Employers can say oh thank heaven for 7-Eleven victory

The Illinois Wage Payment and Collection Act (IWPCA) provides employees with a right to require employers to make timely and complete payment of earned wages. The law also prohibits employers from making unauthorized deductions from wages. A recent federal court decision grappled with the question of whether a franchisee was an employee of the franchisor and thus able to assert claims under the IWCPA.

Self-serve

Nira Patel, through his solely owned and operated corporation, purchased a 7-Eleven franchise in Illinois. The relationship was governed by 7-Eleven’s standard franchise agreement under which the company and Patel agreed to split the profit from the store.

Patel claimed that despite the franchisor-franchisee relationship, in practice the agreement created an employer-employee relationship. Indeed, according to Patel, 7-Eleven’s franchise agreement enabled it to exert substantial control over the day-to-day operations of its stores.

For example, 7-Eleven controlled store operating hours, store employee training and uniforms, and even store temperature. Patel also alleged 7-Eleven required him to deposit daily revenues into an account it controlled. He claimed he and other franchisees weren’t free to use or withdraw funds from their store accounts at their discretion. Rather, from the store account, 7-Eleven deducted its share of profits and other franchise-related fees before paying the franchisee his portion of the profit.

Big bite