“Through this proposal, the Department of Labor has the chance to undo one of the most harmful regulatory actions from the past administration and replace it with a rule that creates certainty for America’s 733,000 franchise businesses,” Matthew Haller, a senior vice president at the International Franchise Association, said in a statement.

“An expanded joint employer standard has held back tens of billions of dollars in economic output each year due to a proliferation of frivolous lawsuits, precipitating significant changes to the way franchise brands interact with their local owners,” he said.

According to the new proposal, four factors are involved in establishing joint employment: whether the upstream company exercises the power to hire and fire employees, whether it supervises them and controls their schedules, whether it sets their pay and whether it keeps up their employment records.

If a company doesn’t engage in most or all of these activities, it is unlikely that it would be deemed a joint employer.

Critics accused the department of laying out a step-by-step guide to employers seeking to get off the hook for violations even when they have substantial control over workers hired by their franchisees and contractors.

“It has provided such an obvious road map for employers to evade liability,” said Sharon Block, a former top official in the Obama Labor Department who is executive director of the Labor and Worklife Program at Harvard Law School. “But that’s going to introduce tremendous uncertainty into the lives of American workers who are subject to these business models.”

Ms. Block said that the legality of the regulation was likely to be challenged once it was finalized, and that courts could refuse to be bound by it.