Utah: New Law Excludes Franchisors as Employers Under Certain State Labor Laws

Law Effective May 10, 2016

Under a new law in Utah, a franchisor is generally not considered to be an employer of a franchisee—or a franchisee's employee—under certain state labor laws, including:

• Payment of wages;
• Minimum wage;
• Workers' compensation;
• Employment discrimination; and
• Unemployment insurance.

However, employers should note that the rule above does not apply to a franchisor under a franchise that exercises a type or degree of controlover the franchisee (or the franchisee's employee) not customarily exercised by a franchisor for the purpose of protecting the franchisor's trademarks and brand.

Note: The new measure also amends certain other laws. As such, affected employers are advised to read the law in its entirety and consult a knowledgeable employment law attorney with any questions regarding the law's impact on workplace policies and practices.

The law is effective May 10, 2016. Click here to read the text of the law.

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