Proactive Joint Employer Legislation

 

 

Proactive Joint Employer Legislation

Since the BFI decision was issued in August, 2015, the IFA has been aggressively pursuing state legislation clarifying the joint employer issue. In short, the bills are an ongoing effort to promote state level laws addressing the joint employer issue, pushing back against bureaucratic overreach originating at the National Labor Relations Board (NLRB). Beginning in the 2015 session and continuing in 2016, several state legislatures have introduced and subsequently enacted legislation to protect the franchisor-franchisee relationship. To date, Governors in Tennessee, Texas, Louisiana, Wisconsin, Indiana, Utah, Oklahoma, Georgia and Michigan have signed into law legislation that preserves the franchisor-franchisee relationship. IFA plans to continue aggressively pursuing similar legislation (see map below) in the 2017 legislative session and beyond.

While each state law is preempted by the National Labor Relations Act, the legislation effectively codifies the traditional joint employer standard (as opposed to what is currently being pushed by unelected bureaucrats at the National Labor Relations Board) for purposes state law and protects businesses in those states from certain joint employment claims arising at the state level. Additionally, these bills provide clarity to state agency when they are presented with joint employment claims.

Each state law has been unique, tailored to suit the needs of each individual legislature and state. At their core, the laws are based on the reality that franchising is a mutually beneficial contractual agreement between two parties, but not one which creates an employee/employer or joint employment relationship between those two parties. Each state law provides for the same two fundamental principles:

  1. A franchisee is not an employee of his/her franchisor; and
  2. A franchisee’s employees are not employees of the franchisor

 

 State Laws Enacted in 2015/2016

  • Texas
  • Tennessee                                          
  • Louisiana
  • Utah     
  • Wisconsin
  • Georgia
  • Michigan
  • Oklahoma
  • Indiana 

 

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