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Workers' Compensation and Franchises

In December 2016, the Pennsylvania Supreme Court rejected an appeal in a decision that would have changed the way franchise business model looked in the state. An employee of G21, a franchise of the company Saladworks, twisted both his knees after slipping on the way out of the restaurant. He petitioned for worker’s compensation benefits from SaladWorks, later amending it to the particular restaurant business he worked for. G21, however, didn’t have worker’s compensation insurance at the time of the accident.

The employee, Gaudioso, and the Uninsured Employers Guaranty Fund (UEGF) filed a joinder petition against Saladworks, as the larger chain was an additional statutory employer of the injured party. 

The chain, however, moved to dismiss the petition because it alleged it had no relationship with Gaudioso. As a franchisor, it had no involvement in the day-to-day running of the restaurant. While a workers’ compensation judge ruled in favor of Gaudioso’s claim against G21, the judge dismissed UEGF’s petition. UEGF’s case against SaladWorks then went all the way to the Pennsylvania Supreme Court, which found that SaladWorks was only in the business of selling its name, while G21 was in the business of selling food.

SaladWorks could not be held accountable for the daily maintenance of all its chains, which is the responsibility of the franchise owner. If the Pennsylvania Supreme Court had ruled in UEGF’s favor, it would have changed the liability of franchisors and franchisees across the state.

While Pennsylvania now has a precedent, the law isn’t terribly clear about liability in California. The western state has a few franchisor-liability cases to draw from but no California legal codes to definitively site. If a worker is injured in a franchise, should the workers’ compensation claim be filed with the smaller franchisee or the larger franchisor? The short answer is, the more a franchisor has control over smaller chains, the more it may be liable.

If you are an employee of a franchise and you were injured on the job, contact one of our skilled Woodland Hills workers’ compensation attorneys. We can help you find the compensation you deserve. Call us at 818-888-3000 or fill out our online form for a free case consultation.

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