by John J. Tollefsen | Apr 23, 2009 | Administrative OR, Blog, Employment Law OR, Oregon
Franchisors May Be Employees for Unemployment Insurance Purposes. Issue Preclusion in Administrative Law Franchisor Imputed Employer of Franchisee’s Employee Employment Dep’t v. Nat’l Maint. Contrs. of Or., Inc., 226 Ore. App. 473, 204 P.3d 151, (Or. Ct. App. 2009) (March 19, 2009) National Maintenance Contractors of Oregon, Inc. (NMC) franchisees-janitors performed janitorial services at buildings owned by third parties. The question was whether the franchisees’ s employees were NMC’s employees for purposes of unemployment insurance taxes. NMC is a janitorial franchisor that enters into agreements with building owners to provide janitorial services and informs the owners that the services will be provided by its franchisees. Although NMC often enters into a contract for an entire building, it generally does not assign the building to one franchisee but instead splits identifiable parts of the building among various franchisees. The cost of an NMC franchise is determined by the volume of monthly billing for the accounts that NMC assigns to the franchisee. NMC does not guarantee that the franchisee will receive a specific account, and all accounts serviced under the franchise must be serviced pursuant to an agreement between the building owner and NMC. Franchisees are not permitted to enter into direct contractual relationships with the building owners-a prohibition that continues for 12 months after the termination of a franchise. All franchisees are required to sign a written franchise agreement, and each agreement contains essentially the same terms. Under the agreement, it is contemplated that building owners will pay NMC directly for the janitorial services. NMC then deducts a royalty, an “office management fee,” and a liability insurance premium. If a...
