©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 257 actions of the franchisee’s supervisors. Rather, to be considered an employer, the franchisor would have to retain or assume a “general right of control” over the business.464 But the Court of Appeal has continued efforts to expand the scope of employer liability. In 2014, the same Court of Appeal justice who wrote Patterson v. Domino’s Pizza wrote a similarly expansive decision in Castaneda v. Ensign Group, Inc.465 A nursing assistant, seeking unpaid minimum and overtime wages earned at a rehabilitation care center, sued Ensign Group, a holding company that owned the care center. The trial court granted summary judgment to Ensign because Ensign did not manage the care center. But the Court of Appeal reversed, holding that a parent corporation could be liable for a wholly owned subsidiary’s wage and hour violations, even if the parent corporation did not directly hire, fire, or supervise the employees in question. The Court of Appeal opined that where the parent corporation exercised structural and managerial control over the subsidiary, and thus could have ensured that the subsidiary’s practices complied with California labor law, a potential basis of liability is “the owner’s failure to perform the duty of seeing to it that the prohibited condition does not exist.”466 The Court of Appeal cited, as evidence of managerial control, that Ensign required care center employees to follow Ensign “core values,” to use Ensign “forms and templates in the course of doing their jobs,” and to use particular computer and billing and operational systems. Nonetheless, in a 2019 wage and hour case, the Court of Appeal rebuffed efforts to impose joint employer status on the owner of premises where another company has employed a worker. The Court of Appeal affirmed summary judgment for a gas station owner that was sued for unpaid wages and unprovided breaks by a station manager who worked for the owner’s operating company. The Court of Appeal held that the gas station owner was not a joint employer because the operating company alone made decisions on recruiting, interviewing, hiring, disciplining, promoting, and discharging employees, had sole control over payroll functions, and had its own employee handbook and set its own meal and break policies. The gas station owner could ask the operating company to “remove” an employee from a station “for good cause shown,” but the operating company had sole authority to discharge employees. It was immaterial that the gas station owner provided operation manuals and conducted station inspections that were given to the operator. The Court of Appeal concluded that (1) the operating company had sole control over the plaintiff’s wages and hours, (2) the gas station owner had no right to fire him and no role in either allowing him to work or preventing him from working, and (3) the gas station owner lacked the right to control the manner and means by which the plaintiff did his work.467 ABC test not extended to joint employer issue. The Supreme Court, in the context of whether a worker hired by a company is its employee or independent contractor, has adopted an “ABC test” that heavily tilts toward employee status. (See § 19.6.) Both the Court of Appeal and the Ninth Circuit have rejected plaintiffs’ efforts to apply the ABC test to issues of joint employment. In 2019 the Court of Appeal stated: “the ABC test in Dynamex does not fit analytically with and was not intended to apply to claims of joint employer liability.”468 Similarly, the Ninth Circuit stated that Dynamex “has no bearing here, because no party argues that Plaintiffs are independent contractors.” Thus, while a defendant must satisfy the ABC test to defend its classification of a worker as an independent contractor, it need not satisfy the ABC test in resisting a claim that it is a joint employer.469 The California Supreme Court thus far has declined to address this issue. In Vasquez v. Jan-Pro Franchising International, the high court rebuffed the plaintiff’s effort to expand the review of whether the Dynamex ruling is retroactive to the further question of whether Dynamex’s ABC test governs issues of joint employment.470 “Client employers.” The Legislature has created special liability for “client employers.” A client employer is an entity that obtains workers from a labor contractor to work within the entity’s usual course of business—for example, payroll, temporary staffing, and employee leasing agencies. Client employers share with their labor contractors “all civil legal responsibility and civil liability for all [nonexempt] workers supplied by that labor contractor,” in connection with the payment of wages and the securing of workers’ compensation coverage.471
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