A trio of decisions emanating from California could prove of great peril to franchisors nationwide.

‘Dynamex’

The first decision came from the Supreme Court of California in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903, 416 P.3d 1 (2018), and addressed when an individual should be properly classified as an “employee” or an “independent contractor” (of critical importance in franchising since virtually every franchisee is an independent contractor of its franchisor). As the court noted, the distinction is crucial since “…if a worker should properly be classified as an employee, the hiring business bears the responsibility of paying federal Social Security and payroll taxes, unemployment insurance taxes and state employment taxes, providing worker’s compensation insurance, and, most relevant to the present case, complying with numerous state and federal statutes and regulations governing the wages, hours and working conditions of employees.”

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