On January 26, 2016, the Michigan House of Representatives passed House Bills 5070 through 5073 which shall all go into effect May 23, 2016. House Bill 5070 changes the Employment Security Act, House Bill 5071 changes the Workforce Opportunity Wage Act, House Bill 5072 changes the Wages and Fringe Benefits Act, and House Bill 5073 changes the Occupational Safety and Health Act.
In each act, the definition of employer has been amended by its respective House Bill to exclude franchisors in cases where a franchise relationship exists and the franchisee is solely responsible for providing paid wages or fringe benefits to employees. The new bills are largely in response to a 2015 ruling by the National Labor Relations Board that stated that both the franchisor and the franchisee can be considered “joint employers” that share responsibility for the franchisee’s workers. (See our article on the NLRB’s Browning-Ferris decision here: https://detroitbusinesslaw.com/?s=browning
Although changing the definition of employer may seem like a small change, it has a large impact on franchisors in light of the NLRB’s Browning-Ferris decision. With these changes to the definition of employer, the franchisor is less likely to be determined to be a “joint-employer” and liable for acts of the franchisee.
This article was written by Tyler Kemper, law clerk.