Franchisees; status thereof and its employees as employees of the franchisor. (HB18)

Introduced By

Del. Chris Head (R-Roanoke) with support from co-patron Del. Michael Webert (R-Marshall)

Progress

Introduced
Passed Committee
Passed House
Passed Senate
Signed by Governor
Became Law

Description

Employees; franchisees excluded. Clarifies that neither a franchisee nor any employee of the franchisee shall be deemed to be an employee of the franchisee's franchisor for any purpose, notwithstanding any voluntary agreement between the U.S. Department of Labor and the franchisee. Read the Bill »

Status

04/08/2016: vetoed by governor

History

DateAction
11/16/2015Prefiled and ordered printed; offered 01/13/16 16100032D
11/16/2015Committee
11/16/2015Committee
11/16/2015Prefiled and ordered printed; offered 01/13/16 16100032D
11/16/2015Referred to Committee on Commerce and Labor
01/12/2016Impact statement from DPB (HB18)
01/19/2016Reported from Commerce and Labor (15-Y 6-N) (see vote tally)
01/21/2016Read first time
01/25/2016Passed by for the day
01/26/2016Read second time and engrossed
01/27/2016Read third time and passed House (64-Y 34-N)
01/27/2016VOTE: PASSAGE (64-Y 34-N) (see vote tally)
01/28/2016Constitutional reading dispensed
01/28/2016Referred to Committee on Commerce and Labor
02/22/2016Reported from Commerce and Labor (12-Y 3-N) (see vote tally)
02/24/2016Constitutional reading dispensed (39-Y 0-N) (see vote tally)
02/25/2016Read third time
02/25/2016Reading of amendment waived
02/25/2016Amendment by Senator Surovell agreed to
02/25/2016Engrossed by Senate as amended
02/25/2016Passed Senate with amendment (27-Y 12-N) (see vote tally)
02/26/2016Placed on Calendar
02/29/2016Senate amendment agreed to by House (65-Y 34-N)
02/29/2016VOTE: ADOPTION (65-Y 34-N) (see vote tally)
03/01/2016Enrolled
03/01/2016Bill text as passed House and Senate (HB18ER)
03/01/2016Signed by Speaker
03/02/2016Impact statement from DPB (HB18ER)
03/04/2016Signed by President
03/11/2016G Governor's Action Deadline Midnight, Monday, April 11, 2016
03/11/2016Enrolled Bill communicated to Governor on 3/11/16
03/11/2016G Governor's Action Deadline Midnight, Sunday, April 10, 2016
04/08/2016G Vetoed by Governor
04/20/2016Placed on Calendar
04/20/2016House sustained Governor's veto (66-Y 34-N)
04/20/2016VOTE: OVERRIDE GOVERNOR'S VETO (66-Y 34-N)
04/20/2016Requires 67 afirmative votes to override Governor's veto

Video

This bill was discussed on the floor of the General Assembly. Below is all of the video that we have of that discussion, 4 clips in all, totaling 17 minutes.

Transcript

This is a transcript of the video clips in which this bill is discussed.

AYES 21, NOS 19. AYES 21, NOS 19. THE BILL IS PASSED. HOUSE BILL 18, A BILL RELATING TO THE STATUS OF A FRANCHISEE AND ITS EMPLOYEES AS EMPLOYEES OF THE FRANCHISOR. REPORTED FROM THE COMMITTEE ON COMMERCE AND LABOR. AND THERE IS A FLOOR AMENDMENT. THE SENIOR SENATOR FROM VIRGINIA BEACH, SENATOR WAGNER.

Sen. Frank Wagner (R-Virginia Beach): THANK YOU, MR. PRESIDENT. I WOULD MAKE A MOTION THAT THE BILL PASS AND SPEAKING TO THAT MOTION.

[Unknown]: SENATOR, WE HAVE A FLOOR AMENDMENT.

Sen. Frank Wagner (R-Virginia Beach): OKAY. YOU WANT TO TAKE UP THE FLOOR AMENDMENT FIRST.

[Unknown]: THE SENATOR FROM EASTERN FAIRFAX COUNTY, SENATOR SUROVELL.

Sen. Scott Surovell (D-Mount Vernon): THANK YOU, MR. PRESIDENT. I MOVE TO WAIVE READING OF THE FLOOR AMENDMENT.

[Unknown]: THE QUESTION IS SHALL THE READING OF THE FLOOR AMENDMENT BE WAIVED. ALL IN FAVOR OF THE MOTION WILL SAY AYE. THOSE OPPOSED, NO. THE AYES HAVE IT. THE SENATOR FROM EASTERN FAIRFAX COUNTY.

Sen. Scott Surovell (D-Mount Vernon): SPEAKING TO THE AMENDMENT. THIS FLOOR AMENDMENT IS REQUESTED -- WE HAD SOME LAWYERS LOOK AT THIS WHO HAD SOME CONCERN THAT THE SCOPE OF THIS BILL MIGHT EXTEND TO ALTERING THE COMMON LAW WHEN IT COMES TO VICARIOUS LIABILITY, AND THIS FLAR AMENDMENT, THIS MAKES IT CLEAR THAT THE SCOPE OF THIS BILL IS ONLY ON THE SUBJECT MATTER OF THE BILL AND IT DOESN'T GO PARTY AND ALTER VIRGINIA'S COMMON LAW WHEN IT COMES TO VIRGINIA'S PRINCIPAL AND AGENT LIABILITY. IT'S MY UNDERSTANDING OF THE PATRON OF THE BILL DOESN'T HAVE AN OBJECTION TO IT AND I WOULD MOVE THAT WE PASS THE FLOOR AMENDMENT.

[Unknown]: THANK YOU, SENATOR. THE QUESTION IS SHALL THE FLOOR AMENDMENT BE AGREED TO. ALL IN FAVOR -- MR. PRESIDENT. THE SENIOR SENATOR FROM VIRGINIA BEACH. MR. PRESIDENT, I WOULD ASK THE GENTLEMAN IF HE WOULD YIELD FOR A QUESTION. WOULD THE SENATOR FROM EASTERN FAIRFAX COUNTY YIELD FOR A QUESTION? HAPPY TO YIELD. HE YIELDS, SENATOR. MR. PRESIDENT, MY QUESTION WOULD BE, HAVE YOU TALKED TO PAY TRON OF THE -- THE HOUSE PATRON OF THIS BILL AND IS HE IN AGREEMENT WITH THIS? THE SENATOR FROM EASTERN FAIRFAX COUNTY.

Del. Bill Howell (R-Fredericksburg): MR. PRESIDENT, I WOULD TELL THE GENTLEMAN THAT I HAVE NOT SPOKEN TO HIM, BUT I BELIEVE THE GENTLEMAN FROM ROCKINGHAM HAS SPOKEN TO HIM AND THAT THE PATRON IS OKAY WITH IT. THAT'S MY UNDERSTANDING.

[Unknown]: MR. PRESIDENT -- I WOULD YIELD TO THE SENATOR FROM ROCKINGHAM. MR. PRESIDENT, IF THE GENTLEMAN WOULD YIELD, I DID SPEAK FOR THE PATRON BRIEFLY BEFORE SESSION TODAY. I SHOWED HIM THE LANGUAGE OF THE FLOOR AMENDMENT. HE TOLD ME HE DIDN'T HAVE ANY OBJECTION TO IT, BUT, OF COURSE, HE RESERVES THE RIGHT TO LOOK MORE CLOSELY AS IT MAKES ITS WAY DOWN THE HALL AND IN THE EVENT THAT HE HAS A CHANGE OF HEART AND REALIZES IT DOES SOMETHING MORE THAN THE GENTLEMAN FROM WHATEVER PART OF FAIRFAX INTENDED, THEN THEY CAN REJECT THE SENATE AMENDMENT. AND PUT IT IN COMPS. THANK YOU, SENATOR. MR. PRESIDENT, I HAVE NO OBJECTION TO THE FLOOR AMENDMENT. THANK YOU, SENATOR. THE QUESTION IS SHALL THE FLOOR AMENDMENT BE AGREED TO. ALL THOSE IN FAVOR OF THE MOTION WILL SAY AYE, THOSE OPPOSED NO. THE AYES HAVE IT. THE FLOOR AMENDMENT IS AGREED TO. THE SENIOR SENATOR FROM VIRGINIA BEACH. AND MR. PRESIDENT, WHAT THE BILL DOES IS IT MAKES IT CLEAR, IT'S JUST A CLARIFYING AMENDMENT THAT MAKES IT CLEAR THAT A FRANCHISEE OR ITS EMPLOYEE CANNOT BE CONSIDERED AN EMPLOYEE OF THE FRANCHISOR, AND EVEN DESPITE THERE'S AGREEMENTS BETWEEN THE FRANCHISEE AND THE VIRGINIA DEPARTMENT OF LABOR. I MOVE THE BILL PASS. THE SENATOR FROM ROANOKE CITY, SENATOR EDWARD NROOP MR. PRESIDENT, WOULD THE SENATOR FROM NORFOLK YIELD FOR A QUESTION?

Sen. John Edwards (D-Roanoke): WOULD THE SENIOR SENATOR FROM VIRGINIA BEACH --

[Unknown]: SENATOR FROM VIRGINIA BEACH, WHEREVER HE'S FROM. MR. PRESIDENT, THE SENATOR FROM VIRGINIA BEACH. THE SENIOR SENATOR FROM VIRGINIA BEACH, WILL HE FIELD FOR A QUESTION. I YIELDS. I YIELD. MR. PRESIDENT, WHAT IS THE PURPOSE OF THIS BILL? IT SAYS THAT NOTWITHSTANDING ANY VOLUNTARY AGREEMENTS BETWEEN THE DEPARTMENT OF LABOR AND A FRANCHISEE. NEITHER THE FRANCHISEE NOR FRANCHISEE'S EMPLOYEE SHALL BE DEEMED TO BE AN EMPLOYEE OF THE FRANCHISEE -- FRANCHISOR. FOR ANY PURPOSE TO WHICH THE SECTION APPLIES. WHAT IS THE PURPOSE OF HAVING A STATE LAW THAT OVERTURNS AN AGREEMENT A VOLUNTARY AGREEMENT BETWEEN THE DEPARTMENT OF LABOR AND A FRANCHISEE? THE SENIOR SENATOR. MR. PRESIDENT, I WOULD RESPOND THAT I THINK IT'S JUST MAKING CLEAR, IT'S A DEFINITIVE POSITION IN VIRGINIA THAT A FRANCHISEE OR HIS EMPLOYEE CAN'T BE CONSIDERED AN EMPLOYEE OF THE FRANCHISOR AND I WOULD IMAGINE THAT WOULD PROVIDE AN ADDITIONAL LAYER OF PROTECTION FROM THE FRANCHISOR FOR ACTIONS OR LACK OF ACTION ON BEHALF OF THE FRANCHISEE IN ACCORDANCE WITH THE RELATIONSHIPS WITH THE EMPLOYEES. THE SENATOR FROM ROANOKE CITY. MR. PRESIDENT, SPEAKING TO THE BILL. THE SENATOR HAS THE FLOOR. IF THE FRANCHISEE HAS A VOLUNTARY AGREEMENT WITH THE DEPEND OF LABOR, THAT'S BETWEEN THEM. I DON'T KNOW WHY VIRGINIA WANTSTON GET IN THE MIDDLE OF THIS. -- WANTS TO GET IN THE MIDDLE OF THIS. FOR THE MOST PART, MY UNDERSTANDING IS FRANCHISEES HAVE THEIR OWN EMPLOYEES AND THEY WOULD NOT BE AN EMPLOYEE OF THE EMPLOYER ORDINARILY RNG BUT ONE NEEDS TO LOOK AT THE RAM FIXES OF THIS AND FRANKLY -- RAMIFICATIONS OF THIS AND FRANKLY, I CAN THINK OF A NUMBER OF POSSIBILITIES THAT WOULD SUGGEST THAT UNDER CERTAIN CIRCUMSTANCES, THE FRANCHISEE'S EMPLOYEES COULD BE CONSIDERED FOR SOME PURPOSES THE EMPLOYEE. TO BYPASS THE FRANCHISOR, IT -- TO BIND THE FRANCHISE YORK IT DENY ON THE FACT SITUATION. I DON'T KNOW WHY VIRGINIA WOULD WANT TO OVERTURN A VOLUNTARY AGREEMENT BETWEEN THE DEPARTMENT OF LABOR AND FRANCHISE SEES. I DON'T THINK IT MAKES ANY SENSE THAT WE GET IN THE MIDDLE OF WE OUGHT TO LEAVE IT UP TO THE THIS. FREE ENTERPRISE SYSTEM AND THE FREEDOM OF CONTRACT.

Del. Bill Howell (R-Fredericksburg): THE QUESTION IS SHALL HOUSE BILL 18 RECORD THEIR VOTES AYE, THOSE OPPOSED NO. ARE THE SENATORS READY TO VOTE? HAVE ALL THE SENATORS VOTED? DO ANY SENATORS DESIRE TO CHANGE THEIR VOTE? THE CLERK WILL CLOSE THE ROLL.

[Unknown]: AYES 27, NOS 12.
A BILL TO AMEND AND REENACT A SECTION OF THE CODE RELATED TO A STATUS OF EMPLOYEE OF THE FRANCHISOR. MR. HEAD. THANK YOU, MR. SPEAKER. LADIES AND GENTLEMEN OF THE HOUSE THIS AMENDMENT IS CLARIFYING ONLY AND SO I ASK THAT WE ACCEPT THE SENATE AMENDMENT.

Del. Bill Howell (R-Fredericksburg): SHALL THE SENATE BE AGREED TO?


Del. Mark Cole (R-Fredericksburg): COULD BE ATTEMPTED BY CERTAIN FEDERAL AGENCIES AND SOME CHANGES TO HOW THEY WANT TO INTERPRET EMPLOYER, EMPLOYEE RELATIONSHIPS. THE DEFINITION OF EMPLOYER HAS BEEN LIMITED TO THOSE THAT CAN EXERCISE DIRECT AND IMMEDIATE CONTROL OVER THE ACTIONS OF AN AND A FRANCHISOR CANNOT DO THAT. EMPLOYEE. THERE ARE 24,872 FRANCHISE LOCATIONS AROUND THE COMMONWEALTH. THE OVERWHELMING MAJORITY OF THOSE ARE INDEPENDENT, OWNED, SMALL BUSINESSES THAT SEEK TO DIRECT THEIR EMPLOYEES ACTIONS AND PROVIDING A PRODUCT OR A SERVICE TO THE PEOPLE IN THE COMMON WEALTH. THERE HAS BEEN, PERHAPS, SOME ARGUMENT ABOUT THIS BILL THAT DEMONSTRATES A LACK OF UNDERSTANDING OF HOW FRANCHISING WORKS. IN SHORT, WHAT YOU HAVE IN A FRANCHISE IS A PARENT COMPANY THAT HAS CREATED A BUSINESS SYSTEM THAT SELLS THE RIGHT TO USE THAT NAME, PROCESS, THAT SOMETIMES PATENTED PROCESS OR PRODUCT AND DELIVER THAT TO THE PEOPLE OF THE COMMUNITY. BUT INSTEAD OF DOING THAT THROUGH THAT PARENT ORGANIZATION, THEY GIVE THE BUSINESS OPPORTUNITIES FOR INDIVIDUALS TO PURCHASE THAT RIGHT, THEN, RUN THEIR OWN INDEPENDENT BUSINESS, HIRE THEIR OWN DIRECT EMPLOYEES TO PROVIDE THAT. FRANCHISING IS FEDERALLY I AM A FRANCHISEE. REGULATED. WHEN I PURCHASE MY FRANCHISE, I HAD TOW RECEIVE FIRST OF ALL, A UNIFORM OFFERING, AND THEN, AN AGREEMENT THAT IS ALMOST THAT SAME SIZE, COVERING EVERYTHING I WAS GOING TO BE REQUIRED TO DO. THAT IS UNIFORMLY REGULATED AND CONTROLLED BY THE FEDERAL GOVERNMENT FOR EVERYONE THAT QUALIFIES AS A FRANCHISE. FRANCHISING IS SOMETHING CONTROLS PERHAPS WHICH IS WHY ALL McDONALDS, WENDY'S AND BURGER KINGS LOOK PRETTY MUCH THE SAME. AND IT MAY TALK ABOUT THE PROCESS BUT NOTHING CONTROLS THE WAY THE BUSINESS IS OPERATED OR CONTROL OF THE EMPLOYEES. IF YOU STEP IN AND TRYING TO CONTROL THAT BY SAYING THERE MIGHT BE SOME SOME SORT OF RELATIONSHIP THAT DISPLAYS A LACK OF UNDERSTANDING. THE PROBLEM IS THAT TERM DOESN'T EXIST ANYWHERE IN LAW. IT'S MADE UP. AND THERE IS NO SUCH THING AS A DOMINANT FRANCHISE. THE LOCAL FRANCHISEE MAINTAINS CONTROL. IF, HOWEVER, WE DON'T PROTECT OUR FRANCHISEES FROM THE OPPORTUNITY THAT THEY MIGHT HAVE A JOINT EMPLOYER RELATIONSHIP, AND THAT WERE TO BE CARRIED FORWARD, THEN, YOU'RE OPENING DOORS THAT COULD EFFECT BUSINESS IN OTHER WAYS. YOU CAN SAY THEY'D BE UNFAIRLY LIABLE AND IT WOULD UP END THE CURRENT, WELL ESTABLISHED JOINT STANDARD AND CAUSE SEVERE UNCERTAINTY AND PERHAPS, A DISRUPTION OF SMALL BUSINESS OWNERS AND FORCE SOME BUSINESSES TO CLOSE AND DETOUR ENTREPRENEURS AND IT'S POSSIBLE THAT IF WOULD CHANGE SOME OF THE EMPLOYER RIGHTS DEFINITIONS IN VIRGINIA THAT WE HAVE. AT THE LEAST WHAT WILL HAPPEN WITH THAT SITUATION IS THAT IT WOULD REDUCE THE QUALITY OF HOLDING ON TO EMPLOYEES BY SMALL BUSINESS THAT'S WORK HARD AS I DO TO MAINTAIN HIGH QUALITY STANDARDS OF EMPLOYEES AND REDUCE TURNOVER. YOU REDUCE IT TO LOWEST COMMON DENOMINATOR. THE GOVERNOR'S VETO DISPLAYS A LACK OF UNDERSTANDING. THAT IS WHY NATIONAL FEDDERATION OF RETAIL BUSINESSES OPPOSE THE VETO, URGING THE PASSAGE OF THIS, AS DO YOUR CONSTITUENTS. I VENTURE TO SAY MOST OF YOU HAVE BEEN CONTACTED BY THEM THAT ARE FRANCHISEES. IT'S GOING TO AFFECT EVERYBODY. PASSING THIS IS IMPORTANT. IT'S PASSED IN EIGHT STATES, IT PASSED IN INDIANA UNANIMOUSLY. THEY GOT IT. AND SO ARE YOU GOING TO STICK WITH THE GOVERNOR OR LISTEN TO YOUR CONSTITUENTS? AND STAND WITH THE BEST INTEREST OF THE PEOPLE THAT PUT YOU IN OFFICE? SO I ASK YOU TO OVERTURN THE GOVERNOR'S STANDING.

[Unknown]: THANK YOU, MR. SPEAKER. THERE ARE GENERAL FRANCHISEES THAT ARE NOT EMPLOYEES OF THE FRANCHISOR, BUT THERE ARE SOME CONTROLS OVER A FRANCHISEE AND EMPLOYEES AND MAY BE DEEMED TO BE AN EMPLOYER ON THE HEARING AND CAN INCUR CONCERN OBLIGATIONS AND RESPONSIBILITIES LIKE WAGE LAWS. HB 18 WOULD ELIMINATE THOSE BY CAT GORICLY SAYING A FRANCHISEE CANNOT BE CONSIDERED EMPLOYEES OF THE FRANCHISOR. THE GOVERNOR IS WORRIED ABOUT THE SMALL BUSINESSES BECAUSE WHAT WILL HAPPEN IS THAT BURDEN WILL FALL ON A SMALL BUSINESS. AND SO WE ASK YOU SUSTAIN THE VETO. MR. SPEAKER, I RISE TO SPEAK TO THE VETO.

Del. Bill Howell (R-Fredericksburg): GENTLEMAN HAS THE FLOOR. MR. SPEAKER I WANT TO ADD A REAL

[Unknown]: THANK YOU. WORLD EXPERIENCE TO THIS. HAVING BEEN A FRANCHISOR, I CAN TELL YOU THAT THE FRANCHISEES WERE OWNER OPERATORS. A PERSON OPERATED BUSINESS. MAYBE 2, 3 EMPLOYEES BUT VERY SMALL. THEY CAN PROVIDE -- COULDN'T PROVIDE HEALTH INSURANCE, THEY SAID CAN YOU PROVIDE THAT? SO THEY WERE CONCERNED IS BEING ABLE TO COMPETE FOR THE RIGHT BUT CONCERNED WE'RE GOING TO TRIP THE WIRE AND THEY'D BE EMPLOYEES OF OURS. WE COULDN'T DO IT. I ARGUE IF THE GOVERNOR IS EMPLOYEES WE TRIED TO DO THIS, INTERESTED IN THE WORKERS AND IN HEALTH BENEFITS FOR THOSE THAT CAN'T GET THEM, THE LAST THING HE WANTS TO DO IS GO WITH THIS BILL. IT WILL ALLOW FRANCHISORS TO STEP IN TO PROVIDE THESE BENEFITS THEY'RE CONCERNED ABOUT TODAY, THANK YOU, MR. SPEAKER.

Del. Bill Howell (R-Fredericksburg): SHALL THE GOVERNOR'S VETO BE OVERRIDDEN? CLERK WILL CLOSE THE ROLL.

Comments

Labor Laura writes:

This is another attack on employees. It would mean that employees who are directed by a company what to wear, when they will work, how they will perform their jobs, and what they will be paid are not employees and will not have the ability to gain redress for wrongs on the job. Wrongs such as lack of safety protections and other grievances could not be heard or addressed.
It's a new twist that corporations are striving to gain, on par with having corporations reconized as "persons" with the same rights as individuals.
We should all pay attention to this corporate creep.