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States move to reverse ‘joint employer’ redefinition

While waiting for Congress to restore a franchising-friendly definition of “joint employer,” restaurant chains are likely to see the legislatures of at least five states take up the effort, according to the International Franchise Association.

The trade group noted in a newsletter last week that a bill to reverse the National Labor Relations Board’s push to hold franchisors liable for franchisees’ labor practices is moving forward in Michigan. It cited expectations of a similar measure being introduced near term in Wisconsin.

Next year, bills reversing or tempering the designation of franchisors as joint employers are expected for Colorado, Indiana and South Dakota, the IFA said.

Laws that protect franchisors from joint-employer liability are already on the books in Texas, Louisiana and Tennessee.

The legislative measures usually declare that franchisees are the sole employers of their staffs, a reversal of the doctrine set through decisions in the last 11 months by the NLRB. It is currently regarding McDonald’s as a joint employer of franchisees’ staffs in complaints brought by participants in the Fight for $15 wage-hike movement. 

OSHA has also started to treat franchisors as liable parties for the job-site infractions of franchisees.

The franchise industry maintains that franchisors and franchisees are not responsible for each other’s employment practices and policies. Franchisors have voiced fears that redefining the partners as joint employers of one another’s staffs will foster liabilities that undercut the economic viability of the franchising model.

The NLRB maintains that the broader definition of joint employer is needed to reflect the modern realities of franchising and other business relationships.

The IFA represents both franchisors and franchisees.

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