Employment Status of Franchises
On May 4, 2017, North Carolina Governor Roy Cooper signed legislation (S.B. 131) establishing the employment status of franchises. Codified at N.C. Gen. Stat. § 95-25.24A, neither a franchisee nor a franchisee’s employee is an employee of the franchisor for any purposes. This applies to, but is not limited to, all the following North Carolina laws:
- Wage and Hour Act.
- Employment Security.
- Workers’ Compensation Act.
Per the law, a franchisee and franchisor have the same definitions as set out in 16 C.F.R. § 436.1:
- A franchisee is any person who is granted a franchise.
- A franchisor means any person who grants a franchise and participates in the franchise relationship. Unless otherwise stated, it includes subfranchisors. A subfranchisor is a person who functions as a franchisor by engaging in both pre-sale activities and post-sale performance.
The law became effective on May 4, 2017.
Read NC S.B. 131