Independent Contractor Misclassification and Compliance News September 2024

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we bring you the latest news stories from around the web.

Massachusetts Court Says 7-Eleven Franchisees are Independent Contractors

Franchisor/franchisee relationships have been the subject of court cases where franchisees argue that they are employees and not independent contractors. Some states, such as Wisconsin, Indiana, Ohio, and Louisiana, have passed laws making it more clear that franchisees are not employees of franchisors. In a recent case, after years of litigation, the Massachusetts Supreme Judicial Court said that 7-Eleven franchisees were independent contractors and not employees of the 7-Eleven parent company. The Court’s decision was made in part because the franchisees operated their own businesses and sold items to their own customers.

The court made a key distinction between 7-Eleven—where the business sells items to the general public and their own customers—and the franchisees from a national cleaning company where the franchisees were providing services for clients of the national cleaning company. In the case of 7-Eleven, the franchisees had their own customers and did not provide services to the parent company. In the case of the cleaning company, the franchisees were providing services to the parent company because they were providing services to the parent company’s clients. The difference in the recipients of the services provided was a key factor in determining that the 7-Eleven franchisees were independent contractors and the franchisees of the cleaning company were employees.

Continued Focus on the Misclassification of Construction Workers

Misclassification of construction workers has been a concern for years. The United States Department of Labor has made misclassification of construction workers a focus in recent years and frequently announces these suits and settlements.

Recently, states and the District of Columbia have become more active in this area. This summer, the Attorney General for the District of Columbia announced several settlements involving the misclassification of construction workers, the Attorney General for Illinois recently settled claims with a construction company, and the Colorado Department of Labor instituted new tools to protect workers in the construction industry from being misclassified.

For more information, check out our resources page on misclassification and compliance. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.