Governor signs New Hampshire ‘joint employment’ bill into law

Measure aims to define employer-employee relationship at franchises

New Hampshire has become the first New England state to enter the fray over who is liable for labor violations involving a franchise – the local franchisee, who mainly deals with the employee, or the national franchisor, which is where all the money is.

Earlier this week, Gov. John Sununu signed into law Senate Bill 89, a bill strongly backed by the big franchisors to help clarify a National Labor Relations Board decision about the definition of a joint employer.

While that 2015 Browning Ferris decision dealt with a staffing agency, both national business groups and labor groups felt that it might have franchising reproductions.

Many thought that before Browning Ferris, franchisors had to have some direct control over their employees. After the decision (which is being challenged in the courts), that a franchisor has indirect control, or responsibility, for the labor violations of a contractor or franchise operator. The concept is known as “joint employment.”

McDonald’s has its own case pending before the NLRB related to joint employment that might clarify the matter. But it is clearly worried where all this may be heading, settling California labor law violations for $3.75 million. That’s the first time the company covered franchisee employees, but the agreement did stave off a court decision on the issue.

Whether or not Browning Ferris applies to franchisors, the uncertainty about its legal responsibility for franchisees’ workers has made them skittish, said Larry Preston, co-owner of the Pembroke-based Mr. Appliance franchise.

Preston’s business is one of three Mr. Appliance franchisees in the state, part of a network of 250 in the country and a larger 2,500-franchise operation owned by The Dwyer Group, which includes Portland Glass, Mr. Rooter and Mr. Electric.

All of that economic clout led to lower health insurance rates and an in-house payroll system for Preston’s 10 employees, but The Dwyer Group, fearful that this might be interpreted as indirect control of the workforce, no longer supplies the services.

“Now I have to deal with a private insurance broker,” said Preston. “And the new version [of the payroll system] leaves us on our own. That’s moving in the wrong direction.”

He said he felt like a “fish out of water” siding with Republicans – he opposed the right-to-work bill, for instance – when he backed SB 89, which states that unless the franchisor agrees, employees are the franchisee’s responsibility.

That’s the way it should be, Preston said. Many people still think that the franchisor really runs things, and while it does provide a lot of guidance, “this is my business. I make the payroll. I make the advertising decisions.”

Decision’s effect

Preston was jointed at hearings on SB 89 by International Franchise Association lobbyist Richard Parsons in supporting the bill.

Parsons testified that the decision could negatively impact many of the 3,000 franchises in the state – businesses that he said employ 27,000 and produce $1.6 billion in revenue.

Parsons said that what happened to Mr. Appliance franchisees happened to other businesses. For instance, Microsoft backed off a policy forcing its contractors to provide paid sick leave because that might be interpreted as indirect control, which might require it to negotiate with a union.

Unlike its strong stance against right to work, labor has not been united on the issue.

While some hailed the initial decision as a victory that would spill over into franchise organizing, others noted that the decision was rather narrow and the opposition to it was an overreaction.

The bill wasn’t on the radar screen of the local AFL-CIO chapter. Its policy director, Judy Steadman, told NHBR that neither the NLRB decision nor SB 89 really change much.

Also this week, Sununu signed several other laws into law affecting business, including:

 • SB 225, which goes further in making New Hampshire a trust haven, by making it the only state to allow civil law foundations, a trust-like entity found in other countries, including France and the Netherlands. It also would deregulate family trusts.

 • House Bill 340, which creates the Lakeshore Redevelopment Planning Commission, which is will try to do for the closed down Laconia State School property what the Pease Redevelopment Authority did for the former air base.

 • HB 654, which prevents municipal forced inspections of short-term rentals like Airbnb.

 • HB 580, which regulates but does not tax fantasy sports contests.