The Acting Secretary of Labor recently sued Jani-King of Oklahoma, Inc. (JKO), a regional franchisor of commercial cleaning businesses, alleging that JKO violated the Fair Labor Standards Act’s (FLSA) employer recordkeeping requirements pursuant to 29 U.S.C.A. § 211, and that JKO misclassified its franchisees as independent contractors. Sonderling v. Jani-King of Okla., Inc., 2026 WL 2825773 (W.D. Okla. Sept. 21, 2026). On cross-motions for summary judgment, JKO argued that the undisputed material facts established that JKO was merely a franchise operator and not the employer of the franchisees under the FLSA and the Acting Secretary successfully argued the converse. The court concluded that the franchise owners were employees under the FLSA and that JKO was indeed subject to 29 U.S.C.A. § 211.
The court applied the Tenth Circuit’s six-factor “economic reality” test to determine whether a franchisee is an employee for purposes of the FLSA—a totality of the circumstances examination. Regarding the degree of control JKO exerted over the franchisees, the court held that JKO exercised substantial control over the franchisees’ admission into and termination from the franchise system; the franchisees’ assignment to and removal from all of JKO’s customer accounts; the franchisees’ cleaning schedule, work performance, and customer service; and the franchisees’ rate and method of payment; and also found that JKO prohibited franchisees from performing cleaning services for non-JKO customers, among other things. The court concluded that these controls were more consistent with employee status. Regarding the franchisees’ opportunity to affect their own profits or losses factor, the court found that because the franchisees had no independent contractual relationship with customers and that JKO controlled all significant financial aspects of customer accounts, the franchisees could not be characterized as an independent contractor capable of making such decisions. As to the franchisees’ ability to invest in their businesses, the court found their purported ability to invest and liabilities for ongoing business expenses were an illusory framework. The court also found that the permanence of the working relationship factor was satisfied because the franchisees had a continuous and exclusive relationship with JKO for 10–20-year terms. Because independent contractors typically have specialized skills and commercial cleaning does not require specialized skills, the court held that the degree of skill factor also weighed in favor of an employment finding. Finally, the court found that the franchisees’ work was integral to JKO’s business which revolved around commercial cleaning jobs, including negotiating such contracts, and providing such services itself, among other things. Accordingly, the court concluded that the totality of the circumstances demonstrated that the franchisees were undisputedly employees of JKO. Because there was no genuine dispute of material fact, the court granted summary judgment in favor of the Acting Secretary.