“Save Local Business Act” Could Revise Definition of “Joint Employer” – a Win for the Franchise Model

By Kristen M. Smith

In the past couple of years, the legal definition of “joint employer” has been in a state of flux. Presently, the franchising world waits to see whether or not the Protecting the Right to Organize Act (“PRO Act”) will be enacted, which would codify the more expansive definition of “joint employer” adopted by the National Labor Relations Board.

Now, the Save Local Business Act (H.R. 3185) has been introduced to Congress. If passed, it would restore a “direct-control” based definition of “joint employer” under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). The Act would make clear that an employer may be considered a joint employer only if it directly and immediately controls the essential terms and conditions of an employee’s employment.

Advocates for this bill, including the International Franchise Association and more than 60 other industry groups, are confident that this revised definition under the Save Local Business Act would provide much needed clarity for franchisors on who can be considered a joint employer.

We will continue to monitor the status of the PRO Act, the Save Local Business Act and any other developments in the joint-employer space and provide updates as they come. If you have any questions about how this area of the law may affect your franchised business or franchise system, please reach out via e-mail at kristen.harvilla@kentfranchiselaw.com or by phone at 215-751-2874.