Congress shields franchisors from labor liability—workers lose recourse

What it does

This bill rewrites the legal definition of 'joint employer' in federal labor law to make it much harder for franchisees' employees to hold franchisors (the parent company) legally responsible for labor violations. Under current law, a franchisor can be deemed a joint employer if it exercises significant control over working conditions. This bill narrows that definition to require 'substantial direct and immediate control'—and then carves out most of the ways franchisors actually control franchisees (setting standards, providing training, recommending staffing levels, etc.). The result: franchise workers lose leverage to sue or file complaints against the franchisor for wage theft, unsafe conditions, or retaliation, even when the franchisor sets the rules franchisees must follow.

Why we flagged it

The bill's operative mechanism is a redefinition of joint-employer status that systematically narrows franchisor liability for labor violations. It does this by raising the legal threshold and carving out most forms of franchisor control, making it functionally a liability shield for the franchise industry.

What the text implies

• Franchisees' employees may lose standing to sue franchisors for wage theft, even when the franchisor sets wage-related policies or standards that the franchisee must follow.
• The carve-out for 'setting brand standards' and 'minimal training requirements' allows franchisors to control labor practices indirectly without triggering joint-employer status, creating a legal loophole.
• Workers in franchise systems (fast food, hotels, retail) will have fewer legal remedies and weaker bargaining power, as they can only sue the franchisee (often a small operator with limited assets) rather than the franchisor.
• The bill's retroactive non-applicability clause (Section 4) may shield franchisors from pending litigation, effectively immunizing them from current claims.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Franchise workers—disproportionately low-wage, often in food service and retail—lose legal recourse against parent companies that set operational rules but claim not to be employers. The bill shields franchisors from joint-employer liability even when they exercise pervasive control over labor practices, weakening workers' ability to enforce wage, hour, safety, and anti-retaliation protections.

Who stands to gain

• franchise parent companies and franchisors
• large franchise systems (QSR, hospitality, retail)
• franchise industry trade associations

Named in the bill

National Labor Relations Board (NLRB), Department of Labor, franchise industry, franchisors, franchisees, franchise workers

Where it stands

158 cosponsors: 140 Republicans, 17 Democrats, 1 Independents.

• Sep 10, 2025 — Introduced · Congress.gov: “Introduced in House”
• Sep 10, 2025 — Referred to House Committee on Education and Workforce · Congress.gov: “Referred to the House Committee on Education and Workforce”
• Jul 21, 2026 — Markup held in committee · Congress.gov: “Committee Consideration and Mark-up Session Held”
• Jul 21, 2026 — Reported out of committee · Congress.gov: “Ordered to be Reported (Amended) by the Yeas and Nays: 18 - 15”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

36 lobbying clients named this bill on 54 disclosure filings across 4 quarters, Sep 2025 to Jun 2026. Those filings disclosed $18,165,070 in lobbying spend. A filing names 6 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 98% of bills with at least one filing.

Kevin Hern, the sponsor, reported $2,075,651 in PAC receipts in the 2026 cycle. $8,000 of that came from 2 PACs tied to these lobbying clients.

• American Association for Justice — $3,610,000 on 2 filings
• Fedex Corporation — $2,930,000 on 1 filing
• Nfib (national Federation of Independent Business) — $1,670,000 on 1 filing
• National Restaurant Association — $1,620,000 on 2 filings
• AFL-CIO — $1,520,000 on 2 filings

Lobbying Disclosure Act filings through Jul 21, 2026. A filing shows who paid to lobby on a bill it names, not what changed.