The Tennessee legislature in Public Chapter No. 114 clarified Tennessee law on who is considered the employer of franchisee employees. This was signed into law by Governor Bill Haslam on April 10, 2015 and took effect immediately. Specifically, employees of franchisees as well as franchisees themselves will not be “deemed to be an employee of the franchisor for any purpose.” This obviously is important in several different areas of the law. It can certainly be important for numerous employment law issues including Tennessee employee discrimination or fair labor standard cases. Additionally, if employees are deemed to be employed by a franchisor, this could lead to an increased level of litigation against franchisors for claims based in premises liability or automobile liability (when a franchisee is involved in an incident or claim).
The Tennessee legislature felt it was important to clarify this issue mainly because of concerns for litigation as well as recent changes in the law on this issue at the national level.