Save Local Business Act
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The bill would narrow the legal definition of a "joint employer" under federal labor and wage law, requiring that a company directly, actually, and immediately exercise significant control over workers' hiring, pay, scheduling, supervision, or discipline before it can be held jointly liable as an employer.
The change would make it harder to hold franchisors, parent companies, or businesses that use staffing and contract labor jointly responsible for labor violations affecting workers technically employed by another firm.
What this bill would do
What it would do
The bill would amend the National Labor Relations Act and the Fair Labor Standards Act of 1938 to set a stricter standard for when one business can be treated as a "joint employer" of another business's workers. Under the bill, a company could only be considered a joint employer if it directly, actually, and immediately exercises significant control over essential terms of employment, such as hiring, firing, setting pay and benefits, day-to-day supervision, assigning schedules or tasks, or disciplining employees. The bill applies this same standard to both statutes, aligning the Fair Labor Standards Act's joint-employer test with the National Labor Relations Act's test. It does not create any new agency, funding, or reporting requirement; it only changes the legal criteria used by the National Labor Relations Board, courts, and the Department of Labor when determining joint-employer status in labor disputes and wage claims.
Key provisions
- 1Would require that a joint employer directly, actually, and immediately exercise significant control over essential terms of employment under the National Labor Relations Act
- 2Would list specific forms of control—hiring, firing, pay and benefits, day-to-day supervision, scheduling, and discipline—that can demonstrate joint-employer status
- 3Would apply the same joint-employer standard to claims under the Fair Labor Standards Act of 1938, using that Act's definitions of employee and employer
Who would be affected
Franchise businesses, parent companies, staffing agencies, general contractors, and companies that rely on subcontracted or temporary labor would be affected, along with the workers employed through those arrangements. Labor unions, the National Labor Relations Board, and the Department of Labor, which enforce joint-employer determinations, would also apply the new standard.
Why it matters
A narrower joint-employer standard would make it harder for workers to hold parent companies, franchisors, or businesses that use contracted labor liable for wage violations or unfair labor practices committed by a subcontractor or franchisee. Businesses using such arrangements would face reduced legal exposure, while affected workers could have fewer avenues to seek accountability from the larger company.
What would change
Changes to existing law
Amends National Labor Relations Act (29 U.S.C. 152(2)) (Sec. 2(a))
Adds a new joint-employer test requiring direct, actual, and immediate significant control over essential employment terms
Amends Fair Labor Standards Act of 1938 (29 U.S.C. 203(d)) (Sec. 2(b))
Applies the same stricter joint-employer control test used in the National Labor Relations Act to wage and hour claims
Agencies directed to act
Funding and costs
Congressional Budget Office estimate
CBO estimates enacting H.R. 4366 would increase the federal deficit by less than $500,000 over the 2026–2036 period.
H.R. 4366 would narrow the joint-employer standard under the Fair Labor Standards Act and the National Labor Relations Act, requiring that an employer directly and actually exercise significant control over essential employment terms — rather than merely possessing the authority to do so — to be considered a joint employer. By reducing the number of entities subject to civil monetary penalties collected by the Department of Labor, the bill would slightly decrease both revenues and direct (mandatory) spending, with the net effect on the deficit estimated at less than $500,000 over the 2026–2036 period. Any effect on the operating costs of the Department of Labor or the National Labor Relations Board would be negligible and subject to appropriated funds. CBO identified no intergovernmental or private-sector mandates in the bill.
How implementation would work
The bill is self-executing: once enacted, the new joint-employer standard would apply directly whenever the National Labor Relations Board, federal courts, or the Department of Labor evaluate joint-employer claims under the National Labor Relations Act or the Fair Labor Standards Act. No new rulemaking, grant program, or reporting structure is created; the change operates by altering the statutory text those agencies and courts already apply case by case.
Legislative status & sources
Latest action
Rule H. Res. 988 passed House.
Official CRS summary
Show the CRS summaryHide the CRS summary
Save Local Business Act
This bill provides that a person may be considered a joint employer of the employees of another employer under federal labor law only if such person directly, actually, and immediately exercises significant control over the essential terms and conditions of employment. Such control may by demonstrated by hiring and discharging employees; determining individual employee rates of pay and benefits; day-to-day supervision of employees; assigning individual work schedules, positions, or tasks; or administering employee discipline.
Legislative subjects
Labor and Employment; Labor standards; Labor-management relations; Wages and earnings
Committee report
H. Rept. 119-422