On September 10, 2025, a bipartisan group in the U.S. House of Representatives introduced the American Franchise Act (H.R. 5267). The proposal would directly amend the National Labor Relations Act...
Introduction
On September 10, 2025, a bipartisan group in the U.S. House of Representatives introduced the American Franchise Act (H.R. 5267). The proposal would directly amend the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to create a clear standard for when franchisors can be deemed joint employers of franchisee employees. The legislation holds out the promise of stability in an area of law long marked by volatility.
The Twists and Turns in the Law of Joint Employment
The definition of "joint employer" has swung dramatically over the past decade. At times, courts and federal agencies have applied a narrow test, asking whether a franchisor exercised "direct and immediate control" over essential employment terms. At other moments, the definition expanded to capture situations where a franchisor merely retained the right to control employment conditions or exerted influence indirectly even if it did not actually exercise such control. Each change in presidential administration has often meant another reversal in approach.
These shifts create practical difficulties for franchise systems. When the standard is broad, franchisors risk being pulled into collective bargaining disputes or wage-and-hour lawsuits simply for maintaining brand standards—...
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