Legislation is moving through Congress that, if enacted, would establish a new joint employer standard and end some of the uncertainty businesses have faced the past several years whenever a new party won the White House.
The House Committee on Education and the Workforce approved the Save Local Business Act on July 23, 2025. The bill, if approved by Congress and signed by President Donald Trump, would set a joint employer standard with major implications for unionized employers, the franchise industry and other interested parties.
The bill would cement a narrower joint employer standard, as compared with standards proposed by the National Labor Relations Board (NLRB) in the Biden and Obama administrations, by requiring that an employer have “direct and immediate” control over the working conditions of another employer’s employees to be considered a joint employer.
The bill would amend the National Labor Relations Act (NLRA) by requiring that an employer may be considered a joint employer of another employer’s employees only if “each employer directly, actually, and immediately, exercises significant control over the essential terms and conditions of employment of the employees of the other employer.”
The legislation provides examples of essential working conditions, to include hiring, firing and disciplining employees, setting employees’ wages and benefits, supervising employees on a day-to-day basis, and assigning employees a work schedule, position or task.
The bill would establish the same joint employer standard under the Fair Labor Standards Act (FLSA), which sets rules for wages and overtime pay.
Shifting Standards
If enacted, the Save Local Business Act would end a 10-year oscillation in joint employer standards set by the NLRB.
Most recently in that fight, in March 2024, a Texas federal court struck down the Biden NLRB’s 2023 regulation on the matter. The 2023 regulation contemplated joint employer status even if an employer indirectly controlled, or had contractually-reserved (but unexercised) control over, the working conditions of another employer’s employees. In July 2024, the NLRB voluntarily ended its appeal of the court’s ruling, effectively reinstating the joint employer regulation issued by the Trump NLRB in 2020.
Also in 2024, Congress voted largely along party lines to repeal the 2023 regulation under the Congressional Review Act, although then-President Biden vetoed that legislation. The vote was 206-177 in the House, including eight Democrats who voted in favor, and 50-48 in the Senate, including Senators Joe Manchin, Kyrsten Sinema, and Angus King, independents who caucus with the Democrats and voted in favor.
The joint employer standard in the 2020 regulation is similar to the standard proposed in the Save Local Business Act. However, the validity of that regulation is being challenged by a labor union in federal court in the District of Columbia. As of now, briefs are due this fall.
It may be significant that the bill requires “each” employer to exercise sufficient control over the essential working conditions of the other employer in order to be considered a joint employer. If enacted, this standard could operate even more narrowly than the Trump NLRB’s 2020 regulation.
The 2020 regulation merely requires that, to be considered a joint employer, an employer must exercise sufficient control over “one or more” of another employer’s essential working conditions “as would warrant finding that the [employer] meaningfully affects matters relating to the employment relationship with those employees.” By contrast, the legislation could be construed to mean that both employers must exercise sufficient control over all of the essential working conditions of the other employer, thereby reducing the likelihood that employers would be considered a joint employer as compared with the 2020 standard. The bill, if enacted, would provide the NLRB the authority to interpret the scope of the bill’s text through case-by-case adjudication, and it is possible that the NLRB could adopt this or another construction.
Implications for Franchising and Other Industries
There are several potential consequences to being considered a joint employer under the NLRA. A joint employer could be held liable for violations of the NLRA (such as discharging workers for engaging in union activity). A joint employer also could be required to bargain collectively with unions over working conditions, or endure strikes or boycotts even though only one of the two employers is the target of the labor dispute.
Franchisors have voiced particular concern with an expansive joint employer standard, which the legislation seeks to address. For example, a broad standard could mean that a franchisor is the joint employer of a franchisee’s employees based on setting brand standards in franchise agreements and operations manuals that concern hiring or any other essential working condition. A franchisor could have an incentive to reduce its engagement with its franchisees in order to avoid joint employer status.
By requiring a finding of “direct, immediate, actual, and significant” control over working conditions as a requirement of being considered a joint employer, the Save Local Business Act could reduce the odds that interactions between franchisors and franchisees would result in the two being considered a joint employer of a franchisee’s employees — again as compared to even the Trump NLRB’s 2020 regulation.
Industries that have voiced similar concerns include retail, hospitality, and temp and staffing agencies.
On the other hand, the legislation would undermine the efforts of unions and others who support a broader joint employer standard, which would spread accountability under the NLRA among more employers.
Given the uncertain odds of the bill’s passage in the Senate (should it pass the House), as well as the unresolved litigation over the NLRB’s 2020 joint employer standard, the legal landscape remains in flux for the foreseeable future. Interested parties should continue to monitor changes and evaluate workplace policies.
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