A Win for Franchising in Pennsylvania

A Win for Franchising in Pennsylvania

For those of you following the Saladworks v. Workers’ Compensation Appeal Board pending before the Pennsylvania Supreme Court, I’m pleased to report that the Court, after briefing and argument, dismissed the appeal as “improvidently granted”.  This result leaves in place what we thought was well settled law in Pennsylvania that the franchisor is not generally liable for the acts or omissions of its franchisees.

This case involved the employee of a Saladworks franchisee that was injured on the job.  This employee sought workers’ compensation benefits from both the franchisee and franchisor, but the franchisee did not have proper workers’ compensation coverage. Under the Pennsylvania Workers’ Compensation Act, an employee who is unable to recover from their direct employer can seek benefits from a statutory employer.  The question before the courts was whether the work performed by franchisees was a “regular or recurrent part of the business, operation, profession, or trade” of Saladworks.  The Workers’ Compensation Appeal Board found that Saladworks was primarily in the business of selling salads and other food products, and therefore was a statutory employer.  The Commonwealth Court found that Saladworks was primarily in the business of selling franchises, not salads, and therefore was not a statutory employer under the Act.

The Supreme Court’s decision today effectively affirms the lower court’s finding that franchisors are in a different business than their franchisees and are not liable as statutory employers under the PA Workers’ Compensation Act.

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