Requirements set forth by the first Trump administration and then rescinded by the Biden administration are under review again, with potential to impact franchisees across the United States. Lisa Jennings, Executive Editor for Nation’s Restaurant News (NRN) breaks down the proposed legislation and why restauranteurs and industry leaders see this as a positive move for small businesses.
“The proposed rule under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act attempts to resolve significant differences in court opinions across the country about what employers are responsible for in terms of protecting wages and other rights of workers,” her article explains.
This issue has been up for debate for years, thus the back-and-forth between administrations. The argument for regulation and defining “joint employer” specifically “determines what businesses are responsible for compliance with minimum wage, overtime and other labor laws.” The goal is to put full power into the hands of the franchisees, the physical place of employment, and remove liability from the franchisor.
Generally, labor and wage laws can vary from state-to-state, complicating responsibility for national chains with franchisees. The Department of Labor believes that clarity is needed and that with a working definition, tensions between viewpoints can be set aside in the name of continuity.“ DOL’s proposed rule, which was published in the Federal Register on Thursday, [note: this was published in early May 2026] sets up a test to determine different standards that include ‘vertical joint employment,’ and ‘horizontal joint employment,’ with specific definitions for those terms,” Jennings writes. “The multi-part test would consider things like who hires or fires the worker, who supervises or controls the workers’ schedule and who determines the rate of pay.”
Experts liken this legislation to the passed proposal from the Trump administration in 2020, so the breakdown of the new rule would be familiar to restaurant owners. “The Trump Administration’s joint employer rule provides a clear and commonsense approach for America’s 832,000 franchised businesses to operate and grow,” said Matt Haller, International Franchise Association (IFA) president and CEO, in a statement. “This pro-franchise standard protects the independence of franchise small businesses, safeguards the equity franchisees have built in their local operations, and prevents the kind of regulated overreach that has threatened jobs and growth in previous administrations.”
Richard Weil, owner and principal of National Restaurant Consultants, an experienced franchiser as well, notes, “Recognizing the basic franchising/licensing business model and what it represents across the country, allows small businesses and franchisers that this updated ruling take the required responsibilities at the core, particularly the day-to-day management of staff, which, in most cases, the sole responsibility of the franchisee/licensee. This issue has been a ‘political football’ for many years, but as many have pointed out, the impact on over three quarters of a million small businesses requires a permanent solution to this problem that should not be a problem, but rely on sensible standards to be implemented and followed.”