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There is further news from Texas relating to the classification of a franchisee and/or its employees as employees of a franchisor. On June 19, 2015, the Governor signed SB 652 into law which amends the Texas Labor Code. The law provides that a franchisor is not considered the employer of its franchisees or of the employees of its franchisees for claims under Texas law related to employment discrimination, minimum wage, workers' compensation, wage payment and other related laws. There is one exception to the rule however – if a Texas state court of competent jurisdiction finds that the franchisor has exercised a type or degree of control over the franchisee or its employees not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademark or brand, then the protection of this new law will not apply.
The law goes into effect on September 1, 2015. It is hard to say how the exception to the law will be interpreted – what type or degree of control will be deemed to be not customary or not in protection of a franchisor's trademark or brand. As with the recent actions by the NLRB board and the developments discussed in our various blogs, the landscape of the employer/employee relationship continues to change.
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