Posts Tagged business

Franchisor Liability As a Joint-Employer

Franchisors have a valid interest in protecting the brand they have worked hard to create. they accomplish this by requiring uniformity from their franchisees and exercising control over certain aspects of their franchisees’ operations. This includes control over the location and look of their franchisees’ places of business, the products and services offered by their franchisees and how intellectual property is utilized and protected by their franchisees. Franchisors also exercise control over their franchisees’ “employees by dictating minimum employment standards, the type of training that is required for employees and the clothing or uniforms employees must wear. Unfortunately, this control over their franchisees’ employees can sometimes create liability for franchisors when employees sue the franchisees for violations of Title VII, the Fair Labor Standards Act or other labor laws. It is becoming increasingly common that employees are also suing the franchisor claiming the franchisor is liable because they acted as a joint-employer based upon the amount of control they exercised over their franchisees’ employees. This joint-employer claim creates a second, deep pocket for them to pursue. Background of Joint-Employer Liability The current standard for determining whether an individual or entity is a joint-employer was set forth in the National Labor Relations Board (the “NLRB”)’s 2015 decision in the Browning-Ferris Industries matter. Specifically, the NLRB held the primary inquiry for determining joint-employer status is whether the purported joint-employer possesses the actual or potential authority to exercise control over the primary employer’s employees, regardless of whether the control is in fact ever exercised. In December 2017, the NLRB established a more employer-friendly standard in the Hy-Brand Industrial Contractors, Ltd. matter that required the purported joint-employer to actually exercise joint control over essential employment terms, rather than just reserving the right to exercise such control. This control had to be “direct and immediate”


Employee Handbook Prep 101

Employment Handbooks for Small Businesses (less than 50 Employees) An employment handbook – if done right, provides a small businesswith legal protections and can be used to demonstrate legal compliance. Without an employment handbook, a small business misses legal protections and opens itself to liability and legal expenses (even for frivolous claims) that far exceed the time and costs associated with ensuring a well-drafted employment handbook is in place. A well-drafted handbook means the handbook is current with laws and legal protections, which constantly evolve with new laws and court decisions.   Are Employment Handbooks Legally Required for Small Businesses? There may not be a law that expressly states that a small business (or large business for that matter) is legally required to have an employment handbook, but without an employment handbook – there may be a presumption that your company is not in legal compliance. And, worst yet, your small business is missing out on legal protections and the right to enforce your lawful rights and expectations with regard to employees. So, the better question is the following: Is your small company in a much better position (legal or business) with an employment handbook? Yes…if done right! Here’s a simple example. If a disgruntled employee threatens to sue your small business for being wrongfully terminated – having employment handbook policy expectations in place and showing the employee failed to meet such written handbook expectations – can stop a potential lawsuit in its tracks. Beyond the legal issues, an employment handbook also helps employees understand your company expectations and policies, which is a great tool for a better workforce. What’s Addressed in the Employment Handbook? It depends on your business. Generally speaking, an employment handbook summarizes employment rules, policies, and expectations of the small business and addresses many legal compliance