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In April 2026, the U.S. Department of Labor issued a proposed rule to establish a single, clear standard for determining when joint-employer status applies under three major federal laws: the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). This proposal, published by the DOL's Wage & Hour Division, aims to make it easier to identify joint employment relationships and to apply these laws more consistently across workplaces.
The Department says all three laws use a broad definition of "employ," which includes "to suffer or permit to work." Right now, joint employment is interpreted differently under each law. The new rule would use the FLSA's definition to create a single approach. The goal is to provide clearer guidance, ensure enforcement is more consistent, and help ensure that workers are protected by all responsible employers.
What Is Joint Employment?
The proposed rule says joint employment happens when two or more employers share responsibility for the same employee's work. In these cases, all joint employers must follow labor laws. Work done for one employer can count toward another, and legal duties such as paying wages or providing leave may be shared.
Two Types of Joint Employment
The new proposal identifies two types of joint employment. The proposal describes two types of joint employment. Horizontal joint employment occurs when an employee works for two or more related employers, focusing on the connection between those employers. Vertical joint employment is when an employee works directly for one employer, but another business also benefits from their work. Here, the focus is on the link between the employee and the second employer. The proposed rule applies an economic reality analysis to determine whether a worker is economically dependent on a potential joint employer. No single factor determines the outcome. Instead, the analysis considers the totality of the circumstances to evaluate the nature of the working relationship.
Core Factors in the Analysis
The proposed rule lists several factors to help determine whether joint-employer status applies. These include whether the potential joint employer hires or fires the employee, manages the employee's schedule or work conditions, sets pay rates or methods, and maintains employment records. These are just examples, and their importance can change depending on the situation.
A main point of the proposal is how it looks at control. The Department says the analysis can include direct control over the employee, indirect control through another company, and even the right to control, whether or not it is used. So, just having the power to influence working conditions can matter, even if it is not used.
Factors That Do Not Determine Joint Employment
The DOL's proposed rule also makes clear that, by themselves, some business practices do not make a company a joint employer. These include requiring legal compliance, setting quality or contract standards, and giving advice or recommendations. The Department says these actions should be considered as part of the broader economic reality analysis and should not, on their own, determine joint employer status.
Employer Taleaways
If the rule is finalized, it will give clearer guidelines for reviewing joint employment situations. Employers who use staffing agencies, subcontractors, or have related business partners should take note. Since the analysis considers both actual and potential controls, companies may need to review how their business and contractual relationships are set up. This rule is still a proposal and is not final yet. The Department is seeking public feedback before making a final decision, and current rules will remain in effect for now.
WorkWise Compliance now offers a selection of monthly and annual compliance plans to help businesses address their legal obligations, including virtual consulting services and a dedicated HR & Safety business partner. These services can help affected businesses address current and proposed requirements regarding joint employment.
