February 05, 2026|Franchise Frontlines
February 5, 2026 | U.S. District Court, District of Maryland | Unpublished Decision
Executive Summary
In an unpublished decision, the District of Maryland dismissed an employee’s claims under the Family and Medical Leave Act (“FMLA”) after concluding that she failed to plausibly allege that a county and a housing authority were joint employers, an integrated employer, or a single public agency. The plaintiff argued that the county exercised sufficient control over the housing authority and its employees to trigger FMLA coverage. The defendants countered that the entities were legally distinct and that the county did not control the plaintiff’s employment. The court agreed with the defendants, holding that the plaintiff’s allegations reflected, at most, system-level oversight rather than the type of day-to-day control required to establish employer status under the FMLA.
Relevant Background
The plaintiff was employed by a county housing authority and alleged that she was denied medical leave and subsequently terminated in violation of the FMLA. The housing authority maintained that it was not a covered employer because it had fewer than fifty employees. To overcome this limitation, the plaintiff sought to aggregate the housing authority with the county by alleging that the two entities operated as joint employers, an integrated employer, or a single public agency.
The complaint alleged that the county appointed members of the housing authority’s governing board, retained the ability to approve or disapprove housing projects, administered certain employment-related benefits, and provided policies addressing employee rights. The plaintiff further alleged that the county had authority to terminate housing authority employees and communicated with the authority regarding employment decisions.
The defendants moved to dismiss, arguing that the allegations did not establish the requisite level of control over employment conditions and that the entities remained legally distinct.
Decision
The court began by clarifying the applicable framework for evaluating joint employer status under the FMLA. It concluded that the “economic realities” style analysis derived from Salinas v. Commercial Interiors, Inc.—which focuses on whether entities codetermine the essential terms and conditions of employment—was more appropriate than tests developed in other statutory contexts.
Applying that framework, the court found that the plaintiff failed to plausibly allege joint employment. Although the complaint described various connections between the county and the housing authority, it did not allege that the county supervised the plaintiff’s day-to-day work, controlled her duties, or exercised direct authority over her employment conditions. The court emphasized that the existence of governance relationships, policy involvement, and administrative support does not, without more, establish that two entities share control over essential employment terms.
The court also rejected the plaintiff’s integrated employer theory. While acknowledging that the entities shared some operational overlap, the court emphasized that centralized control of labor relations is the most critical factor in the integrated employer analysis. The complaint made clear that the housing authority’s executive director—not the county—made decisions regarding the plaintiff’s leave and termination. The absence of allegations showing that the county controlled those decisions was fatal to the claim.
Finally, the court concluded that the county and the housing authority could not be treated as a single public agency under the FMLA. Although the plaintiff pointed to evidence suggesting that the entities were treated as a single unit in certain contexts, state law established that housing authorities are separate legal entities with independent authority to contract, own property, and sue or be sued. This legal separation precluded treating the entities as a single employer for purposes of the statute.
Looking Forward
This decision provides a clear framework for evaluating joint and integrated employer theories in multi-entity structures and reinforces a principle that is directly relevant to franchise systems: system-level involvement does not, standing alone, create employment liability. Courts continue to focus on whether an entity exercises meaningful control over day-to-day employment conditions, rather than whether it participates in governance, policy development, or administrative functions.
For franchisors, the court’s analysis underscores the importance of distinguishing between brand-level oversight and operational control. Activities such as establishing policies, providing training, administering certain benefits, or maintaining approval rights over aspects of the business may be consistent with a structured system without necessarily creating employer status. The critical inquiry remains whether the franchisor controls hiring, firing, supervision, and other essential employment decisions.
The decision also highlights the significance of centralized labor relations in determining whether entities may be treated as a single employer. Even where entities are closely connected, liability may not attach absent allegations that one entity directs or controls employment decisions for the other. Maintaining clear lines of responsibility in these areas may help preserve the intended allocation of risk within a system.
Ultimately, the ruling reflects a continued judicial reluctance to expand employer liability based on generalized allegations of coordination or oversight. Instead, courts are requiring plaintiffs to plead—and ultimately prove—a concrete connection between the alleged misconduct and the entity’s control over the employment relationship.
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.
