In the wake of the recent NLRB decisions finding that franchisors are the joint employers of their franchise employees (best known, the NLRB’s July 2014 finding that McDonalds was a joint employer of its franchise employees), the Michigan legislature has amended the Michigan Franchise Investment Law (“MFIL”). This amendment clarifies that the franchisee is the sole employer of its employees unless the franchise agreement provides otherwise.
In addition to the amendment to the MFIL, the term “employer” has been redefined in the Michigan Employment Security Act, the Workforce Opportunity Wage Act, the Michigan Occupational Safety & Health Act, and the Payment of Wages and Fringe Benefits Act. The new definition makes it clear that the franchisor is not considered a joint employer of the franchise employees under Michigan law. Under the new definition, “the franchisee is considered the sole employer of workers for whom the franchisee provides a benefit plan or pays wages” except as “specifically provided in the franchise agreement.”
Finally, the Michigan Worker’s Disability Compensation Act was amended to exclude joint employer status unless “the franchisee and franchisor share in the determination of or codetermine the matters governing the essential terms and conditions of the employee’s employment” and “ both directly and immediately control matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.”
Recommended action for Franchisors with operations in Michigan
In light of these amendments, it is recommended that franchisors review their franchise agreements with Michigan franchisees and consider amending their franchise agreements to clearly provide that the franchisee is the sole employer of the Michigan workers.