How Colorado Employment Laws Impact Franchise Owners
Posted September 12, 2025 in Uncategorized
On October 26, 2023, the federal National Labor Relations Board (NLRB) issued a new rule regarding joint employer relationships, in an effort to redefine the nature of these unique employer-employee relationships. If you’re a franchise owner, it’s important to talk to your Greenwood Village, CO franchise lawyer about how this law could affect your employment practices and risk exposure.
The NLRB’s new rule became effective in February 2024. It changed the definition of a joint employer to one in which employer status is established when an entity has the authority to control employment terms, regardless of whether it exercises this right. Previously, joint employer status existed when an entity had direct, immediate control over employment terms.
Franchisors and franchisees both may see a change in their obligations as joint employers. The legal team at Volpe Law LLC can help you avoid risk exposure and legal action filed by employees under this new rule.
What Does the NLRB’s New Rule Mean for Franchise Owners?
The relevant employment terms changed in the new rule include:
- Wages
- Work hours
- Job duties
- Supervision
- Employment rules
- Workplace safety
- Health conditions
Franchisors may be subject to collective bargaining with unions, whereas before, this was typically the purview of the franchisee. Franchisors may also be open to liability for unfair labor practices complaints, such as discriminatory practices in the workplace, even though they may not be directly managing the employees at the franchise.
As a franchisor, you may not be more responsible for the decisions made by your franchise owners, including ones that violate state and local employment laws.
Review your current contracts and best practices to identify any changes that need to be made for compliance with the new rule. Our Greenwood Village franchise lawyer offers a few tips.
How Colorado Franchisors Can Best Comply with the New NLRB Rule
You may have been a hands-off franchisor, but the new rule means you may have to take a more active role. Where possible, certify and train only franchise owners and managers, not line employees. If this isn’t possible, always ensure that the franchise owner or a manager is present when employees are being certified or trained.
You can also do the following:
- Be very clear to your franchise owners, managers, and employees that the employees at the location do not work for you; they work for the franchise owner and general manager
- Require your franchise owners to have all employees sign an acknowledgement that they work for the owner of the franchise, not you, the franchisor
- Do not involve yourself in any employment decisions, such as hiring, discipline, promotions, or terminations
- Ensure that all franchisees follow proper HR protocols for management
- Review any software and SaaS platforms you provide to ensure it does not involve labor matters (such as payroll)
- Ensure that each franchise is listed as an independently owned and operated location
- All paychecks should use the franchisee’s business entity name or DBA, not the name of your franchise (i.e., Smith’s Franchise, LLC, not In-and-Out Burger)
While these tips make an excellent start for reducing your liability and chances of being named as a defendant in an employment action, they’re no replacement for personalized advice from Volpe Law, LLC. Call our franchise attorney today for a complimentary discovery call.