Pizza Hut franchises could face new labor rules under DOL proposal

A Pizza Hut franchisee’s $4.75 million driver settlement is the kind of case that could matter even more if Washington broadens who counts as an employer. The earlier lawsuit covered 321 locations in eight states and alleged that delivery drivers were not fully reimbursed for gas, repairs, insurance and cell-phone costs from June 21, 2019, through September 27, 2021.

Now the Labor Department has proposed a new joint-employer rule that could change who gets blamed, and who pays, when wage, scheduling or leave problems surface inside a Pizza Hut store. Announced on April 22 and published in the Federal Register on April 23, the proposal would create a single nationwide standard for joint employment across the Fair Labor Standards Act, the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act. The comment period runs through June 22.

The key shift is liability. Under the proposal, when joint employment exists, employers would be jointly and severally liable for wages, damages and other relief owed to workers. The department says the goal is to simplify compliance, reduce litigation and give investigators one standard to use nationwide. Acting Labor Secretary Keith Sonderling said the proposal is meant to simplify compliance and strengthen protections, while Wage and Hour Division Administrator Andrew Rogers said clearer guidance would help workers receive wages and benefits even if one employer cannot or will not pay.

For Pizza Hut, that lands in a franchise system where local owners run the stores but the brand still sets many chainwide standards, training expectations and technology practices. Yum! Brands said in 2025 that it operates or franchises more than 61,000 restaurants in more than 155 countries and territories, and it launched a strategic review of Pizza Hut on April 17, 2025. If the joint-employer standard broadens, franchisees, general managers and shift leaders may need tighter records on hiring, scheduling, overtime approvals, timekeeping, leave requests and the chain of supervision that shapes day-to-day work.

The business lobby and franchise industry have already split over the proposal. The U.S. Chamber of Commerce praised it as restoring certainty for employers, especially small businesses, contractors and franchisees. The International Franchise Association called it a commonsense framework for franchising and said the sector includes 832,000 franchised businesses, 8.8 million direct jobs and $907.3 billion of economic output. The group is also backing the bipartisan American Franchise Act, which it says has 116 House cosponsors.

The proposal follows years of regulatory whiplash. The Labor Department rescinded its prior 2020 joint-employer rule in 2021, and the National Labor Relations Board’s 2023 joint-employer rule was vacated by a federal court in March 2024 before it took effect. For Pizza Hut operators, the new test could determine whether labor mistakes stay local or spread up the franchise chain.