February 02, 2026|Franchise Frontlines
February 2, 2026 | U.S. District Court for the District of Colorado | Report and Recommendation
Executive Summary
In a report and recommendation, Magistrate Judge Cyrus Y. Chung of the U.S. District Court for the District of Colorado recommended granting summary judgment in favor of a hotel operator on claims that it acted as a joint employer of guestworkers supplied by a third-party contractor. The plaintiffs, housekeeping workers employed through an H-2B visa program, argued that the hotel jointly employed them based on its control over their day-to-day work. The hotel contended that the contractor retained responsibility for all employment functions. The court agreed with the hotel, concluding that no reasonable jury could find a joint employment relationship because the hotel did not control the essential terms and conditions of employment—most notably lacking the authority to hire, fire, pay, or maintain employment records.
Relevant Background
The plaintiffs performed housekeeping services at a Colorado hotel through a staffing company that sponsored H-2B guestworkers. That staffing company recruited the workers, secured visas, paid wages, handled payroll taxes and benefits, and maintained employment records. The hotel contracted with the staffing company to provide cleaning services and paid the company based on hours worked.
At the operational level, the hotel integrated the workers into its housekeeping function. Hotel personnel assigned daily work, provided cleaning supplies, and evaluated performance. The workers appeared on the same schedules as hotel employees and performed identical tasks. When performance issues arose, hotel management communicated concerns to the staffing company, which handled retraining and any further action.
The plaintiffs brought wage-and-hour claims under federal and Colorado law, all of which depended on establishing that the hotel was their joint employer. The staffing company and its principal settled, leaving only the claims against the hotel. The hotel moved for summary judgment on the ground that it was not an employer.
Decision
The court recommended granting summary judgment, finding that the hotel was not a joint employer under the Fair Labor Standards Act or Colorado law.
Because the Tenth Circuit has not adopted a single governing test for joint employment, the court surveyed multiple frameworks, including the Ninth Circuit’s Bonnette factors, the Fourth Circuit’s Hall-Salinas test, and the Tenth Circuit’s “economic realities” approach. Drawing from those authorities, the court focused on whether the hotel “co-determined the essential terms and conditions of employment,” emphasizing that the most important factor in that analysis is the right to terminate the employment relationship.
Applying that framework, the court found that the hotel did not control key employment functions. The staffing company hired the workers, secured their visas, paid their wages, handled payroll taxes and benefits, and maintained employment records. The hotel had no authority to terminate the workers’ employment. At most, it could request that a worker not be assigned to its property, which could result in reassignment rather than termination. The court treated that distinction as critical, noting that the absence of termination authority weighed heavily against a finding of joint employment.
The court acknowledged that the hotel exercised some operational control. It assigned daily tasks, set work schedules at the property, provided tools and supplies, and monitored performance. Hotel personnel also communicated performance issues and requested retraining when necessary. However, the court concluded that this level of control reflected quality assurance and coordination of contracted services rather than control over employment itself. The court emphasized that specifying work to be performed and ensuring compliance with contractual standards does not establish joint employment.
The court further noted that while supervision was shared to some extent, discipline remained with the staffing company. When issues arose, the hotel reported them to the contractor, which determined how to respond. Similarly, although the hotel reviewed timesheets to verify billing accuracy, it did not control payroll or maintain employment records. Considering the totality of the circumstances, the court concluded that the hotel did not “share or co-determine the essential terms and conditions of employment,” and that no reasonable jury could find otherwise.
Looking Forward
This decision provides a clear and practical framework for evaluating joint employer risk in multi-entity business structures, including franchise systems. The court’s emphasis on termination authority as the most important factor offers a useful anchor point for assessing exposure. Where an entity lacks the ability to hire or fire workers, it is far more difficult for plaintiffs to establish that the entity controls the employment relationship.
At the same time, the opinion carefully distinguishes between operational control and employment control. The hotel’s involvement in assigning work, setting schedules at a specific location, providing tools, and enforcing quality standards did not transform the relationship into one of employment. That distinction is particularly relevant for franchisors, who routinely impose system standards and monitor compliance across locations. The case reinforces that such oversight, standing alone, is not enough to create joint employer liability.
The court’s treatment of removal requests is also instructive. The ability to request that a worker not return to a particular location, without more, does not equate to termination authority. In franchise systems, where franchisors may require the removal of personnel who fail to meet brand standards, this distinction may be critical in preserving the independence of franchisees as employers.
More broadly, the decision underscores the importance of maintaining clear contractual and operational boundaries. Entities that avoid involvement in hiring, payroll, discipline, and employment records—and that consistently route employment decisions through the direct employer—are better positioned to defend against joint employer claims. As courts continue to evaluate increasingly complex operational relationships, this case illustrates that the analysis remains grounded in who actually controls the core terms of employment, not who oversees day-to-day work.
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 Partner at Buchalter LLP 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.
