On April 23, 2026, the U.S. Department of Labor published a proposed rule clarifying when multiple employers may be jointly liable under certain wage-and-hour laws: Joint Employer Status Under the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act (MSPA), RIN 1235-AA48.
As explained in a news release by Acting Labor Secretary Keith Sonderling, the proposed rule is intended to create a clearer nationwide federal framework that “would give businesses more confidence to invest in partnerships, help employees understand their rights, and make the department’s investigations more efficient.”
Currently, since the Department rescinded its 2020 FLSA joint-employer rule in 2021, there has been no DOL regulatory guidance governing joint-employer status under the FLSA, and federal courts have continued to apply differing judicial formulations under the FLSA, FMLA, and MSPA. The Department has now proposed restoring certain of the 2020 FLSA guidance and aligning the analysis under the FLSA, FMLA, and MSPA. Comments are due by June 22, 2026.
The new rule would distinguish between “vertical” and “horizontal” joint employment.
For vertical joint-employment questions, the proposed rule centers on four principal factors, asking whether the potential joint employer:
- hires or fires the employee;
- supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
- determines the employee’s rate and method of payment; and
- maintains the employee’s employment records.
The proposal also states that actually exercising control carries more weight than merely reserving some ability to exercise control, addresses questions of indirect control, and allows consideration of some additional factors. It also says that certain common business models or practices standing alone do not make joint-employer status more or less likely, such as franchising, brand-and-supply arrangements, quality-control standards, anti-harassment requirements, background checks, sample handbooks, association benefit plans, and apprenticeship participation.
For horizontal joint employment, the focus remains whether the employers are sufficiently associated with one another with respect to the employee’s work.
Proponents of the proposed rule argue that it would provide clarity, at least at the federal law level, in an area marked by inconsistent court decisions, reduce compliance and litigation costs, promote beneficial business arrangements, and create a more uniform standard for enforcement across the FLSA, FMLA, and MSPA. The Department also says the proposal would help workers better understand when more than one entity may be responsible for their wages or leave-related rights.
Critics of the rule assert that it would make it harder to hold secondary employers responsible for wage violations committed in subcontracting, staffing, and franchise arrangements. Reuters reported that worker advocates, including the Economic Policy Institute, contend that a narrower joint-employer standard could impede wage-theft enforcement and reduce worker recoveries.
Although the rule could be a significant development in the federal employment arena (assuming, that it is adopted later this year), it will not eliminate state-law uncertainty or exposure. Historically, many states’ joint employment analysis has been guided by federal law and guidance, but that may change if state agencies believe the new rule is too permissive and propose adopting new rules of their own.
For more information, see the DOL Wage and Hour Division’s informative Q&A.
This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.
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