fabfile I used for testing

fabtest.py

from fabric.api import *

@parallel
@hosts("hosta", "hostb")
def test1():
    local("exit 0")
    if env.host == "hostb":
        local("exit 1")
    
@parallel
@hosts("hosta", "hostb")
def test2():
    local("echo 'should not run'")

stdout

╭─mgoose@mgoose-ml  ~/workspace/fabric ‹457-failure-checking-for-parallel*› 
╰─$ ~/Envs/fabric-testing/bin/fab -f fabtest.py test1 test2                                                                                                 (env: fabric-testing) 
[hosta] Executing task 'test1'
[hostb] Executing task 'test1'
[localhost] local: exit 0
[localhost] local: exit 0
[localhost] local: exit 1

Fatal error: local() encountered an error (return code 1) while executing 'exit 1'

Aborting.

Fatal error: A task has failed on at least one host. Aborting.

Aborting.