A California appeals court has ruled that Shell is not a joint employer in a
case involving a multisite operator and, as a result, the major is not required
to pay back wages, penalties and interest to an ex-station manager.

In recent years, joint employer liability has been a hot issue for franchisers.
Joint employment means that more than one business is considered a worker's
employer.

In Billy R. Henderson v. Equilon Enterprises LLC (doing business as Shell Oil
Products US), the ex-manager of several Shell-owned stations sued Shell
claiming the company owed him back wages and other relief because he had worked
overtime and missed off-duty meal and rest breaks without receiving
compensation, according to the court record.

Billy Henderson alleged that though he was hired by Shell retailer Danville
Petroleum, Shell was liable as his joint employer because Shell "both directly
and indirectly controlled the wages, hours or working conditions" of Danville's
employees.

Henderson sued Shell in 2016, but the trial court found Shell was not
Henderson's joint employer and dismissed the case. The California appeals court
earlier in October affirmed the dismissal.

Danville Petroleum operated as many as 39 gas stations for Shell under a
multisite operator (MSO) agreement. Shell supplied branded fuel to the stations
and set fuel prices. Shell paid Danville a fee and reimbursed the retailer for
some expenses, the court record said.

Danville agreed to survey and report fuel prices charged by competitors, change
fuel prices under Shell's direction, keep the station open for specific hours,
use required equipment for recording and reporting fuel transactions and follow
brand standards.

Danville and Shell also entered into a multisite, nonpetroleum facility lease
to operate convenience stores, car washes and quick service restaurants on
Shell gas station sites. Under the MSO lease, Danville operated and profited
from these operations and took care of most of the expenses. Danville paid
Shell monthly rent, the court record showed.

Danville alone made decisions regarding recruiting, interviewing, hiring,
disciplining, promoting and terminating its employees and had sole control over
payroll, including whether employees would be exempt from overtime regulations.
It had its own employee handbook and set its own meal and break policies,
according to the court record.

Although Shell had the right to ask Danville to "remove" an employee from a
Shell station "for good cause shown," the MSO agreement gave Danville the sole
authority to fire workers.

"Danville alone set Henderson's wages, determined which employees would be
deemed exempt from overtime regulations, and was solely responsible for
Danville's payroll function and compliance with labor laws," the appeals court
noted in its Oct. 8 decision. "Danville alone set its meal and rest break
policies, enforced its own employee handbook, and determined Henderson's work
schedule and the number of employees who worked at a particular station."

--Donna Harris, dharris@opisnet.com



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