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More States Enact Laws: Franchisors Are Not “Joint Employers”

By: Sheila Raftery Wiggins

Eight states passed legislation prohibiting a franchisor from being considered an employer or co-employer of franchisee employees, including: Texas, Louisiana, Tennessee, Wisconsin, Michigan, Indiana, Utah and Georgia. Similar legislative efforts were introduced in California, Colorado, Massachusetts, Oklahoma, Pennsylvania, Vermont and Virginia.

On May 3, 2016, Georgia is the most recent state to enact such a law. Georgia’s “Protecting Small Businesses Act” amends Georgia’s Labor and Industrial Relations Code to provide that neither a franchisee nor a franchisee’s employee is considered an employee of a franchisor for “any purpose.” The Act is effective on January 1, 2017. Like other states’ new laws, the Act responds to the dramatic 2015 ruling of the National Labor Relations Board in NLRB v. Browning-Ferris Industries, which impacts when a franchisor could be found to be a joint employer of its franchisee’s employees.

Sheila Raftery Wiggins, of the Newark office, handles matters involving complex commercial disputes, insurance defense, coverage disputes, financial fraud, and attorney ethics.