Earlier this fall House Resolution 5267 was introduced for consideration by Congress. The bill is called the American Franchise Act (AFA). It seeks to clarify and establish consistency around what a joint employer technically is.

Here’s a clearer, more concise rewrite:

For years, federal agencies have tried to shape rules on joint employment, aiming to define when two businesses should be treated as a single employer. The National Labor Relations Board has repeatedly revisited whether entities such as franchisors and franchisees qualify as joint employers under the National Labor Relations Act. The Department of Labor, which enforces the Fair Labor Standards Act, has also been engaged in this issue and would fall under the scope of the new law.

The AFA bill seeks to codify in law what joint employment is by defining franchisor single employer status to where the franchisor (e.g. McDonalds Corporation) “actually exercises substantial, direct, and immediate control over a franchisee’s (e.g. a McDonalds franchisee) employees.”  In most franchisor-franchisee relationships the parent company only exercises some indirect control.

The AFA would consider the franchisor a joint employer only if the franchisor exercised “substantial, direct, and immediate control” over one or more “essential terms and conditions of employment within the franchise.”

The AFA would examine such items as benefits, hours worked, hiring control, discipline, and supervision to ascertain where the control was exercised from. In most cases these days the franchisee would control those aspects of the employment relationship. Not the parent franchisor.

The AFA also details control that does not trigger joint-employer status. These actions are:

• Setting operating hours for the franchise location
• Establishing quality or marketing standards; and
• Providing training materials or operational manuals

The AFA is intended to narrow what joint employment is, so they are no longer exposed to the “winds” of agency enforcement and litigation arising from the various agency interpretations.

Here’s a smoother rewrite:

The AFA would establish a baseline standard without overriding broader state laws, such as California’s more expansive joint employment rules. It also leaves other federal statutes, including Title VII of the Civil Rights Act of 1964, unchanged. While the bill aims to simplify joint-employment guidance, franchisors operating across multiple states would still face certain joint-employer risks under state law.

To date this bill has not moved far from introduction in the House and resides in the Education and Workforce Committee. Given this bill’s narrow definition of joint employment, it probably faces the collective opposition of the pro-worker, union supporting Democratic Party in Congress.

Source: Sheppard Mullin Richter & Hampton Labor and Employment Law Blog. Congress Introduces the “American Franchise Act” To Clarify Joint Employer Liability. (11/24/2025)