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House of Representatives
Session of 2017 - 2018 Regular Session


Posted: January 3, 2018 03:51 PM
From: Representative Todd Stephens
To: All House members
Subject: Clarify Franchisor-Franchisee Relationship
Traditionally, franchisors have not generally been considered to be employers of a franchisee or a franchisee’s employees, unless the franchisor exercises direct and immediate control over the employment conditions of the franchisee.

In 2015, however, the National Labor Relations Board ruled that a franchisor can be considered a joint employer with the franchisee of the franchisee’s employees if it possesses sufficient control over the terms and conditions of employment. Under the ruling, sufficient control includes both indirect control and even a reserved right to control employment conditions.

This ruling set a dangerous precedent that could hold franchisors liable for a franchisee’s employees across a variety of labor laws, even where a franchisor has nothing to do with the employment conditions and daily operations of a franchisee.

I will be introducing legislation to address this issue by clarifying that for the purposes of various Pennsylvania laws, our Workers’ Compensation, Unemployment Compensation, Human Relations Act, Wage Payment and Collection, and Minimum Wage laws, a franchisor will not be considered an employer of a franchisee or a franchisee’s employees.

Please join me in cosponsoring this important piece of legislation.

Introduced as HB2446