Employment Law Daily Wisconsin law clarifies that franchisors are not joint employers
Friday, March 11, 2016

Wisconsin law clarifies that franchisors are not joint employers

Signed into law on March 1, Wisconsin Senate Bill 422 clarifies that a franchisor is not the employer of a franchisee’s employees under several areas of state labor and employment law. Specifically, the law amends the definition of an employer for purposes of unemployment insurance, worker’s compensation, minimum wage and hour laws, and fair employment laws. Under Senate Bill 422 (2015 Wisconsin Act 203), a franchisor can only be considered the employer of a franchisee if:
  • the franchisor has agreed in writing to assume that role; or
  • the franchisor has exercised a degree of control over the franchisee or the franchisee’s employees “that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks or brands.”
The exclusion of franchisors as employers provision applies to work performed beginning on March 3. Whether franchisors may be considered the employers of their franchisees’ employees—imposing new responsibilities and liabilities—has become one of the most controversial topics in the franchising and distribution practice. The NLRB has recently endorsed an expanded joint employer standard, while courts have considered whether franchisors may be liable for the workers compensation coverage of franchisee employees.

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