The U.S. House of Representatives lawmakers announced last week that they have prepared a bill that would establish that a business simply licensing a trademark, such as in the case of a license from a franchisor to a franchisee, would not create a so-called “joint employer” relationship.
Joint employment is the sharing of control and supervision of an employee’s activity among two or more businesses. This new bill, called the Trademark Licensing Protection Act of 2018, declares that if a company is licensed to use a trademark, this should not be enough to establish “an employment or principal agent relationship” between the two licensing entities.
The rules for determining joint employer status have been a hot-button issue for the last several years. In 2015, the National Labor Relations Board (NLRB), the federal agency tasked with enforcing the National Labor Relations Act (NLRA), issued a controversial decision, Browning-Ferris Industries of California, Inc., 362 NLRB No. 186, that expanded the definition of “joint employer” under the NLRA. This decision held that “indirect” or “potential” control over employees’ working conditions is sufficient for finding a joint employment relationship.
However, in December 2017, the NLRB briefly overturn the Browning-Ferris joint employer standard, only to reinstate the standard once more when a conflict-of-interest controversy was revealed involving one of the NLRB members in February 2018. Months later, in April, the D.C. Circuit decided to reinstate the appeal of Browning-Ferris and restore the case to the docket.
This new House bill, if it passes, will effectively render the Browning-Ferris standard null and void. Representatives sponsoring the bill have stated, “The Trademark Licensing Protection Act will provide our nation’s small and franchise businesses the certainty necessary to grow and invest in the future of their employees.”
If you own a franchise or are interested in learning how to franchise your business, don’t hesitate to contact Stark & Stark’s experienced Franchise practice today.