SD law nixes joint-employer liability between franchisees, franchisors

South Dakota Governor Dennis Daugaard on March 6 signed a measure that protects against joint-employment liability. The simple bill purports to establish that regardless of other laws and what the U.S. Department of Labor has to say about it, a franchisee’s employee cannot also be the franchisor’s employee—at least not within the State of South Dakota.

Senate Bill 137, which cleared the state Senate on February 13, 2017, by a 28-4 vote, and the House unanimously on February 23, very simply states: “Notwithstanding any other provisions of law or any voluntary agreement between the United States Department of Labor and a franchisor, a franchisee or an employee of a franchisee is not considered an employee of the franchisor.”

Since the bill did not specify an effective date and was not considered an emergency measure, S.B. 137 is presumably effective July 1.

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