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Employer Liability Issues Franchises Franchisors

Fox Rothschild LLP

Texas Supreme Court Reverses Liability Finding Against Franchisor

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A recent Texas Supreme Court decision fully overturned a jury’s finding that a franchisor was liable for the criminal actions of a franchisee’s employee. This decision underscores the importance of a franchisor having clearly...more

Polsinelli

Landmark Texas Supreme Court Case Finds No “Direct Liability” for Franchisor Arising Out of Franchisee Employee’s Actions

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On May 2, 2025, the Texas Supreme Court reversed a Texas Court of Appeals’ decision that had affirmed a jury’s verdict finding a franchisor directly liable to the customer of a franchisee for actions undertaken by the...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

New York State Senate Bill Would Make Fast-Food Franchisors Jointly and Severally Liable for Certain Labor Law Violations

On April 8, 2025, the New York State Legislature took up Senate Bill S7289, which, if enacted, would amend the New York Labor Law (NYLL) by adding a new article 35-A, otherwise known as the “New York State Fast Food...more

Morgan, Brown & Joy, LLP

Supreme Judicial Court Rules That Typical Franchise Operators Are Independent Contractors, Not Employees

On September 5, 2024, the Massachusetts Supreme Judicial Court (“SJC”) held that 7-Eleven franchisees operating in a “typical” franchisor-franchisee relationship were independent contractors and not “employees” of 7-Eleven,...more

Skadden, Arps, Slate, Meagher & Flom LLP

FAQs About the FTC’s Broad New Ban on Noncompetes

When the Federal Trade Commission (FTC) issued its long-awaited final rule banning virtually all noncompete clauses between workers and employers, it also published 500-plus pages of commentary....more

Polsinelli

What is the Impact of the FTC’s Final Non-Compete Rule on Franchisors and Franchisees?

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As explained in Polsinelli’s prior alert of April 24, 2024, the FTC announced its final rule on non-compete covenants (the “Rule”) on April 23, 2024. Critically, the Rule does not prohibit non-compete agreements between...more

UB Greensfelder LLP

FTC Issues Rule Prohibiting Non-Competes

UB Greensfelder LLP on

On April 23, 2034, the Federal Trade Commission (FTC) issued a final rule intended to ban the use and enforcement of most non-compete clauses signed by workers. The new rule is not in effect yet. It will become...more

Hogan Lovells

U.S. NLRB makes it more likely to deem companies as joint-employers

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The National Labor Relations Board (NLRB or the Board) issued its final rule on the latest standard for joint-employer status on October 26, 2023, with an effective date of December 26, 2023. Joint-employer status is crucial...more

Vedder Price

NLRB’s New Joint Employer Test Significantly Expands Circumstances Under Which Separate Entities Will Be Deemed Joint Employers

Vedder Price on

On October 26, 2023, the National Labor Relations Board (“NLRB” or “Board”) issued its long-awaited final rule establishing a new standard for determining when two employers are joint employers under the National Labor...more

Troutman Pepper Locke

‎“Unlawyering” Can Avoid Joint Employer Status Under the New NLRB Rule

Troutman Pepper Locke on

The highly controversial joint employer regulation just issued by the National Labor Relations Board (NLRB) on October 26 is not so different than the standard that has historically been applied in determining whether a group...more

Lathrop GPM

Maine Federal Court Grants Franchisor’s Motion to Dismiss Age Discrimination Claim Brought by Franchisee’s Independent Contractor

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A federal court in Maine granted a franchisor’s motion to dismiss claims asserting that a franchisor was liable for its franchisee’s alleged age discrimination in employment. Goodwill v. Anywhere Real Est., 2023 WL 4034372...more

Lathrop GPM

Michigan Federal Court Denies Franchisor’s Motion to Dismiss Claims of Sexually Hostile Work Environment and Retaliatory...

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A federal court in Michigan recently denied a franchisor’s motion to dismiss claims alleging that it was liable as a joint employer for claims under Title VII of the Elliott-Larsen Civil Rights Act, Michigan’s state...more

Littler

Hot Take(out): California Fast Food Franchises Could Face Increased Liability

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It’s been a busy spring at the California state capitol.  Among the few thousand bills being considered by California’s legislature this year, AB 1228 stands out.  The bill would essentially create joint liability for...more

Ogletree, Deakins, Nash, Smoak & Stewart,...

Eleventh Circuit Serves a Whopper of a Ruling on Franchisor’s ‘No-Poach’/‘No-Hire’ Agreement With Franchisees

​​​​​​​Over the last several years, business-to-business “no-hire” and “no-poach” agreements have come under legal attack, including through enforcement actions by the Federal Trade Commission and criminal prosecutions by the...more

Fox Rothschild LLP

A Franchisee-Franchisor Relationship Cannot Be A Defense In An Independent Contractor Action

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When a company issues franchises, and the workers (in this case janitors) claim they are not independent contractors and sue the franchise company, can that “relationship” be posited as a defense?...more

Seyfarth Shaw LLP

Patel, et al. v. 7-Eleven, Inc., et al – While the Massachusetts’ Independent Contractor Statute May Apply to Franchise...

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Seyfarth Synopsis: On March 24, 2022, the Massachusetts Supreme Judicial Court (“SJC”) issued a much-anticipated decision in Patel, et al. v. 7-Eleven, Inc., et al. answering a certified question from the United States Court...more

Polsinelli

Labor Department Rescinds Pro-Franchise Joint-Employment Rule

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On July 29, 2021, the U.S. Department of Labor announced it is rescinding a final rule issued just last year (2020 Final Rule) that sought to clarify the standard for finding two separate entities to be “joint employers”...more

Ervin Cohen & Jessup LLP

FAST Act (AB-257) Narrowly Defeated

On June 3, 2021, AB-257, the Fast Food Accountability and Standards Recovery Act (the “FAST Act”) was defeated in the California Assembly, coming up three votes short of the 41 votes needed. The FAST Act would have...more

Lathrop GPM

The Franchise Memorandum - Issue # 262

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California Supreme Court Applies Independent Contractor Standard Retroactively; Does Not Reach Applicability to Franchises - The California Supreme Court has held that its Dynamex decision applies retroactively, answering...more

Lewitt Hackman

Franchisor 101: AB 5’s Preemptive Strike

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Franchisors faced unprecedented challenges in 2020. Enactment of California’s Assembly Bill 5 on January 1, 2020 was just the tip of an iceberg. As the COVID-19 pandemic upended franchise systems across all industries,...more

Bradley Arant Boult Cummings LLP

Joint Employment -- Still a Conundrum

For generations of small business owners franchising serves as a successful business model. Under this paradigm a franchisor grants a franchisee a license to use the franchisor’s trademark and business concept in exchange for...more

Lewitt Hackman

Competing Tests: Employee or Independent Contractor? Saving the Franchise Model

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Download PDF Assembly Bill 5 took effect in California on January 1, 2020 and governs when a business can treat a worker as an employee as opposed to an independent contractor. Under AB5 and its “ABC” test, a hiring entity...more

K&L Gates LLP

The National Labor Relations Board Issues Second in Trio of Agency Rules to Clarify Its Joint Employer Standard

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On February 26, 2020, the National Labor Relations Board (NLRB) formally issued its final rule on joint employment under the National Labor Relations Act (NLRA). ...more

McCarter & English, LLP

NLRB Joint Employer Regulations Provide Clarity But Not Full Picture

The modern workplace has a dizzying array of formal and informal relationships between individuals performing work and the persons and entities they perform the work for—beyond just the typical employer/employee relationship....more

ArentFox Schiff

NLRB Issues Pro-Employer Joint Employment Rule

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On February 26, 2020, the National Labor Relations Board (the NLRB) issued its final rule governing joint employer status under the National Labor Relations Act (the NLRA). The final rule replaces the Obama administration’s...more

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