SF 510 (LSB 1512SV (1) 88)

SENATE FILE 510

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO SSB 1110)

(COMPANION TO HF 327 BY COMMITTEE ON COMMERCE)

A BILL FOR

An Act relating to franchisor-franchisee relationships for the purposes of certain employment laws and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  85.55  Franchisor-franchisee relationship.
   1.  For purposes of this section, franchisee and franchisor mean the same as defined in section 523H.1.
   2.  For purposes of this chapter and chapters 86 and 87, a franchisor shall not be considered to be an employer of a franchisee or of an employee of a franchisee unless any of the following conditions apply:
   a.  The franchisor has agreed in writing to be considered to be the employer of the franchisee or of the employees of the franchisee.
   b.  The franchisor has been found by the workers’ compensation commissioner to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.
    Sec. 2.  NEW SECTION.  91A.15  Franchisor-franchisee relationship.
   1.  For purposes of this section, franchisee and franchisor mean the same as defined in section 523H.1.
   2.  For purposes of this chapter, a franchisor shall not be considered to be an employer of a franchisee or of an employee of a franchisee unless any of the following conditions apply:
   a.  The franchisor has agreed in writing to be considered to be the employer of the franchisee or of the employees of the franchisee.
   b.  The franchisor has been found by the commissioner to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.
    Sec. 3.  Section 91D.1, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  2A.  a.  For purposes of this subsection, franchisee and franchisor mean the same as defined in section 523H.1.
   b.  For purposes of this chapter, a franchisor shall not be considered to be an employer of a franchisee or of an employee of a franchisee unless any of the following conditions apply:
   (1)  The franchisor has agreed in writing to be considered to be the employer of the franchisee or of the employees of the franchisee.
   (2)  The franchisor has been found by the labor commissioner to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.
    Sec. 4.  NEW SECTION.  96.36  Franchisor-franchisee relationship.
   1.  For purposes of this section, franchisee and franchisor mean the same as defined in section 523H.1.
   2.  For purposes of this chapter, a franchisor shall not be considered to be an employer of a franchisee or of an employee of a franchisee unless any of the following conditions apply:
   a.  The franchisor has agreed in writing to be considered to be the employer of the franchisee or of the employees of the franchisee.
   b.  The franchisor has been found by the department to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.
    Sec. 5.  NEW SECTION.  216.22  Franchisor-franchisee relationship.
   1.  For purposes of this section, franchisee and franchisor mean the same as defined in section 523H.1.
   2.  For purposes of this chapter, a franchisor shall not be considered to be an employer of a franchisee or of an employee of a franchisee unless any of the following conditions apply:
   a.  The franchisor has agreed in writing to be considered to be the employer of the franchisee or of the employees of the franchisee.
   b.  The franchisor has been found by the commission to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.
    Sec. 6.  APPLICABILITY.  This Act applies to work performed on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill provides that, for the purposes of certain specified employment laws, a franchisor shall not be considered to be an employer of a franchisee or of an employee of a franchisee unless at least one of two specified conditions are met. The first condition is that the franchisor has agreed in writing to be considered to be the employer of the franchisee or of the employees of the franchisee. The second condition is that the franchisor has been found by the governing state agency to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor for the purpose of protecting the franchisor’s trademarks and brand.
   The affected employment laws are Code chapter 216 relating to civil rights, Code chapters 85, 86, and 87 relating to workers’ compensation, Code chapter 91A relating to wage payment collection, Code chapter 91D relating to the minimum wage, and Code chapter 96 relating to unemployment insurance.
   Franchisee is defined under Iowa law as a person to whom a franchise is granted, including a subfranchisor with regard to its relationship with a franchisor and a subfranchisee with regard to its relationship with a subfranchisor. Franchisor is defined under Iowa law as a person who grants a franchise or master franchise, or an affiliate of such a person, including a subfranchisor with regard to its relationship with a franchisee, except as otherwise provided by state law. 
   The bill applies to work performed on or after the effective date of the bill.