{"id":10520,"date":"2026-04-30T10:49:06","date_gmt":"2026-04-30T10:49:06","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/dol-proposes-new-joint-employer-rule\/"},"modified":"2026-04-30T10:49:06","modified_gmt":"2026-04-30T10:49:06","slug":"dol-proposes-new-joint-employer-rule","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/dol-proposes-new-joint-employer-rule\/","title":{"rendered":"DOL Proposes New Joint Employer Rule"},"content":{"rendered":"\n
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Summary<\/h2>\n

On April\u00a022, 2026, the U.S. Department of Labor (\u201cDOL\u201d) proposed a four-part test for determining whether a person or entity may be held liable as a \u201cjoint employer\u201d for violations of the federal Fair Labor Standards Act (\u201cFLSA\u201d), as well as the Family Medical Leave Act (\u201cFMLA\u201d) and the Migrant and Seasonal Agricultural Worker Protection Act (\u201cMSPA\u201d). The proposed rule revisits the DOL\u2019s 2020 Rule, which was rescinded in 2021, and makes minor changes to align with interpretations issued by the courts over the past several years.<\/p>\n

Background<\/h2>\n

The wage-and-hour provisions of the FLSA require covered employers to pay their employees at least minimum wage, and overtime for every hour worked in excess of 40 hours per workweek.[1]<\/a> The FMLA generally requires employers to restore an employee to an equivalent position after they take unpaid leave for family and medical reasons.[2]<\/a> The MSPA protects the employment rights of migrant and seasonal workers.[3]<\/a> Both the FMLA and MSPA adopt the FLSA\u2019s definition of \u201cemploy.\u201d[4]<\/a> The FLSA\u2019s Sections 3(d), (e), and (g) define \u201cemployer,\u201d \u201cemployee,\u201d and \u201cemploy,\u201d respectively.<\/p>\n

In 1939, one year after the FLSA was enacted, the DOL issued Interpretative Bulletin No.\u00a013, which recognized that two or more employers may be jointly and severally liable for violating the wage-and-hour provisions of the FLSA.[5]<\/a> The FLSA itself did not define \u201cjoint employer\u201d or \u201cjoint employment.\u201d The DOL proposed a four-part test for determining joint employer status under the FLSA in 2019, adopting a final rule in 2020.[6]<\/a> For further discussion of the proposed rule that was adopted, and additional background regarding the status of the joint employer standard before 2020, please see our memorandum on the proposed 2019 rule here.<\/p>\n

On September\u00a08, 2020, the United States District Court for the Southern District of New York found that the 2020 Rule violated the Administrative Procedure Act and was arbitrary and capricious.[7]<\/a> The court held that the 2020 Rule conflicted with the FLSA, departed from prior interpretations, conflicted with MSPA regulations, and did not consider its cost to workers.[8]<\/a> In July 2021, the Department rescinded the 2020 Rule as not supported by the FLSA or Congressional intent.[9]<\/a> In October 2021, the Second Circuit dismissed the Department and Intervenors\u2019 appeal and vacated the district court\u2019s order.[10]<\/a><\/p>\n

In February 2026, the National Labor Relations Board (\u201cNLRB\u201d) issued a final rule for determining joint employer status under the National Labor Relations Act. Our post on the NLRB 2026 Rule can be found here.<\/p>\n

The DOL\u2019s New Proposed Rule<\/h2>\n

The DOL\u2019s newly announced proposed rule would cover both \u201cvertical\u201d and \u201chorizontal\u201d joint employment under the FLSA. For vertical joint employment\u2014where the employee works for one employer but another person benefits from the work as an employer as well\u2014the DOL proposes reinstating a four-part test similar to the 2020 Rule to determine whether liability could be imposed jointly for violations of the FLSA.[11]<\/a> The four factors mirror the 2020 Rule and are \u201cwhether the other person or entity: (1)\u00a0hires or fires the employee; (2)\u00a0supervises and controls the employee\u2019s work schedule or conditions of employment to a substantial degree; (3)\u00a0determines the employee\u2019s rate and method of payment; and (4)\u00a0maintains the employee\u2019s employment records.\u201d[12]<\/a><\/p>\n

The DOL stated these four factors \u201cweigh the economic reality of the potential joint employer\u2019s control, direct or indirect, over the employee and would provide needed clarity and uniformity to the determination.\u201d[13]<\/a> According to the DOL, these factors align with the standards the Supreme Court found to be dispositive in Falk <\/i>v. Brennan<\/i>, <\/i>414 U.S. 190 (1973), and the Bonnette<\/i> test from Bonnette <\/i>v. California Health and Welfare Agency<\/i>, 704 F.2d 1465 (9th Cir. 1983), abrogated on other grounds by<\/i> Garcia<\/i> v. San Antonio Metro. Transit Auth.<\/i>, 469 U.S. 528 (1985).[14]<\/a> Similar to the 2020 Rule, the DOL deviates from the Bonnette<\/i> test\u2019s first factor, choosing instead to focus on the economic reality, which the DOL clarified is consistent with the approach taken by various courts.[15]<\/a> Similarly, the DOL proposed adding \u201cto a substantial degree\u201d to the second factor to reflect the holding in Falk<\/i>, and to recognize there is not often a binary between absolute control and no supervision.[16]<\/a> The proposed rule also provides guidance that \u201c[n]o single factor is dispositive in determining joint employer status under the FLSA, as the determination will depend on all of the facts in a particular case.\u201d[17]<\/a><\/p>\n

Beyond these four factors, the DOL has clarified that additional factors may be relevant for vertical joint employment in some cases.[18]<\/a> Two examples provided by the proposed rule of additional factors that may indicate joint employment are situations in which: the joint employer \u201ccontinuously or repeatedly benefits from the employee\u2019s work,\u201d or \u201cif the employee works at a location or facility that is owned or controlled by the potential joint employer.\u201d[19]<\/a> The 2020 Rule had allowed for the consideration of additional factors only when they indicated control over the employee.[20]<\/a> No such limitation is proposed in the new rule.<\/p>\n

In another deviation from the 2020 Rule, the DOL does not propose excluding any factors because they \u201cmay assess or relate to economic dependence on an employer for work.\u201d[21]<\/a> The proposal does list factors that are not relevant: \u201c(1)\u00a0whether the employee is in a job that requires special skill, initiative, judgment, or foresight; (2)\u00a0whether the employee has the opportunity for profit or loss based on his or her managerial skill; and (3)\u00a0whether the employee invests in equipment or materials required for work or the employment of helpers.\u201d[22]<\/a> The DOL further explained these factors are irrelevant because they are not probative of whether an employee has a joint employer, and not because they relate to economic dependence.[23]<\/a><\/p>\n

The 2020 Rule stated that FLSA Section\u00a03(d) was the only relevant statutory basis for analyzing joint employer status. In the new proposed rule, the DOL clarified the proposal does not limit the analysis to Section\u00a03(d), recognizing that definitions of \u201cemployer,\u201d \u201cemployee,\u201d and \u201cemploy\u201d within Sections 3(d), (e), and (g) of the FLSA are all relevant.[24]<\/a><\/p>\n

For horizontal joint employment\u2014where an employee works for multiple employers in the same workweek that are sufficiently associated with one another\u2014the DOL identified three situations in which employers \u201cwill generally be sufficiently associated: (1)\u00a0there is an arrangement between them to share the employee\u2019s services; (2)\u00a0one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (3)\u00a0they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.\u201d[25]<\/a><\/p>\n

The DOL explained that three common business practices\u2014(1)\u00a0\u201cFranchising, Brand-and-Supply Agreements, and Similar Business Models,\u201d (2)\u00a0\u201cCompliance With Legal Obligations or Health and Safety Standards,\u201d and (3)\u00a0\u201cQuality Control and Brand Reputation Standards\u201d[26]<\/a>\u2014do not categorically make joint employer status more or less likely.<\/p>\n

The proposed rule would also revise the FMLA and MSPA regulations that are inconsistent with the proposed FLSA analysis for determining joint employer status.[27]<\/a><\/p>\n

Implications<\/h2>\n

The public comment period for the proposed rule is scheduled to end on June\u00a022, 2026.[28]<\/a> If adopted, the 2026 Rule would bring clarity and uniformity to the enforcement of federal wage-and-hour laws. That being said, employers will still need to ensure compliance with applicable state laws, which may differ from\u2014and be broader than\u2014the new proposed federal standard.<\/p>\n


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[1]<\/a> Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act, 91 Fed. Reg. 21878, 21878 (Apr. 23, 2026) (to be codified at 29 C.F.R. pts. 500, 780, 791, and 825).<\/p>\n<\/div>\n

\n

[7]<\/a> New York <\/i>v. Scalia<\/i>, 490 F. Supp. 3d 748, 757 (S.D.N.Y. 2020).<\/p>\n<\/div>\n

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[8]<\/a> Id. <\/i>at 774, 792\u201393.<\/p>\n<\/div>\n

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[9]<\/a> Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act, 91 Fed. Reg. 21878, 21883 (Apr. 23, 2026) (to be codified at 29 C.F.R. pts. 500, 780, 791, and 825).<\/p>\n<\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"

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