, while the Court declined to address class certification issues at the pleading stage, the decision highlights the importance of maintaining clear delineation of responsibilities within multi-entity business structures. Franchisors may view this decision as reinforcing the value of maintaining well-defined operational boundaries, documenting franchisee-level control over employment matters, and ensuring that systemwide policies are implemented in ways that preserve franchisees’ independent employer status.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
