Bipartisan US House Introduces Franchise Bill Clarifying Joint Employer Liability

A bipartisan group of lawmakers introduced the American Franchise Act to establish a permanent, clear standard for joint employer liability in franchise businesses, aiming to provide regulatory stability after years of shifting rules. The bill, supported by representatives from both parties including Rep. Kevin Hern, a former franchisee, clarifies that franchisors will only be considered joint employers if they exercise substantial direct and immediate control over essential employment terms of franchisee employees. This legislation seeks to protect franchisors from liability for franchisees' labor law violations under the National Labor Relations Act and Fair Labor Standards Act, addressing the regulatory whiplash experienced over the past decade with multiple changes under different administrations. Industry groups, such as the National Restaurant Association and the International Franchise Association, back the bill, arguing that a clear, narrow joint employer definition preserves franchisor-franchisee independence and encourages economic growth and job creation. The bill has been referred to the House Committee on Education and Workforce and is viewed as a significant step toward safeguarding small businesses and franchise operators from unpredictable compliance challenges. This bipartisan effort highlights a rare consensus to balance worker protections with business certainty in the franchise sector.