House Bill 494 would shield corporate franchisors when franchisees violate labor laws
Posted March 21, 2018 in Press Releases
House Bill 494 would give corporate franchise owners a free pass when it comes to their franchisees complying with labor and employment law. Today, Policy Matters Researcher Hannah Halbert submitted testimony against the legislation to the Ohio House Government Accountability and Oversight Committee.
“If this bill were enacted, workers and the state could no longer hold franchisors jointly responsible for… violations, regardless of the level of control the corporate owners exerted over the franchisees’ practices,” she said.
When two or more businesses “co-determine” or share control over a worker’s pay, schedule, or job duties, then both of those businesses should be considered employers of that worker, Halbert said. Under the legal joint-employer doctrine, both these businesses should be held accountable for enforcing employment and labor law. Big franchisors across the country are pushing similar bills in other states. If they pass, small business franchisees will be at a real disadvantage and have to shoulder all the responsibility of complying with the law even when compliance is discouraged by corporate owner practices.
“The joint-employer doctrine does not mean that every franchisee violation of wage and hour law is automatically attributable to the franchisor,” Halbert said. “It means that franchisors can be held responsible when they encourage, participate in, and are complicit in violations.”
The joint-employer standard aligns the economic interests of the franchisor with those of the franchisee, helping small businesses and their employees. When corporate owners know they can be held liable for violations, they are less likely to force franchisees to cut corners, Halbert said.
“HB 494 will stick franchisees with the liability tab, regardless of the role of the corporate franchisor or the degree to which the franchisor exercises control over the workers and working conditions in the franchisees’ stores,” Halbert said. “Ohio should not be insulating these powerful interests against the risks of doing business, certainly not at the expense of working Ohio’s access to justice.”