On April 22, 2026, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking (the “Proposed Rule”) that would clarify when two or more entities are considered “joint employers” under the Fair Labor Standards Act (FLSA). The proposal would also align the joint employer analysis under the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) with the FLSA standard.
According to the DOL, the goal of the Proposed Rule is to provide a single, nationwide framework for determining joint employment at the federal level—an area that has seen conflicting standards across federal courts and shifting regulatory guidance in recent years.
Joint Employer Status Matters
When a joint employment relationship exists, each joint employer is jointly and severally liable for compliance with the applicable law. Under the FLSA, that can include responsibility for all wages owed, including overtime, for all hours an employee works for any joint employer. Under the FMLA, joint employers may also share obligations related to job-protected leave and reinstatement.
Because joint employer findings can significantly expand potential liability, the standard used to determine joint employment is especially important for businesses that rely on subcontractors, staffing agencies, franchise relationships, or other shared workforce arrangements.
Key Features of the Proposed Rule
The Proposed Rule, which is largely consistent with the rule established in 2020 under the original Trump administration, would restore regulatory guidance on joint employment under the DOL’s FLSA joint employer regulations before they were rescinded in 2021 under the Biden administration. Among other things, the Proposed Rule:
- Adopts a unified joint employer framework grounded in “economic reality” principles reflected in federal court decisions
- Distinguishes between horizontal and vertical joint employment scenarios
- Emphasizes that actual, exercised control over a worker’s terms and conditions of employment is more relevant than theoretical or reserved control
- Aligns the joint employer analysis under the FMLA and MSPA with the FLSA, based on the statutes’ shared employment definitions
The Proposed Rule also provides that common business arrangements—such as franchising relationships—or contractual provisions requiring an entity to comply with general legal or safety standards do not, standing alone, establish joint employer status.
What Happens Next
The Proposed Rule is open for public comment through June 22, 2026. After the comment period closes, the DOL will review feedback and determine whether to issue a final rule, which may include revisions to the proposal.
Practical Takeaways for Employers
If finalized, the Proposed Rule could bring greater predictability to joint employer determinations under federal wage and hour and leave laws. However, it also underscores the importance of carefully evaluating workforce relationships—particularly where multiple entities share control over hiring, pay, scheduling or supervision.
Employers should review existing contracts, operational practices and supervisory structures during the comment period to assess potential exposure and consider whether to submit comments on the proposed framework. Employers should also be mindful of any applicable state law joint employment considerations, which may be more expansive than those at the federal level.
