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Employer-Employee Relationship Required to Allege a Labor Code Wage Dispute

On May 8th, 2012, in Aleksick v. 7-Eleven Inc., (California Courts of Appeal – 4th District, No. D059236), the court found that an employer-employee relationship is a requisite element in maintaining an unfair competition claim for a Labor Code wage dispute.

In Aleksick, a class action suit was filed in response to 7-Eleven's practice of truncating a decimal point when determining pay for hours worked. This suit was alleged on behalf of hourly employees (as opposed to salaried) of a 7-Eleven franchise. The plaintiffs believed that the truncation of a decimal point resulted in a wage discrepancy. The plaintiffs alleged that this practice was in direct violation of the Labor Code wage statutes.

The court held that the nature of the business was critical in determining whether the plaintiffs could sue 7-Eleven Inc. Because employees were working for a franchise, franchise owners were designated as independent contracts. The court determined that this meant that 7-Eleven could not be sued for an Unfair Competition Law claim.

The Unfair Competition Law prohibits "unlawful, unfair, or fraudulent" business practices. However, in order to maintain this type of action, there must be an employer-employee relationship. Due to the evolution of case law, the law stands that payroll companies do not have control over employee wages, which means that they cannot be liable under the Labor Code wage statutes. As a result, the court found that the plaintiffs lacked the requisite relationship to allege a Labor Code dispute.

If you are experiencing a wage or hour dispute with your employer, please do not hesitate to contact a Southern California Employment Lawyer today.

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