7-Eleven Litigation Could Have Damaging Effects on Franchisee Laws, State Economy

December 10, 2021

On Wednesday, the Supreme Judicial Court of Massachusetts heard oral arguments in an ongoing case which could have lasting effects on the future of franchises in the Bay State. The case, Patel v. 7-Eleven, was brought by franchisees of 7-Eleven alleging that, under Massachusetts law, they are employees of 7-Eleven rather than owners of their own individual franchise. The franchise owners allege that the provisions of their franchise agreement with 7-Eleven mean that they function as store managers, not business owners. 

 

The franchisees allege they are employees based on the degree of control 7-Eleven exercises over them, including requirements to keep their franchises open 24 hours a day and stock their shelves with certain products. In determining whether one is an employee or independent contractor, Massachusetts relies on what is known as the “ABC” test. Ultimately, the difference between the two boils down to one simple question: does the corporation have the right to control the individual’s work? If yes, they are typically an employee. If not, they are almost always an independent contractor.

 

A ruling in favor of the franchisees could have devastating affects not only on the future of franchises in the Commonwealth, but on the well-being of the state’s economy. Currently, there are 159 7-Eleven stores in Massachusetts. Franchises, such as Dunkin Donuts, Burger King, and McDonald’s to name a few, account for a total economic output of $12 billion. These corporations, and many other franchises, may leave the state if forced to treat franchisees as employees. If classified as such, the parent corporation would be required to pay them [franchisees] sick time, unemployment insurance, and offer sick leave. In addition, it would be illegal for franchisees to pay franchise fees out of their wages. As of now, franchisees operate as independent businesspeople and are accountable for payroll and other employer-related costs.

 

If you have questions about employment law, or any other general employment issues, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.

Royal Law at Thunderbirds Hockey Playoff Game in the Executive Perch

April 21, 2025
Friday April 18th: Amy Royal, Fred Royal, and Derek Brown attended the Springfield Thunderbirds playoff game! They enjoyed watching the Thunderbirds play the Charlotte Checkers from the Executive Perch.

Massachusetts Wage Act: Not Even a Single Day Delay

April 18, 2025
Employee's Wage Act Claim Case Overview : In Turgut v. Hitachi Rail STS USA, Inc., Plaintiff filed a putative class action against a company, Defendant, alleging violation of the Wage Act by not paying wages within six days of the pay period's end. Defendant argued that its employees fell under the exception that allowed seven days for payment; however that exception only applies to hourly workers that work all seven days of a work week. The plaintiff is looking to represent a class of employees that received W-2 wages in what he alleges was in an untimely manner. The case was originally filed in state court on February 20, 2025 but was moved to federal court. Reason for Treble Damages: Under Rueter v. City of Methuen, the seminal case regarding the Massachusetts Wage Act (“Wage Act”), the proper measure of damages under the Wage Act is treble damages. Previously employees were only entitled to interest on the unpaid wages if the company paid before proceedings started. It kept noncompliance from being as costly as it is now. Currently any violation can be subjected to treble damages for the total amount of the alleged late payment. It’s expected that we will see more cases pick up by attorneys because the treble damages make it worthwhile for their clients as well as themselves, given this recent ruling. Judge's Ruling : The Judge ruled that the six-day deadline applies. The Judge stated that while the complaint didn’t make it clear if plaintiff is hourly or salary, plaintiff only worked five days a week, meaning that the seven-day exception did not apply as the Wage Act was written. Legal Implications Legislative History : The Wage Act provides different deadlines for an employee’s final pay based on the number of days worked in a week. This case also emphasizes that having salaried workers on staff does not fulfill the requirement of having employees work seven days a week. Significance of One Day : The judge emphasized that even a single day's delay in payment can significantly impact employees living paycheck to paycheck. What Employers need to know Make sure you’re aware of your employees’ pay cycle and make compliance a company priority. It’s more cost effective to pay a day or two earlier than it is to head to court over claims of violations. This ruling expands on the Reuter ruling by clarifying the Wage Act rules in relation to hourly employees. If an hourly employee resigns, ensure that automatic payment systems (as well as the employer’s own internal pay systems) are aligned with the requirements of this ruling. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.