To date, eight states have passed legislation prohibiting a franchisor from being considered an employer or co-employer of franchisee employees.

On May 3, 2016, Georgia enacted the “Protecting Small Businesses Act” (“the Act”), which 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, and is in response 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. We have reported on developments in franchise law in earlier Duane Morris Alerts: “Five States Enact Laws: Franchisors Are Not ‘Joint Employers’” and “NLRB Abandons Well-Established Joint-Employer Standard.”

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