The current federal joint employer standard is not permanent. Since 2015, the NLRB’s joint employer standard has changed four times. The DOL’s joint employer standard has similarly changed several times in the past decade. The American Franchise Act (AFA) would establish a long-term, clear joint employer standard for franchise businesses.

The American Franchise Act  would amend the Fair Labor Standards Act (FLSA) and National Labor Relations Act (NLRA) to provide that a franchisor may be considered a joint employer only if it possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment of a franchisee’s employees. That test mirrors the NLRB’s current joint employer rule; under the FLSA, the Department of Labor has had no joint employer rule in place since 2021.

• Prevents continued policy changes: Legislation is the only way to ensure the federal joint employer standard applicable to franchising does not continue to change with each new administration and new NLRB and DOL composition.

• Addresses ongoing legal uncertainty: The 2020 National Labor Relations Board (NLRB) joint employer rule is the subject of a pending challenge in federal court that could result in another change in the NLRB’s joint employer standard, .and the Department of Labor’s April 2026 proposed rule would establish a separate framework for determining joint employer status under the FLSA.

• Supports independent franchise businesses: With a permanent solution, franchise businesses can rely on a workable joint employer standard that allows franchisees to operate independently, and franchisors provide brand consistency, training tools and support.

• Source: https://www.franchise.org/advocacy/american-franchise-act/
• Source: https://www.franchise.org/wp-content/uploads/2026/05/AFA-Backgrounder-2026.pdf