Currently pending before Congress is the American Franchise Act (“AFA”), a bipartisan legislative initiative designed to clarify the meaning of a “joint employer,” as that term relates to a franchise system. The implications of that term are directly relevant to most labor laws, potentially entangling franchisors with the employment practices of all franchisees. If passed, the AFA would provide that “a franchisor may be considered a joint employer of the employees of a franchisee only if the franchisor possesses and exercises substantial, direct, and immediate control over one or more essential terms and conditions of employment of the employees of the franchisee.” The evaluation would take various factors into consideration, such as whether the franchisor has direct and immediate control over, e.g., employee wages and benefits, supervision and direction of employees, franchisee hiring practices, and employee discipline and termination. For the avoidance of doubt, the AFA has not yet become law, but it is under consideration by Congressional committees.
