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New Georgia Law Says Franchisors Generally Not Employers of Franchisees or Franchisees’ Workers

The “Protecting Georgia Small Businesses Act” amends Georgia’s Labor and Industrial Relations Code to provide that neither a franchisee nor a franchisee’s employee is considered an employee of a franchisor for “any purpose.” However, the amendment does not apply to Georgia Workers’ Compensation Code. The Act goes into effect on January 1, 2017.

The Georgia Legislature reportedly passed the Act in response to the National Labor Relations Board’s ruling in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015). In that case, the NLRB broadened its definition of a “joint-employer” to include any entity that: (1) could exercise control over another entity’s employees’ terms and conditions of employment, whether it actually does so or not, or (2) exercises any such control through a third party.

In the wake of Browning-Ferris, several states have introduced legislation aimed at protecting businesses from the wide-ranging effects of the NLRB’s aggressive decision. For example, seven states (Texas, Louisiana, Tennessee, Wisconsin, Michigan, Indiana, and Utah) have passed legislation that, like the Georgia law, prohibit a franchisor from being considered an employer or co-employer of franchisee employees. (S.B. 652, 84th Leg., Reg. Sess. (Tex. 2015); La. Rev. Stat. 23:921(F)(2) (2015); Tenn. Code Ann. § 50-1-208(a) (2015); Wisconsin S.B. 422, 2015-2016 Session; (Michigan) MCL 421.1, et seq.; Section 41(11); 8 MCL 408.411, et seq., Section 2(d); 9 MCL 408.1001, et seq., Section 5(2); 10 MCL 408.471 et seq., Section 1(d); 11 MCL 418.101 et seq.; Indiana House Bill 1218 (2016); Utah H.B. 116, 2016 General Session.)

Similar legislative efforts have been introduced in California, Colorado, Massachusetts, Oklahoma, Pennsylvania, Vermont, and Virginia. (California (AB 545), Colorado (HB 16-1154), Massachusetts (HB 3513), Oklahoma (HB 3164), Pennsylvania (HB 1620), Vermont (HB 694) and Virginia (HB 18).) Legislators in Wyoming, North Carolina, Arizona, and Colorado are evaluating similar efforts.

Although the Protecting Georgia Businesses Act, and other state legislative actions, likely are preempted by the National Labor Relations Act, they represent yet another example of lawmakers’ attempts to rein in what has been described as an “activist” NLRB.

Jackson Lewis P.C. © 2022National Law Review, Volume VI, Number 127
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About this Author

Jonathan J. Spitz, Jackson Lewis Law Firm, Labor Employment Attorney, Atlanta
Shareholder

Jonathan J. Spitz is a Principal in the Atlanta, Georgia, office of Jackson Lewis P.C. He is Co-Leader of the firm’s Labor and Preventive Practices Group.

Mr. Spitz lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media issues and the changing regulatory landscape. He understands the practical and operational needs of corporate America, helping design pragmatic strategies to minimize risk and maximize performance. He has represented...

404-586-1835
Kathleen M. Tinnerello, Jackson Lewis, Cleveland, Labor Rights Lawyer, Employment Litigation Attorney
Associate

Kathleen M. Tinnerello is an Associate in the Cleveland, Ohio office of Jackson Lewis P.C. Ms. Tinnerello brings a common sense approach to the practice of law, giving thoughtful advice that promotes her clients’ goals and protects her clients’ interests.

Serving as a counselor and advocate for employers in the private and public sector, Ms. Tinnerello represents employers in state and federal courts, as well as before the Equal Employment Opportunity Commission, the Ohio Civil Rights Commission, the National Labor Relations Board, the State Employment...

216-750-4335
Jason Carruthers, Jackson Lewis, employment dispute attorney, government agencies legal counsel, Fair Labor Standards Act lawyer
Associate

Jason R. Carruthers is an Associate in the Atlanta, Georgia, office of Jackson Lewis P.C. He represents management in employment and labor matters in state and federal court and before various government agencies.

While attending Georgia State University, Mr. Carruthers was President of the Black Law Student’s Association, Associate Research Editor of Law Review and interned for the Honorable Justice Robert Benham of the Georgia Supreme Court. Mr. Carruthers was honored by the Labor and Employment Law Section of the Atlanta...

404-586-1861
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