Save Local Business Act: New Rules Make It Harder to Hold Big Companies Accountable for Contracted Workers' Wages

The aptly named Save Local Business Act is all about redefining the term "joint employment." This term matters because it determines when a larger company can be held legally responsible for labor violations—like wage theft or unsafe conditions—committed by a smaller company they contract with, such as a franchisee or a staffing agency. This bill specifically tightens the screws on this definition under two massive federal laws: the National Labor Relations Act (NLRA), which covers collective bargaining, and the Fair Labor Standards Act (FLSA), which governs minimum wage and overtime.

The New, Very Strict Control Test

Under this proposal, a company can only be considered a "joint employer" of another company’s workers if it exercises direct and immediate control over five specific areas. We’re talking about the core functions of employment: hiring/firing, setting pay/benefits, daily supervision, task assignment, and discipline. If a company isn't directly involved in all five of those things, they are legally off the hook. Previously, courts and agencies sometimes looked at things like reserved contractual rights or indirect economic influence to establish joint liability. This bill scrubs those concepts clean. It creates a bright-line rule: if you didn't directly tell that worker what to do, how much to pay them, and when to fire them, you aren't an employer.

Who Benefits from the Fine Print?

For large corporations that rely heavily on franchising, contracting, or staffing agencies, this is a massive win for liability management. It gives them a clear roadmap for structuring their contracts to legally insulate themselves from potential labor disputes. For example, a major fast-food franchisor can ensure their contract with a local franchisee only covers branding and operations standards, explicitly leaving all five core employment decisions (hiring, pay, scheduling, etc.) to the local owner. This reduces the legal risk for the large corporation and provides greater certainty in business dealings.

The Real-World Cost for Workers

This is where the rubber meets the road for the average person. When a worker is underpaid by their direct employer—say, a small subcontractor or a local franchisee—they sometimes rely on the joint employer doctrine to pursue the larger, more financially stable company (the franchisor or the general contractor) for lost wages. By demanding direct and immediate control over all five factors, this bill makes it significantly harder for workers to successfully sue the deep pockets. If you’re a contract worker and your direct boss commits wage theft, this bill makes it much less likely you can hold the big company that hired your boss responsible, even if that big company is the one truly benefiting from your labor. It essentially shifts the risk of labor law non-compliance almost entirely onto the smaller, direct employer, and by extension, the worker seeking recourse.