New Kentucky Law Rejects Treatment of Franchisor as Employer of Franchisee’s Employees

New Kentucky Law Rejects Treatment of Franchisor as Employer of Franchisee’s Employees

 

      In recent years, both the National Labor Relations Board and private parties have brought suits as asserting that, at least upon particular fact situations, a franchisor should be treated as the joint-employer of employees of a franchisee.   See e,g,.  Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015) (The Board found that direct control over the essential terms of employment included “matters related to the employment relationship such as hiring, firing, discipline, supervision, and direction”).  Kentucky’s courts have to date not been open to these arguments. See, e.g., Uninsured Employers’ Fund v. Crowder, 2016 WL 2605624 (Ky. May 5, 2016); Doctor’s Associates, Inc. v. Uninsured Employers’ Fund, 364 S.W.3d 88 (Ky. 2011).  Still, in an effort to preclude the argument, the 2017 General Assembly adopted a series of parallel statutes providing, inter alia, that the franchisor is not the joint-employer of the employees of the franchisee.  See Ky. Rev. Stat. Ann. § 337.010 as amended by 2017 Ky. Acts, ch. 24, § 1; id. § 338.021 as amended by 2017 Ky. Acts, ch. 24, § 2; id. § 341.070 as amended by 2017 Ky. Acts, ch. 24, § 3; id. § 342.690 as amended by 2017 Ky. Acts, ch. 24, § 4; id. § 344.030 as amended by 2017 Ky. Acts, ch. 24, § 5. Each statute was amended to provide:

(a)  Notwithstanding any voluntary agreement entered into between the United States Department of Labor and a franchisee, neither a franchisee nor a franchisee’s employee shall be deemed to be an employee of the franchisor for any purpose under this chapter.

(b)  Notwithstanding any voluntary agreement entered into between the United States Department of Labor and a franchisor, neither a franchisor nor a franchisor’s employee shall be deemed to be an employee of the franchisee for any purpose under this chapter.

(c)  For purposes of this subsection, “franchisee” and “franchisor” have the same meanings as in 16 C.F.R. sec. 436.1.

Still, these amendment extend only to the existence of an employer-employee relationship, and does not reach other allegations of franchisor control over, and consequent responsibility for, franchisee conduct. See, e.g., Johnson v. Seagle Pizza, Inc., No. 2015-CA-000085-MR, 2016 WL 4410705 (Ky. App. Aug. 19, 2016) (rejecting claim that franchisor should be liable for murder that occurred off-site following a robbery).