Monday, January 21, 2019

Ohio amends its employment laws to limit joint employment for franchisors

As the debate over the meaning of "joint employer" continues to rage at both the NLRB and in the federal courts, Ohio has jumped into the debate by passing legislation to limit this definition under various Ohio employment laws.

Effective yesterday, franchisors will not be deemed joint employers with their franchisees unless:

  • the franchisor agrees to assume that role in writing or a court of competent; or
  • a court of competent jurisdiction determines that the franchisor exercises a type or 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 trademark, brand.

This limitation applies to the definition of "employer" in the Ohio Minimum Fair Wage Standards Act, the Bimonthly Pay statute, the Ohio Workers' Compensation Act, and the Ohio Unemployment Compensation Act. It does not apply to discrimination claims under Ohio's Fair Employment Practices Act.

What does this mean? It means that a franchisor likely will not be joint employer of its franchisee's employee unless the franchisor exercises direct control over those employees. And as this hardly ever happens, most franchisors should be able to rest easy that they won't be liable for Ohio unpaid wages, workers' comp claims, or unemployment compensation.

And while this is an important gesture, its practicality is limited to workers' comp and unemployment liability. A limitation on unpaid minimum wage and overtime under state law has zero impact on claims under the FLSA. This law also has zero impact on state or federal employment discrimination claims, or claims under federal laws or OSHA.

Thus, while I don't want to downplay the symbolic importance of this law, or its real importance on issues related to certain state-specific claims, until the federal agencies and the federal courts fall in line on this issue, franchisors (and other potential joint employers) will continue to operate in a sea on uncertainty on this critical issue.

* Photo by niu niu on Unsplash