American Franchise Act
This bill narrows when corporate franchise brands can be held legally responsible as "joint employers" alongside local franchise owners for workplace and wage violations. Under the standard, parent companies are only liable or required to bargain with unions if they directly and regularly control daily employment terms, such as setting individual pay rates, scheduling specific work hours, or handling hiring and firing. Setting overall brand rules, store hours, training guidelines, and health and safety requirements would no longer count as direct employer control.
What this bill touches.
Who it helps · who it burdens.
Who it helps
- FranchisorsAre shielded from joint-employer liability under the National Labor Relations Act and Fair Labor Standards Act unless they exercise substantial, direct, and immediate control over essential employment terms of a franchisee's workers.
Who it burdens
- Franchise employeesFace stricter legal standards when seeking to hold a parent franchisor jointly responsible for collective bargaining obligations under the NLRA or wage and hour violations under the FLSA.
The provisions, in plain language.
Limits joint-employer status under the National Labor Relations Act so a franchisor is only considered an employer of a franchisee's workers if it actively exercises regular, direct control over core job terms like pay, hiring, firing, or daily supervision, effective for legal proceedings started after enactment.
Applies the same direct-control standard to the Fair Labor Standards Act, shielding franchisors from joint responsibility for minimum wage and overtime claims unless they directly manage a franchisee's workers.