Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Connecticut House Finance Committee rejects wage bill impacting franchises, (Apr 21, 2014)

By Linda O’Brien, J.D., LL.M.

The Connecticut House Finance Committee has rejected HB 5069, an “Act Concerning Low Wage Employers.” The bill was introduced to the Connecticut State House by Representatives Peter Tercyak (D-26), Emmett Riley (D-46), James Albis (D-99), and Mary Mushinsky (D-85) and would have undermined the legal foundation of franchise law in the state, according to the IFA.

The bill would require certain employers to pay a quarterly fee to the Labor Commission at a rate of $1.00 per work hour for each employee that receives wages below the state minimum wage. The provision would start on January 1, 2015, and cover franchisors whose franchisees collectively employ 500 or more employees.

“IFA applauds the decision by the Connecticut House Finance Committee to protect Connecticut’s franchise businesses and strike down HB 5069,” said IFA President & CEO Steve Caldeira in a statement announcing the move. “The bill would have made the unprecedented move of obligating franchisors to pay taxes on the employees of franchisees, despite the two being completely separate business entities. Franchisors in the state would have been faced with large new costs, making them more reluctant to extend opportunities for new locations and causing significant damage to Connecticut based businesses.”

“Nowhere in the country has the franchise industry ever seen a bill as potentially damaging as HB 5069, which would have effectively ended franchising in the state of Connecticut, home to roughly 8,000 franchise establishments that account for more than 100,000 jobs and $12.6 billion in annual economic output,” Caldeira added. “While ignoring the decades of legal precedent establishing that these two entities are not joint employers, this bill was unprecedented in scope and sent a strong anti-business message to franchise organizations nationwide.”

“Connecticut businesses are already being pressed hard by the impending implementation of the Affordable Care Act’s employer mandate, the proposed increase to the federal minimum wage so this important decision ensures that franchise businesses can continue to operate without unreasonable government interference into the franchise relationship,” Caldeira concluded.

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. The IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

News: FranchisingDistribution ConnecticutNews