New Wisconsin Law Protects Franchisors From Joint Employer Liability

Employee Relations, Employment Law

This week, Wisconsin Gov. Scott Walker (R) signed legislation that would prohibit a franchisor from being considered the joint employer of a franchisee's employees under state law.  The legislation responds to the NLRB's ruling in Browning-Ferris that two or more employers can be joint employers where there is reserved or potential control.  The franchise community is concerned that, under the NLRB decision and the potential for similar rulings by other government agencies, their entire business model could come under attack.  Wisconsin's law specifies that a franchisor can be the employer of a franchisee's employees if the franchisor agrees in writing or if the franchisor exercises a degree of control over the franchisee that goes beyond the customary purpose of protecting the franchisor's trademarks and brand.  The bill was passed along party lines.  Gov. Walker said that the new law "ensures Wisconsin franchisors are not unfairly liable for the actions of franchisees, will prevent frivolous lawsuits, and encourages franchisees to act responsibly."