By Samantha Sanders and Margaret Poydock
Soon, the House of Representatives is expected to vote on the American Franchise Act (AFA), which, if passed, will make U.S. workers’ lives less affordable and increase their vulnerability to exploitative employers. The bill would weaken joint employer standards, making it harder for workers to form a union and enforce other labor and employment protections—while large corporate franchisors are shielded from liability.
What is the joint employer standard?
When two or more businesses share control over a worker’s terms of employment (such as pay, schedules, and job duties), then both businesses may be considered employers of that worker. This is known as the joint employer standard, which applies under worker protection laws such as the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA). A strong joint employer standard is needed to ensure that workers can exercise their rights—like the right to a minimum wage or the freedom to choose to join a union. In today’s workplace, many workers find themselves subject to more than one employer, and they deserve a joint employer standard that guarantees the involvement of all parties that dictate workers’ terms of employment.
The American Franchise Act would weaken the joint employer standard
The AFA would define a joint employer as a business that exercises “direct or immediate control” over a worker’s terms of employment. This narrow definition of joint employer would shield franchisors from liability and leave franchisees, many of whom are small businesses, on the hook for violations of labor and employment laws.
Ironically, the International Franchise Association (IFA) has often used small businesses as a front to weaken joint employer standards, stating that small businesses must have their “independence…protected by federal law.” But it is large corporate franchisors who often dictate the terms and conditions of work to franchisees. Existing joint employer standards do not affect a franchisee’s liability under the FLSA or NLRA in any way. The franchisee—the direct small business responsible for hiring the workers—is already considered an employer. This is about whether franchisors may face liability, and they only would if they insisted on franchise contracts in which they retain control over fundamental terms and conditions of employment. Simply put, the IFA is less concerned with franchisee independence and more concerned with franchisor liability.
A weakened joint employer standard is costly for workers
Under the first Trump administration, the Department of Labor and the National Labor Relations Board conducted rulemakings that narrowed the definition of joint employer. Estimates show that the DOL rule would cost workers $1.3 billion per year and the NLRB rule $1 billion per year. A weakened joint employer standard doesn’t just affect workers’ wages—it also makes it more difficult for workers to enforce their labor and employment rights when they cannot hold all responsible employers accountable for violations of the law. Workers need stronger joint employer standards—not weaker ones.
Congress should reject the American Franchise Act—it will make U.S. workers’ lives less affordable and leave workers more vulnerable to exploitative employers.