DOL Proposes Rule Clarifying Joint Employer Status

The U.S. Department of Labor’s (DOL) Wage and Hour Division this week announced a proposed rule to address joint employer status under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). 

Through its proposal, the department said it seeks to ensure employees and employers have a clear, consistent understanding of when multiple employers are jointly responsible for protecting the wages and other rights of an employee. 

“Under President Trump’s leadership, the Department of Labor is committed to simplifying compliance for American employers and strengthening protections to put American workers first,” said Acting Secretary of Labor Keith Sonderling. “This proposal helps us deliver on that promise. A clear standard on joint employment would give businesses more confidence to invest in partnerships, help employees understand their rights and make the department’s investigations more efficient.”

The proposed rule is largely similar to a rule issued late in the first Trump Administration in 2020. That rule was ultimately struck down by a New York Federal Judge, but appeals were never heard because the subsequent Biden Administration DOL rescinded the rule entirely. While rescinding the 2020 version, the Biden DOL failed to replace it leaving businesses to contend with a patchwork of state level joint employment standards and a vague “totality of circumstances” interpretation at the federal level.

“NACS welcomes the DOL’s new proposal as it provides employers with clear and easily understandable guidelines for determining if any of their workers qualify as being jointly employed with another employer,” said Jon Taets, director of government relations at NACS. 

The new rule establishes a four-part test to determine joint employer relationships. While it clearly states that “no single factor is dispositive” and other factors may be considered, these four will carry the most weight:

1. The ability to hire and fire.
2. Supervision and control of the work schedule or conditions of employment to a significant degree.
3. Determination of the rate and method of payment.
4. Maintenance of employment records.

The proposal also aligns this standard under the Family Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act; and brings the DOL’s interpretation in line with changes made by the National Labor Relations Board earlier this year.

The proposed rule states:

When a joint employment relationship exists, those employers are jointly and severally liable for any wages, damages and other relief owed to employees, including paying for all hours the employee worked for all joint employers, and all overtime premiums due for that time. By restoring regulatory guidance for determining joint employer status under the FLSA and aligning the FLSA analysis with the analysis under the FMLA and MSPA, the department believes the proposal would promote better business practices, provide certainty, reduce litigation and enhance uniformity in the way courts and the Wage and Hour Division apply three laws that share the same statutory scope of employment. 

The department encourages all interested parties to submit comments on the proposed rule by June 22, 2026. 

Earlier this year, the Department of Labor Wage and Hour Division proposed to rescind the analysis for determining employee or independent contractor status under the FLSA currently set forth in 29 CFR part 795.

The Department proposed to replace it with the analysis that it published and adopted in a prior final rule dated January 7, 2021, with a few modifications.