Monthly Archives: February 2015

PHILADELPHIA AND PAID SICK LEAVE

On February 12, 2015, the Philadelphia City Council passed legislation mandating paid sick leave in Philadelphia.  Mayor Michael Nutter signed the legislation into law later that day.    The law, effective 90 days after signing, requires businesses with 10 or more employees to guarantee at least one hour of paid sick leave for every 40 hours worked.  Franchised businesses within Philadelphia, particularly those in the restaurant industry, lobbied against the bill saying that it will discourage businesses from moving to the city and deter current companies from expanding.  Efforts to increase the threshold number of employees from 10 to 15 or 50 ultimately failed.  However, the new law in Philadelphia may be short lived as Pennsylvania considers paid leave preemption in House Bills 1807 and 1796 filed earlier this year.  Both bills would ensure local municipalities cannot pass piecemeal paid leave requirements on businesses in Pennsylvania.  Twelve other states have already passed similar preemption bills.

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Filed under Franchise Basics, Franchise Insight, Franchise Law, In The News, Restaurant & Hospitality Law, The Franchise Legislation Monitor

Franchisors should focus on the brand to mitigate risk.

The standards used to determine joint employer status and the proper identification of an individual as an independent contractor within franchise systems are changing.  In order for a franchisor to minimize liability associated with joint employer status, vicarious liability and misclassification of employees as independent contractors, franchise systems must focus on controls that relate primarily to the protection of a franchisor’s brand and the integrity of the product or services provided to the marketplace by its’ franchisees.  By focusing on these essential elements of a franchise system, rather than the day-to-day operation of a franchisees’ business, the franchisor may mitigate the risk associated with the on-going attack against the franchise business model.  Specifically, franchisors should avoid the following;

  • Imposing employment policies/practices upon the franchised business
  • training employees of the franchised business
  • imposing scheduling requirements and pricing controls upon the franchised business
  • securing contracts/customers on behalf of the franchised business
  • sub-leasing office/retail space to the franchised business
  • acting as a guarantor/surety of the franchised business

In order to mitigate risk, franchise systems should examine their franchise agreements, operating manuals and internal policies to determine where a system may step over the line of policing essential policies to ensure brand integrity and into the day-to-day business operations of its’ franchisees.

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Filed under Advertising & Franchise Law, Franchise Basics, Franchise Insight, Franchise Law, In The News