On April 22, 2026, the U.S. Department of Labor’s (“DOL”) Wage and Hour Division issued a proposed rule regarding the determination of joint employer status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act.
When a joint employment relationship exists, those employers are jointly and severally liable for any wages, damages, and other relief owed to employees. The proposed rule identifies inconsistent legal precedent and the DOL’s lack of interpretive guidance as core reasons for establishing a uniform analytical framework governing joint employment determinations.
The proposed rule addresses the related concepts of “vertical” and “horizontal” joint employment. According to the DOL, vertical joint employment generally describes an arrangement in which an employee is employed by an employer for work, and another person—or entity—simultaneously benefits from that work as, or in the manner of, an employer. The proposed rule provides four factors to determine whether the other person is the employee’s joint employer in that vertical joint employment scenario. Those four factors are whether the other person or entity: (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.
The proposed rule further explains that additional factors beyond those four factors may be relevant for determining vertical joint employment. For example, additional indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee’s work in addition to the four factors may be relevant. It also provides that indicia of whether the employee is economically dependent on the potential joint employer for work may also be relevant.
With respect to determining horizontal joint employment relationships, employers are considered joint employers where: (1) there is an arrangement between employers to share the employee’s services; (2) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (3) the employers share control of the employee—directly or indirectly—because one employer controls, is controlled by, or is under common control with the other employer.
The proposal clarifies that franchisor status or sharing a vendor does not necessarily establish joint employment. According to the DOL, the issuance of this proposed rule seeks to address the dearth of departmental regulatory guidance by proposing a single nationwide standard that both derives from commonalities in federal court precedent where available and resolves significant differences among the circuit courts where they exist.
The public will have 60 days to comment on the proposed rule. We will continue to follow developments and will keep you apprised of same. Should you have any questions, please contact Ali Law Group.
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