March 27, 2024
By: Thomas O’Connell
Citation:
Whitfield v. R&R Enterprise, LLC, 2024 WL 1299365 (D. Md. Mar. 27, 2024)
Executive Summary:
In this unpublished decision, the United States District Court for the District of Maryland, presided over by Magistrate Judge Gina L. Simms, denied Defendant Checkers Drive-In Restaurants, Inc.’s motion to dismiss multiple claims filed by Plaintiff Darnell Whitfield. The case considered whether Checkers, as a franchisor, could be deemed a joint employer of Whitfield under Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), and the Family and Medical Leave Act (FMLA). Applying the Fourth Circuit’s analysis from Butler v. Drive Automotive Industries of America, Inc., the Court found the Plaintiff’s allegations sufficient to proceed.
Relevant Background:
Plaintiff Darnell Whitfield, an African-American man, was a district manager for R&R Enterprise, LLC, a franchisee of Checkers Drive-In Restaurants. Whitfield had worked within the Checkers system since 1995, starting as a general manager and later overseeing multiple locations. In 2019, R&R acquired several Checkers locations in Maryland, including those managed by Whitfield. The Defendants in the case include R&R Enterprise, its owners Rajesh Singh and Rakesh Kalotra, and franchisor Checkers Drive-In Restaurants, Inc.
Whitfield alleged that after R&R’s acquisition, he and his predominantly African-American staff were subjected to a hostile work environment and racial discrimination. According to the complaint, Singh and Kalotra made derogatory remarks about African-American employees, describing them as “liars” and “thieves,” and directed Whitfield to display racially offensive posters. Whitfield also claimed he was pressured to falsify reports against African-American customers.
As a franchisor, Checkers maintained operational and employment oversight through its Team Member Handbook, complaint resolution hotline, and mandatory training. Whitfield alleged that Checkers’ control extended to hiring decisions, setting employee performance standards, and requiring compliance with its operational guidelines. Despite filing complaints about workplace discrimination and retaliation through Checkers’ hotline, Whitfield claimed no action was taken.
In January 2021, Whitfield took medical leave following stress-related health issues and an injury sustained at work. While on leave, he alleged he was replaced without proper notification and ultimately terminated under the pretext of job redundancy. Whitfield argued that Checkers’ involvement in these actions made it a joint employer under Title VII, ADA, and FMLA.
Decision:
The Court denied Defendant Checkers’ motion to dismiss, concluding that Whitfield plausibly alleged a joint employment relationship under Title VII, the ADA, and the FMLA. To reach this decision, the Court applied the Butler factors, focusing on the first three, which are the most critical in determining joint employer liability:
- The first Butler factor considers the authority to hire and fire. Whitfield alleged that Checkers had the power to approve or reject managerial hires proposed by R&R. If a candidate did not meet Checkers’ standards, R&R was required to select a different individual. Checkers also facilitated the hiring process through its website and retained the authority to terminate employees for non-compliance with its operational policies.
- The second Butler factor examines day-to-day supervision. Whitfield claimed that Checkers exercised control over his daily responsibilities. This included requiring him to adhere to the Team Member Handbook, follow operational policies, and resolve grievances through a complaint resolution hotline managed by Checkers. Additionally, Checkers conducted regular inspections to monitor compliance with its policies, further demonstrating its supervisory control over workplace activities.
- The third Butler factor evaluates control over workplace conditions. Checkers allegedly imposed operational guidelines that governed restaurant layout, appearance, and safety standards at R&R locations. These guidelines directly influenced Whitfield’s job responsibilities and working conditions.
The Court found that these allegations were sufficient to satisfy the first three Butler factors. Together, these factors supported the conclusion that Checkers exercised significant control over Whitfield’s employment.
The Court also addressed Checkers’ argument that its franchise agreement with R&R precluded joint employer liability. It rejected this argument, reasoning that the agreement was not integral to the claims at the motion to dismiss stage.
Based on these findings, the Court held that Whitfield’s allegations raised a plausible inference of joint employment. This allowed the case to proceed to the next stage of litigation.
Looking Forward:
This decision highlights the legal risks franchisors face when their level of control over franchisees’ operations blurs the lines of employer responsibility. Franchisors should carefully structure their agreements and operational policies to minimize the potential for joint employer liability. Specifically:
- Franchisors should clearly define their oversight role in agreements to avoid direct involvement in employment-related decisions.
- Compliance mechanisms should focus on maintaining brand standards without infringing on day-to-day employment matters.
- Robust and responsive procedures should be established to address employee grievances and prevent claims of inaction.
While the Court’s findings allow the case to proceed, franchisors should note that such rulings at the motion to dismiss stage are based on allegations and not definitive determinations of liability.