On April 23, 2026, the Department of Labor’s (DOL) Wage and Hour Division published a proposed rule to establish a standard for determining joint employer status under the Fair Labor Standards Act (FLSA). The proposal largely tracks a 2020 rule issued during the first Trump Administration, which was later partially struck down by a federal court and withdrawn by the Biden DOL in 2021.
If finalized, the rule would create a single nationwide standard and, according to the DOL, bring “greater uniformity and consistency” to enforcement. The same framework would apply under the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), both of which rely on the FLSA’s definition of “employ.” It would not extend to other federal laws, such as the National Labor Relations Act.
Two Types of Joint Employment
The proposal outlines two joint employment scenarios. The first is vertical joint employment, where a worker is employed by one entity (such as a staffing agency) but another entity also benefits from, and may control, some aspects of that work. The key question is whether that second entity is also an employer.
The second is horizontal joint employment, where an employee works separate hours for two or more related entities during the same workweek, and those entities are sufficiently associated in their control of the employee. If joint employment exists, hours worked for each entity must be combined for overtime purposes.
The Four-Factor Test for Vertical Joint Employment
For vertical joint employment, the proposed rule adopts the same four-factor test used in the 2020 rule. It looks at whether the potential joint employer (1) hires or fires the employee, (2) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree, (3) determines the employee’s rate and method of payment, and (4) maintains the employee’s employment records.
That said, the proposal makes some meaningful shifts. Most notably, “reserved control” is back in play. The 2020 rule focused only on control actually exercised in practice. The new proposal would also consider control that exists on paper, such as contractual rights to direct work, approve pay rates, or influence employment decisions, even if those rights are never used. As a result, how relationships are structured contractually may carry as much weight as day-to-day operations.
The rule also reintroduces economic dependence as a secondary consideration. While these factors carry less weight than the core four, they mark a departure from the 2020 rule, which explicitly excluded them. The DOL also reserves the ability to consider additional factors beyond the main four, though the primary factors remain the most important.
If all four factors point toward joint employment, there is a “substantial likelihood” that a joint employment relationship exists. If they all point the other way, the opposite is true.
Horizontal Joint Employment and Exclusions
Horizontal joint employment turns on whether entities are “sufficiently associated” in employing the worker. This may include situations where they share the employee’s services, one acts in the interest of the other, or they share or exercise common control.
As in the 2020 rule, the proposal clarifies that certain common business arrangements, standing alone, do not make joint employment more or less likely. These include franchising, brand-and-supply relationships, requiring compliance with legal or safety standards, enforcing quality control measures, and offering model policies or benefit plans.
One notable omission: the 2020 rule’s explicit carve-out for allowing another business to operate on one’s premises, such as “store within a store” arrangements, does not appear in the current proposal.
Different Statutes, Different Consequences
Although the test is consistent across statutes, the consequences of a joint employer finding vary.
Under the FLSA, joint employers may be jointly liable for minimum wage and overtime violations, and an employee’s hours across entities may need to be aggregated. This is particularly significant where employees split time between related businesses.
Under the FMLA, joint employment affects coverage, eligibility, and which entity is considered the “primary” employer. The primary employer is generally responsible for providing notices, maintaining health benefits, and restoring employees after leave, even if another entity supervises the day-to-day work.
Under the MSPA, which governs migrant and seasonal agricultural workers, joint employment can extend liability for wages, disclosures, housing, and transportation to entities that effectively control the work, including those higher up the supply chain.
Bottom Line
The proposed rule signals a return to a broader, more flexible approach to joint employment that emphasizes practical realities over formal labels.
Notably, the DOL is accepting comments on the proposed rule through June 22. To the extent the proposed rule may impact your business, one way or the other, you might consider submitting comments.
Questions on how this new joint employer standard might affect your business? Reach out to your trusted Felhaber attorney for guidance.