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Last week, U.S. House of Representatives unveiled a bill that would allow franchisors to license their trademarks to a franchisee without creating joint employer status. Under the Trademark Licensing Protection Act, “brand controls,” such as uniforms, food and cleanliness standards and other standards to ensure uniformity amongst franchisees of particularly, will not constitute or be evidence of joint employer status in federal or state employment litigation.

As we have reported previously, joint employer has been a hot topic over the past year, especially in the context of franchisor-franchisee. Specifically, in July, a federal administrative law judge rejected a proposed settlement between McDonald’s USA and the NLRB in a matter which sought to hold McDonald’s USA as a joint employer for its franchisees’ labor law violations across the country because it requires its franchise owners to strictly follow its rules on food, cleanliness, and employment practices. As of today, the settlement is still on hold while McDonalds USA and the Fight for $15 campaign leaders continue to battle on various topics, including the recusal of NLRB members John Ring and Bill Emanuel because they used to work at law firms Morgan Lewis and Littler Mendelson, respectively, and both firms entered agreements to help McDonald’s counter the campaign. You can read more about the current state of this battle here.

COUNSEL TO MANAGEMENT:

While still in its infancy stage, this bill has the potential to be a big winner for employers using the franchise model going forward. As reported by Law360, University of North Carolina School of Law labor professor Jeffrey Hirsch surmised that if the bill becomes law, it would be hard to see how a joint employer relationship in a franchise situation would ever happen, unless the proposed legislation were interpreted fairly narrowly. "Really, it worries me that it's carving out franchises from the entire joint employer doctrine," Hirsch said to Law360. "Which could be quite problematic. You can imagine a situation where a franchisor exerts a lot of direct control over the terms and conditions of employment of franchisees." If you have any questions regarding joint employer, please contact The Saqui Law Group.

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