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Court decides Jimmy John's franchisees can be sued, too

In a case that pivots strangely on the "joint employer" standard, a federal court has ruled that assistant restaurant managers suing Jimmy John’s for alleged nonpayment of overtime pay can also take legal action against the concept’s franchisees.

The decision came about a week after the National Labor Relations Board had restored a definition of joint employer that spared most franchisors from being held legally liable for the labor actions of franchisees. In the case decided late last week, the point of dispute was whether franchisees could be sued along with the franchisor.

Jimmy John’s had argued that franchisees should not be included, even though they were the employers of the class-action plaintiffs, because a court first had to decide if Jimmy John’s was a joint employer of the complaining workers. Until that matter was decided, the franchisor asserted, franchisees might be engaging unnecessarily in legal activity.

But plaintiffs noted that the window of time in which they could also sue the franchisees was closing, and asked the U.S. Appellate Court for the Seventh Circuit to give a go-ahead to the actions.

The court agreed, handing a setback to the Jimmy John’s system but perhaps not the franchisor.

It is not clear how last week’s redefinition by the NLRB might change the situation.

Only about 2% of the 2,600-unit Jimmy John’s system is company-operated.

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