What This Bill Does
This bill protects franchise businesses from being classified as employees of the parent company. It says that certain actions by a franchisor (the company that owns the franchise system) cannot be used to claim that a franchisee (the person running an individual franchise location) is actually an employee. The bill applies these protections to three federal labor and safety laws.
Who It Affects
Franchisors (parent franchise companies or their employees), franchisees (people who operate individual franchise locations or their employees), and enforcement agencies for federal labor laws.
Key Provisions
• Franchisors cannot create an employment relationship by providing or requiring training handbooks on sexual harassment, human trafficking, workplace violence, discrimination, or apprenticeship and scholarship opportunities. (Sec. 3(a)(1))
• Franchisors cannot create an employment relationship by requiring franchisees to adopt policies on sexual harassment, human trafficking, workplace violence, discrimination, apprenticeships, scholarships, childcare, or paid leave, including reporting violations to the franchisor. (Sec. 3(a)(2))
• Franchisors cannot create an employment relationship by requiring or providing COVID-19 safety measures and related supplies or compensation to franchisees. (Sec. 3(a)(3))
• These protections apply to the National Labor Relations Act, the Fair Labor Standards Act of 1938, and the Occupational Safety and Health Act of 1970. (Sec. 3(b))
• This federal law overrides state laws that conflict with it, except for how states define "franchisee" and "franchisor." (Sec. 4)
What Changes
Courts and government agencies cannot use these specific franchisor actions as evidence that a franchisee is an employee. Franchisors can engage in these activities without triggering employment relationship claims under federal labor and safety laws.
Important Definitions
"Employment relationship" means any type of joint employer relationship, single employer relationship, or other employment-related status under the three federal laws listed. "Franchisee" uses the federal definition from title 16, Code of Federal Regulations or applies state franchise law definitions. "Franchisor" uses the federal definition from title 16, Code of Federal Regulations or applies state franchise law definitions.
II
118TH CONGRESS
1ST SESSION
S. 1104
To ensure that an employment relationship is not established between a
franchisor and a franchisee if the franchisor engages in certain activities,
and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 30, 2023
Mr. BRAUN introduced the following bill; which was read twice and referred
to the Committee on Health, Education, Labor, and Pensions
A BILL
To ensure that an employment relationship is not established
between a franchisor and a franchisee if the franchisor
engages in certain activities, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Protections for Socially
4
Good Activities Act’’.
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SEC. 2. DEFINITIONS.
6
In this Act:
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(1) EMPLOYMENT
RELATIONSHIP.—The term
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‘‘employment relationship’’ means any type of joint
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•S 1104 IS
employer relationship, single employer relationship,
1
or other employment-related status or relationship
2
under any of the laws described in section 3(b).
3
(2)
FRANCHISEE.—The
term
‘‘franchisee’’
4
means a franchisee, as defined—
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(A) in section 436.1(i) of title 16, Code of
6
Federal Regulations, as in effect on the day be-
7
fore the date of enactment of this Act; or
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(B) under an applicable State franchise
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law.
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(3)
FRANCHISOR.—The
term
‘‘franchisor’’
11
means a franchisor, as defined—
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(A) in section 436.1(k) of title 16, Code of
13
Federal Regulations, as in effect on the day be-
14
fore the date of enactment of this Act; or
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(B) under an applicable State franchise
16
law.
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SEC. 3. SAFE HARBOR.
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(a) IN GENERAL.—For the purposes of each law de-
19
scribed in subsection (b), none of the following may be
20
construed, alone or in combination with any other factor,
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as establishing an employment relationship between a
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franchisor (or any employee of the franchisor) and a
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franchisee (or any employee of the franchisee):
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•S 1104 IS
(1) The franchisor (or any employee of the
1
franchisor) provides the franchisee (or any employee
2
of the franchisee) with, or requires the franchisee
3
(or any employee of the franchisee) to use, a hand-
4
book, or other training, on sexual harassment,
5
human trafficking, workplace violence, discrimina-
6
tion, or opportunities for apprenticeships or scholar-
7
ships.
8
(2) The franchisor (or any employee of the
9
franchisor) requires the franchisee (or any employee
10
of the franchisee) to adopt a policy on sexual harass-
11
ment, human trafficking, workplace violence, dis-
12
crimination, opportunities for apprenticeships or
13
scholarships, childcare, or paid leave, including a re-
14
quirement for the franchisee (or any employee of the
15
franchisee) to report to the franchisor (or any em-
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ployee of the franchisor) any violations or suspected
17
violations of such policy.
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(3) The franchisor (or any employee of the
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franchisor) requires the franchisee (or any employee
20
of the franchisee) to adopt a policy based on the
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novel coronavirus (referred to in this paragraph as
22
‘‘COVID–19’’) pandemic such as the use of personal
23
protective equipment or other policies, or the
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franchisor (or any employee of the franchisor) pro-
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•S 1104 IS
vides the franchisee (or any employee of the
1
franchisee) with personal protective equipment or
2
other material goods or compensation to help the
3
franchisee (or any employee of the franchisee) dur-
4
ing or due to the COVID–19 pandemic.
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(b) LAWS.—The laws described in this subsection are
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each of the following:
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(1) The National Labor Relations Act (29
8
U.S.C. 151 et seq.).
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(2) The Fair Labor Standards Act of 1938 (29
10
U.S.C. 201 et seq.).
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(3) The Occupational Safety and Health Act of
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1970 (29 U.S.C. 651 et seq.).
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SEC. 4. PREEMPTION.
14
Except with respect to the definitions of the terms
15
‘‘franchisee’’ and ‘‘franchisor’’ under section 2, this Act
16
shall preempt any State law to the extent that such State
17
law is inconsistent with the provisions of this Act.
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Æ
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