Complaint Alleges that CleanNet USA, Inc. Avoided Paying Its Workers by Misclassifying them as Franchisees, Independent Contractors

In a complaint filed on March 26, 2014, Plaintiff Jose Sanchez claims that he, along with a class of at least 100 others similarly situated, have been induced to enter into exploitive “franchise agreements” with CleanNet USA, Inc. In their complaint the Plaintiffs argue that these agreements are fraudulent and unlawful, violating both the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law (IMWL) in several respects.

According to the complaint, CleanNet charges a large fee to each new “franchisee,” for which it lends them money then requires them to pay the company in installments at a high rate of interest. This makes the worker financially dependent so that s/he “is unable to leave the employment relation without significant loss.” Plaintiffs also allege that the company actively seeks vulnerable “franchisees” from poor immigrant communities, whom it offers the prospect of “being your own boss” and promises a guaranteed amount of income, and then persuades them to enter into a contract that is full of fine print and escape clauses for the company. In fact, the Plaintiff alleges, the contract is often presented to the “franchisee” only in a non-native language, and in many cases is never translated for the person into their native language.

Under the business relationship established by these franchise agreements, the “franchisees” become entirely dependent on the company for client contacts, investment in the business, and all decisions about sales practices, all of which are manipulated by the company always for its own benefit. The company promises a “guaranteed customer base within a few months,” but within that time begins directing business to new “franchisees” so that existing ones could not hope to earn even the equivalent of minimum wage. The net effect of this contract, the Plaintiff claims, is to supply CleanNet with “a national workforce of sub-minimum wage cleaners denied overtime wages who are dependent on and often in debt to CleanNet.”

The first and second counts in the Plaintiff’s complaint are that CleanNet USA‘s “franchisees” are unlawfully denied their rights to the legal minimum wage under both FLSA and IMWL, since CleanNet knowingly makes it impossible for them to earn as much as they would as hourly minimum-wage workers. The third and fourth counts are that “franchisees” have been required to work hours in excess of forty per week without receiving time and a half pay as again required by both FLSA and IMWL. The allegation is that the company systematically avoided its obligation to guarantee a minimum wage, and to pay overtime, by misclassifying its workers as independent contractors. The fifth count is that Defendants failed to pay wages as required by the contract. The sixth count is that Defendants made unlawful deduction from Plaintiffs’ pay. Finally, the seventh count is that, in their inducement of these misclassified employees to enter into these “franchise” agreements, the company committed large-scale fraud.

If you are an employee and you believe your employer has violated your rights under the FLSA, please contact The Harman Firm, LLP.