Legislation puts workers, small business owners at risk
Posted November 28, 2018 in Press Releases
If Ohio House Bill 494 passes, corporate franchise owners would be shielded from responsibility when their franchisees violate labor laws, even if it’s at the corporate owner’s behest. Today, Policy Matters Ohio testified against the legislation in a hearing before the Senate Transportation, Commerce and Workforce Development Committee.
“HB 494 and similar franchisor shield laws cropping up around the country would limit when corporate franchisors could be found jointly liable with franchisee operators when corporate systems or policies violate employee protections,” Policy Matters Ohio Senior Project Director Hannah Halbert said. “It will put workers and small-business franchisees at a real disadvantage.”
Major franchise corporations are pushing HB 494 and bills like it in response to a ruling by the National Labor Relations Board. The NLRB determined that when two or more businesses share direct or indirect control over a worker’s pay, schedule or duties, they are joint employers – and are both responsible for ensuring employees are paid fairly and have a safe workplace.
For example, in 2016, New York filed a suit against Domino’s Pizza and a number of its franchisees for failing to properly pay $545,000 in wages due to workers. Domino’s, the corporate owner, was determined to also be at fault because it knowingly required its franchisees to use payroll software that systematically undercounted hours.
“The joint-employer standards help small businesses and their employees by aligning the economic interests of the franchisor with the franchisee,” Halbert said. “When the corporate owners know they can be held liable for violations, they are less likely to force franchisees to cut corners. HB 494 will stick franchisees with the liability tab, even if the corporate franchisor’s policies and procedures set the working conditions in the franchisees’ stores.”