Virginia Governor Vetoes Bills on Lawyer Fees and Franchise Employees

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Virginia Governor Vetoes Bills on Lawyer Fees and Franchise Employees

 

Virginia’s newly-elected Democratic governor, Ralph Northam, faced his first legislative session this year. Republicans control the commonwealth’s General Assembly, although they face a narrower majority than they did under the previous Democratic governor. This split in partisan control in Richmond produced significant disagreements over policy this year, some of which resulted in gubernatorial vetoes.

 

Although Governor Northam has voiced concern with many legislative actions, he has only vetoed two bills so far this year:

 

House Bill 110

Clarify status of franchisee employees

Passed 50 to 48 in the House on January 25 and 20 to 19 in the Senate on February 22. Vetoed by the governor on March 9.

Clarifies that under Virginia law, neither a franchisee nor the employees of a franchisee are considered to be employees of a franchisor company. This employment status is not affected by any voluntary agreement entered into by the U.S. Department of Labor and a franchisee.

 

This bill involves a long-standing dispute between organized labor and business owners. Labor organizations would like franchise employees, such as those who work at a local McDonald’s, to be treated as employees of the larger company. Business owners say that these are employees of the local franchises owner, not the company that grants a franchise, or franchisor. Recognizing franchise employees as employees of the franchisor would open up this company to fines if local franchises broke labor laws as well as make it easier to organize workers into unions.

 

Senate Bill 926

Limit fees for outside attorneys used by the state

Passed 21 to 19 in the Senate on February 12 and 51 to 48 in the House on February 28. Vetoed by the governor on March 19.

To limit the contingency fees charged by private attorneys that the state contracts with for legal services. If the fees and expenses are expected to exceed $100,000, such attorneys could only be hired through a competitive bid process. The fees would be limited under this bill on a sliding basis, starting with a 27% cap for awards under $10 million and a 5% cap for awards over $25 million.

 

Governor Northam sees contingency fees as a valuable way to protect taxpayers by shifting the risk of trying and winning a case onto a private law firm, which recovers nothing unless they prevail. Opponents of high contingency fees contend that they are a way to enrich private lawyers for doing the work that government attorneys should be doing.

 

On another eighteen bills, Gov. Northam has recommended that legislators modify certain provisions. Legislators will meet April 18 to vote on whether to override the governor’s vetoes or act on his recommendations for the other bills. Given the narrow majority enjoyed by Republicans, the governor’s vetoes are likely to stand.

 

Do you think that Gov. Northam is right to veto bills that would limit fees for private attorneys working with the state government? Should franchise employees be treated as joint employees of the local franchise and the larger company that grants franchises?

 

 

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