The Indiana House of Representatives passed bipartisan legislation providing clarity to the small business community, codifying that a franchisor is not considered to be an employer of a franchisee or a franchisee’s employees.

Indiana House Bill 1218 passed out of the House Employment, Labor & Pensions Committee unanimously last week, 11-0. On February 1, the full Indiana House took up the measure where it passed with bipartisan support, 93-0. House Bill 1218 will next head to the Senate and will be scheduled for a hearing. “This legislation would provide a great deal of certainty for both franchisees and franchisors currently operating in Indiana or planning to expand into the state,” noted Thom Crimans, FranNet MidAmerica. “The franchise business model supports more than 210,000 jobs in Indiana and nearly $15 billion in annual economic output across more than 18,000 establishments.”

This state law is necessary because of the National Labor Relations Board (NLRB) decision in Browning-Ferris that while on its face appears unrelated to franchising, actually has the potential to affect the legal relationship between franchisors and franchisees. House Bill 1218 simply codifies the traditional standard of employer and will allow franchising to continue thriving in Indiana. The NLRB decision disrupts decades of established law in determining who is and is not a ‘joint employer’.

Tennessee, Texas, Louisiana and Michigan have already enacted laws similar to House Bill 1218. Similar bills are also actively moving through the Wisconsin, Colorado, Virginia and Utah legislatures.

In Indiana, final passage and signing into law of House Bill 1218 will allow small business to continue to grow in the state by providing local businesses the certainty they need to succeed.

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