New York State Senate Bill Would Make Fast-Food Franchisors Jointly and Severally Liable for Certain Labor Law Violations

Quick Hits

• The proposed New York State Fast Food Franchisor Accountability Act would make fast-food restaurant franchisors jointly and severally liable for violations of Chapter 31 of the New York Labor Law, as well as the New York State Human Rights Law and applicable workers’ compensation laws, to the same extent that they may be enforced against fast-food restaurant franchisees.
• The proposed act aims to enhance accountability for fast-food restaurant franchisors and further protect workers’ rights in the fast-food industry.

SB S7289 would make fast-food restaurant franchisors responsible for ensuring that their franchisees are compliant with “applicable employment, worker safety, public health and safety laws and orders and any rules or regulations” to the same extent that those laws are enforceable against fast-food restaurant franchisees. In effect, if a fast-food restaurant franchisee became liable for a violation of applicable employment and worker protection laws, the fast-food restaurant franchisor would be “jointly and severally liable for any penalties or fines” in connection with any violation of laws set forth in the act and any regulations or rules related thereto.

Overview of the Proposed Fast Food Franchisor Accountability Act

The Fast Food Franchisor Accountability Act would apply to “fast food chain[s],” defined in the legislation as “a set of restaurants consisting of fifty or more establishments nationally that either share a common brand or are characterized by standardized options for decor, marketing, packaging, products, and services” and that operate “fast food restaurant[s],” defined as “any establishment in the state that is part of a fast food chain and that, in its regular business operations, primarily provides food or beverages according to all of the following”:

• (a) For immediate consumption, either on or off the premises;
• (b) To customers who order or select items and pay before eating;
• (c) With items prepared in advance, including items that may be prepared in bulk and kept hot, or with items prepared or heated quickly; and
• (d) With limited or no table service. For purposes of this section, “table service” shall not include orders placed by a customer on an electronic device.

Further, a “fast food restaurant franchisor” would mean “a person or entity who grants or has granted a fast food restaurant franchise.” The legislation defines a “fast food restaurant franchisee” as “a person or entity to whom a fast food restaurant franchise is granted.”

If enacted, the act would hold fast-food restaurant franchisors accountable for complying with various employment, worker safety, and public health and safety laws in New York State. These would include the New York State Human Rights Law, applicable workers’ compensation laws, and various laws found in Chapter 31 of the NYLL, such as the New York State Paid Sick Leave Law, New York Prenatal Leave Law, New York Lactation Accommodation Law, and minimum wage and overtime pay requirements. Additionally, the act would apply to emergency executive orders issued by the governor concerning employment standards or worker safety, as well as orders issued by a county or municipality on such matters. If a franchisor’s terms prevent or create substantial barriers to the franchisee’s compliance with these laws, the proposed amendment would allow the franchisee to file an action against the franchisor for monetary or injunctive relief.

The proposed Fast Food Franchisor Accountability Act also provides that a franchisor would not be permitted to waive any part of the act through an agreement or allow the franchisee to indemnify the franchisor for any liability it caused.

Although the act is only a bill and not yet law, fast-food employers with thirty or more fast-food establishments nationally and with operations in New York City are already required to follow New York City’s Fair Workweek Law, which sets forth requirements for predictive scheduling, premium pay, and processes and procedures for discharging employees or reducing their scheduled hours.

Next Steps

Fast-food employers with operations in New York that would be subject to the proposed act may want to review the bill to determine what additional obligations they may face if it is enacted in substantially the same form as currently proposed.

As Senate Bill S7289 progresses through the legislative process, Ogletree Deakins’ New York office will continue to monitor and report on developments and will provide updates on the Hospitality and New York blogs as additional information becomes available.

Jamie Haar is of counsel in the New York office of Ogletree Deakins.

Sarah M. Zucco is of counsel in the New York office of Ogletree Deakins.

Stephen M. Park is a 2024 graduate of Fordham University School of Law and is currently awaiting admission to the State Bar of New York.

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