A company misclassified its workers as franchisees, denying them proper compensation, the U.S. Department of Labor (DOL) has alleged in a lawsuit.

Jani-King of Oklahoma, Inc., a cleaning company, sold franchises to individuals to avoid hiring them as employees, according to the department. Contrary to typical franchise agreements, Jani-King controlled all aspects of the cleaning contracts held by the franchisee, DOL alleged. It set cleaning rates, collected payments from clients, and kept a share of the profits.

Given the characteristics of this business model and the franchisees’ economic dependence on Jani-King, DOL said that the individuals are actually employees entitled to minimum wage and overtime under the Fair Labor Standards Act (FLSA).

“What we are doing in this case is challenging the business model itself, which undermines compliance with our basic labor standards,” said Betty Campbell, a Wage and Hour Division regional administrator, in a press release. “Jani-King of Oklahoma dictated which jobs a person took and directed almost every aspect of the employment relationship–which makes them an employer not a franchisor.”

“Despite its claims, this company had an employee-employer relationship with its so-called franchisees. They were not in business for themselves–they were paying for a job, entirely dependent on Jani-King–a hallmark of an employment relationship,” she continued. “There are many legitimate forms of franchising, but this is not one of them.”

DOL has in recent years focused on enforcing the FLSA in “fissured” industries that use models like subcontracting, temporary agencies, labor brokers, franchising, licensing, and third-party management. Weil said in a 2014 announcement said that these workplaces are especially vulnerable to wage and hour violations and that DOL would provide “robust outreach” to both employers and employees.

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