INSIGHT: California Franchisors Need to Minimize Risk Before ‘Employee’ Storm Hits

The recent passage of new legislation (AB-5), and two Ninth Circuit opinions have left franchise and distribution businesses in California with a great deal of anxiety and incoherent directives as to where they stand and what they need to do.

Franchisors now face the threat that their franchisees and their franchisees’ employees have all become their employees, and indeed may have been their “employees” for the last four years. Along with the risk of damages claims for overtime and missed meal and rest breaks for all these newly-ordained “employees,” franchisors also face potential liability for any costs or ...