House File 2337 - Introduced HOUSE FILE BY COMMITTEE ON COMMERCE (SUCCESSOR TO HSB 559) A BILL FOR 1 An Act relating to franchisor=franchisee relationships for 2 the purposes of certain employment laws and including 3 applicability provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5478HV (2) 87 je/rj PAG LIN 1 1 Section 1. NEW SECTION. 85.55 Franchisor=franchisee 1 2 relationship. 1 3 1. For purposes of this section, franchisee and franchisor 1 4 mean the same as defined in 16 C.F.R. {436.1. 1 5 2. For purposes of this chapter and chapters 86 and 87, 1 6 a franchisor shall not be considered to be an employer of a 1 7 franchisee or of an employee of a franchisee unless any of the 1 8 following conditions apply: 1 9 a. The franchisor has agreed in writing to be considered to 1 10 be the employer of the franchisee or of the employees of the 1 11 franchisee. 1 12 b. The franchisor has been found by the workers' 1 13 compensation commissioner to have exercised a type or degree of 1 14 control over the franchisee or the franchisee's employees that 1 15 is not customarily exercised by a franchisor for the purpose of 1 16 protecting the franchisor's trademarks and brand. 1 17 Sec. 2. NEW SECTION. 91A.15 Franchisor=franchisee 1 18 relationship. 1 19 1. For purposes of this section, franchisee and franchisor 1 20 mean the same as defined in 16 C.F.R. {436.1. 1 21 2. For purposes of this chapter, a franchisor shall not be 1 22 considered to be an employer of a franchisee or of an employee 1 23 of a franchisee unless any of the following conditions apply: 1 24 a. The franchisor has agreed in writing to be considered to 1 25 be the employer of the franchisee or of the employees of the 1 26 franchisee. 1 27 b. The franchisor has been found by the commissioner to have 1 28 exercised a type or degree of control over the franchisee or 1 29 the franchisee's employees that is not customarily exercised 1 30 by a franchisor for the purpose of protecting the franchisor's 1 31 trademarks and brand. 1 32 Sec. 3. Section 91D.1, Code 2018, is amended by adding the 1 33 following new subsection: 1 34 NEW SUBSECTION. 2A. a. For purposes of this subsection, 1 35 franchisee and franchisor mean the same as defined in 16 C.F.R. 2 1 {436.1. 2 2 b. For purposes of this chapter, a franchisor shall not be 2 3 considered to be an employer of a franchisee or of an employee 2 4 of a franchisee unless any of the following conditions apply: 2 5 (1) The franchisor has agreed in writing to be considered 2 6 to be the employer of the franchisee or of the employees of the 2 7 franchisee. 2 8 (2) The franchisor has been found by the labor commissioner 2 9 to have exercised a type or degree of control over the 2 10 franchisee or the franchisee's employees that is not 2 11 customarily exercised by a franchisor for the purpose of 2 12 protecting the franchisor's trademarks and brand. 2 13 Sec. 4. NEW SECTION. 96.36 Franchisor=franchisee 2 14 relationship. 2 15 1. For purposes of this section, franchisee and franchisor 2 16 mean the same as defined in 16 C.F.R. {436.1. 2 17 2. For purposes of this chapter, a franchisor shall not be 2 18 considered to be an employer of a franchisee or of an employee 2 19 of a franchisee unless any of the following conditions apply: 2 20 a. The franchisor has agreed in writing to be considered to 2 21 be the employer of the franchisee or of the employees of the 2 22 franchisee. 2 23 b. The franchisor has been found by the department to have 2 24 exercised a type or degree of control over the franchisee or 2 25 the franchisee's employees that is not customarily exercised 2 26 by a franchisor for the purpose of protecting the franchisor's 2 27 trademarks and brand. 2 28 Sec. 5. NEW SECTION. 216.22 Franchisor=franchisee 2 29 relationship. 2 30 1. For purposes of this section, franchisee and franchisor 2 31 mean the same as defined in 16 C.F.R. {436.1. 2 32 2. For purposes of this chapter, a franchisor shall not be 2 33 considered to be an employer of a franchisee or of an employee 2 34 of a franchisee unless any of the following conditions apply: 2 35 a. The franchisor has agreed in writing to be considered to 3 1 be the employer of the franchisee or of the employees of the 3 2 franchisee. 3 3 b. The franchisor has been found by the commission to have 3 4 exercised a type or degree of control over the franchisee or 3 5 the franchisee's employees that is not customarily exercised 3 6 by a franchisor for the purpose of protecting the franchisor's 3 7 trademarks and brand. 3 8 Sec. 6. APPLICABILITY. This Act applies to work performed 3 9 on or after the effective date of this Act. 3 10 EXPLANATION 3 11 The inclusion of this explanation does not constitute agreement with 3 12 the explanation's substance by the members of the general assembly. 3 13 This bill provides that, for the purposes of certain 3 14 specified employment laws, a franchisor shall not be considered 3 15 to be an employer of a franchisee or of an employee of a 3 16 franchisee unless at least one of two specified conditions are 3 17 met. The first condition is that the franchisor has agreed in 3 18 writing to be considered to be the employer of the franchisee 3 19 or of the employees of the franchisee. The second condition 3 20 is that the franchisor has been found by the governing state 3 21 agency to have exercised a type or degree of control over 3 22 the franchisee or the franchisee's employees that is not 3 23 customarily exercised by a franchisor for the purpose of 3 24 protecting the franchisor's trademarks and brand. 3 25 The affected employment laws are Code chapter 216 relating 3 26 to civil rights, Code chapters 85, 86, and 87 relating to 3 27 workers' compensation, Code chapter 91A relating to wage 3 28 payment collection, Code chapter 91D relating to the minimum 3 29 wage, and Code chapter 96 relating to unemployment insurance. 3 30 Franchisee is defined by federal regulation as any 3 31 person who is granted a franchise. Franchisor is defined 3 32 by federal regulation as any person who grants a franchise 3 33 and participates in the franchise relationship and includes 3 34 subfranchisors unless otherwise stated in federal regulations. 3 35 The bill applies to work performed on or after the effective 4 1 date of the bill. LSB 5478HV (2) 87 je/rj