DOL Proposes New Joint Employer Rule Under FLSA, FMLA, and MSAWPA

The U.S. Department of Labor recently announced a proposal to establish a single federal standard for determining joint employer status. This rule would apply to the Fair Labor Standards Act, the Family Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. For businesses, this marks a shift away from the fragmented approach currently used by various circuit courts.

Under the new proposal, the government will examine four specific factors to identify vertical joint employment. These include who hires or fires an employee, who supervises work schedules, who sets payment rates, and who maintains employment records. Unlike the 2020 rule, which focused heavily on direct control, this version indicates that no single factor is dispositive. Regulators will consider the totality of the circumstances, including whether a worker is economically dependent on the potential joint employer.

The proposal also distinguishes between vertical joint employment and horizontal joint employment, the latter occurring when an employee works separate hours for two employers in the same week. It suggests that joint employer status is more likely if entities share control or act in the interest of one another. For businesses, this means the distinction between reserved control and actual exercised control carries significant weight. Contracts alone may not be enough to shield a company from liability if they exert day-to-day oversight.

There is some clarity for specific industries. The proposal outlines practices that do not, on their own, trigger joint employer status. These include requiring anti-harassment training, providing employee handbooks, maintaining standard franchise quality controls, or offering association health plans. These exclusions aim to provide a safer harbor for franchisees and staffing arrangements.

If finalized, this rule will force employers to adjust how they account for workers across these three statutes. For example, counting jointly employed workers may become mandatory to determine FMLA coverage and job restoration obligations. Employers should review their current subcontracting and staffing agreements now to ensure documentation reflects actual operational reality. Consulting legal counsel to assess how these changes impact specific business structures is a prudent next step.