Joint Employer

In Tennessee, Only Franchisees Can Be Held Accountable for Employees

2 min read

Tennessee is taking a stand on the franchise industry’s joint employer debate.

Earlier this month, Tennessee Gov. Bill Haslam signed a law stating that neither franchisees nor franchisees’ employees can be considered the employees of franchisors for any purpose. This law comes in the aftermath of the National Labor Relations Board’s decision to hold a franchisor -- McDonald’s -- responsible as an employer in a range of labor violation cases.

The legislation has been supported by the International Franchise Association (IFA) and the U.S. Chamber of Commerce Workforce Freedom Initiative, a campaign intended to combat negative labor union activities.

Related: McDonald's Caps Off a Truly Terrible Year With Falling Sales, Discrimination Lawsuit

“Tennessee has taken a critically important step to protect local, franchise business owners from a pro-union government agency in the National Labor Relations Board which continues with its blatant government overreach and its politically-motivated, radical agenda,” IFA President Steve Caldeira said in a statement. “IFA and many other groups welcome Tennessee’s initiative and will continue to make our case against the NLRB’s overreach on the joint employer issue.”

The NLRB has faced backlash from the franchise industry since it’s initial joint employer decision last July, with franchises and lawmakers claiming that to hold a franchisor responsible for franchisees’ employees violates the model franchising has been built upon. However, service workers’ rights activists have thus far only doubled down on the position, with new cases defining McDonald’s as a joint employer in labor violations filed as recently as March.

The NLRB is currently conducting hearings to decide if McDonald’s should be considered a “joint employer” with franchisees, with a final decision not expected to be released until 2016.

Related: Lawmakers Question Legality of NLRB's Joint Employer Decision

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