When I throw my dog a bone, she is so happy. She goes and gets it, eats it, and wonders why she is unable to speak to express her gratitude. She doesn’t wonder, “Why is he throwing me a mere bone instead of an entire squirrel?” The bone is enough for complete contentment.
Ohio lawmakers have thrown franchisors a bone. They’ve limited the circumstances when franchisors can be held jointly liable if individual franchise owners commit certain Ohio employment law violations.
Under the new law, franchisors are not jointly liable for minimum wage, overtime, or pay frequency violations by franchise owners and are not jointly responsible for franchise owners’ responsibilities under unemployment insurance and workers’ compensation law — unless:
- The franchisor agrees to assume that role in writing [Haha! Not likely]; or
- a court rules 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, or both.”
Neither of those things typically happen. A franchisor does not typically meddle in day-to-day oversight of a franchisee’s employees, their hiring, or their supervision.
So that’s a delicious bone for franchisors, right?
Not really. The new law is more like what happens when I give my dog a pill wrapped in cheese. She’ll eat the cheese and drop the pill on the floor. My clever ploy fails.
The problem with the new law is that it doesn’t do very much.
While it is helpful for Ohio unemployment and workers compensation purposes, the wage and hour protections it offers are somewhat of an illusion.
Ohio wage and hour law largely follows federal law. Even if this new law protects a franchisor against joint employment in an Ohio overtime case (that’s the cheese), it has no effect on the same violations under federal law (the pill).
Under federal law (the Fair Labor Standards Act), franchisors are still subject to an Economic Realities Test when it comes to the questions of whether they are joint employers. In the Mid-Atlantic states that make up the Fourth Circuit Court of Appeals, a finding of joint employment is relatively easy because that Circuit applies a loose test. In the rest of the country, it’s a bit harder to demonstrate joint employment, but not nearly as difficult as it now is under Ohio state law claims. Here is a post that explains the difference in the tests.
Franchisors with individual franchisees in Ohio may feel a little love with this small bone, but they may be wondering where’s the full squirrel.
For more information on joint employment, gig economy issues, and other labor and employment developments to watch in 2019, join me in Philadelphia on Feb. 26, or Chicago on Mar. 21 for the 2019 BakerHostetler Master Class on Labor Relations and Employment Law: Meeting Today’s Challenges. Advance registration is required. Please email me if you plan to attend, firstname.lastname@example.org. If you list my name in your RSVP, I will have your registration fee waived.
© 2019 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.