|
When it comes to employee claims, is the franchisor technically the employer of a franchisee’s employees? It can be a little confusing to detail this relationship, and unfortunately the answer is, it depends on the state. Recently, Texas updated its labor code to clarify that a franchisor is not the employer of a franchisee’s employees. This means any claims regarding employment discrimination, the state’s Minimum Wage Act or workers’ compensation, wage payments and other laws won’t bring the franchisor into a legal battle. However, that’s only in Texas. This relationship definition can vary state to state, and much like Texas, may be amended at any time. From a franchisor’s perspective, it’s critical that you understand whether you’re legally considered an employer — or not — of your franchisee’s workers. There can also be some gray areas if you’re based in one state, but it’s even more complicated if your franchise has grown so much that now you have franchise operations around the country or even the world. How do you know where you stand? Your best bet is to ask your business franchise. Who’s at Fault? The bigger your franchise grows, the better the odds that you might face a lawsuit. You could have absolutely nothing to do with the person filing the claim; the issue could originate on the other side of the country. You also may not know the franchise laws in that state or how your franchise agreement and franchise relationship could be interpreted in that state. It can turn into a messy situation with finger pointing, long legal disputes, and (worst of all) maybe even some media coverage that puts your business in the limelight in all the wrong ways. Every time you expand to a new state or country, it’s paramount that you work with your franchise & business lawyer to make sure you’re protected against potential franchisee employee legal claims. In fact, you can include it in your checklist when considering a new franchisee application. It’s not just about the quality of the franchisee candidates, their experience or passion for your business; it’s also about where they live, the laws of their country, state or city, and how it affects your business model. Lessons from the Lone Star State Under the new Texas law, franchisors can only double as employers if they’ve in some way controlled the franchisee, or franchisee’s employees, beyond the norm. The issue came to light after a group of franchisors said they were worried about National Labor Relations Board (NLRB) moves that seemed to target franchisors for the actions of franchisees. The NLRB found that franchisors were “joint employers” in partnership with franchisees, and equally responsible for alleged violations of employee rights. Critics of the NLRB’s actions point out that the NLRB clearly does not understand the franchise model, and say that this makes franchisors unfairly vulnerable to lawsuits when they had nothing to do with the allegations. However, the NLRB does specify that both the franchisor and franchisee must have “direct control” over the employees in order to be joint employers. This control dictates conditions, terms and specific working conditions of employees such as hiring, firing, compensation decisions, daily supervision and scheduling of work hours. Are you concerned about your position with recent NLRB changes, or do you have questions about joint employer status? Call a local, trusted franchise attorney and get the answers from an expert.
Related Articles -
franchise law, franchise lawyer, franchise attorney, franchising, business law, franchisor, franchisee, FDD, franchise, business lawyer,
|
