• Skip to primary navigation
  • Skip to main content

HRMorning

  • FREE RESOURCES
  • PREMIUM CONTENT
  • HR DEEP DIVES
  • PODCASTS
    • VOICES OF HR
    • WOMEN’S LEADERSHIP TODAY
  • LOGIN
  • SIGN UP FREE
  • Employment Law
  • Benefits
  • Recruiting
  • HR Technology
  • Payroll
  • Management
  • Women’s Leadership
  • More
    • Talent Management
    • Performance Management
    • Leadership & Strategy
    • Compensation
    • Policy & Procedures
    • Wellness
    • Staff Departure
    • HR Career & Self-Care
    • Health Care
    • Retirement Plans
  • Employment Law

DOL Proposes New Rule on Joint Employer Liability

Keith Kopplin
By: Keith Kopplin, HR Expert Contributor
  • Share on

About the Author

Keith Kopplin is co-chair of Ogletree Deakins’ Wage and Hour Practice Group. In that capacity, he routinely advises clients, and assists them in resolving class and collective actions, regarding a wide variety of wage and hour topics, including overtime exemptions, timekeeping practices, the compensability of preliminary and postliminary activities, discretionary and non-discretionary bonuses, and how to calculate the regular rate of pay. Keith also helps clients by conducting internal reviews of their policies and practices for compliance with applicable wage and hour standards and responding to government audits. Beyond wage and hour matters, Keith provides employers with day-to-day counseling and defense regarding a broad range of human resource matters, including hiring practices, discipline and discharge decisions, the Wisconsin and federal Family and Medical Leave Acts, and workplace accommodations. He is also a frequent presenter regarding employment law matters. Keith is a trusted advisor and advocate for clients of all sizes and strives to find creative and cost-effective solutions to some of the most vexing workplace issues that also properly balance business objectives, values, and resources.

Show Less
Last Updated: May 1, 2026
5 minute engagement
what employers need to know

On April 22, 2026, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) released a proposed rule for determining when multiple employers may be held jointly liable. For HR professionals, the proposal has significant implications for how your organization structures its staffing, contractor and vendor relationships.

The proposal seeks to unify three labor laws, applying to enforcement under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

The DOL said that the proposed rule, titled, “Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave, and Migrant and Seasonal Agricultural Worker Protection Act,” reflects the “commonality” between federal court precedents on joint employer status—where two or more employers may be found jointly and severally liable for wage and hour violations—and seeks to establish a consistent national standard for enforcement.

The Shifting Joint Employer Standard

The proposed rule is the DOL’s first attempt to define its interpretation of joint employer liability under the FLSA since July 2021, when the Biden administration rescinded a prior 2020 DOL joint employer rule after it was largely vacated by a federal court. HR professionals should be aware that the standard governing when your organization may be treated as a joint employer has shifted multiple times in recent years, creating ongoing uncertainty for workforce planning and vendor management.

The previous joint employer rule was issued in January 2020 during President Trump’s first term and established a four-part balancing test similar to the DOL’s new proposed rule that evaluated “the potential joint employer’s exercise of control over the terms and conditions of the employee’s work.” That rule focused on whether the employer actually exercised control, and not on the potential joint employer’s “ability, power, or right” to control.

The 4-Factor Test for Vertical Joint Employment

The proposed rule would, like the 2020 rule, establish a four-factor test based on federal case law to determine where vertical joint employment exists, defined as situations where an employee is “jointly employed by two or more employers that simultaneously benefit from the employee’s work,” such as traditional staffing agency/client or contractor/subcontractor relationships, and horizontal joint employment. No single factor would be dispositive, and the ultimate determination of joint-employer status would depend on all facts in the case. The test evaluates whether the potential joint employer:

  • “hires or fires the employee”
  • “supervises and controls the employee’s work schedule or conditions of employment to a substantial degree”
  • “determines the employee’s rate and method of payment,” and
  • “maintains the employee’s employment records.”

Much like the DOL’s independent contractor rule proposed in February 2026, the joint employer rule explains that additional factors may be relevant, but that a unanimous finding on the four main factors in either direction would establish a “substantial likelihood” regarding joint employment status.

Unlike the 2020 rule, which required a potential joint employer to actually exercise control, the proposed rule would state that an employer’s “ability, power, or reserved right to act in relation to the employee is relevant for determining joint employer status.” (Emphasis added). However, the proposed rule states that “the potential joint employer’s actual exercise of control is more relevant than such ability, power, or right.” (Emphasis added). The DOL argues in the proposed rule that this is a “more nuanced position” and “is more consistent with the FLSA and longstanding caselaw.”

For HR professionals, this means that even where your organization has never actually exercised control over a contractor’s or vendor’s employees, the mere fact that your contracts reserve the right to do so could weigh toward a joint-employer finding—making it worth reviewing your staffing and vendor agreements.

‘Sufficiently Associated’ Standard for Horizontal Joint Employment

Where there is horizontal joint employment—defined as where an employee works separate hours for two or more employers in the same workweek, but the employers are “sufficiently associated with each other”—employees’ total hours worked in a week for each employer must be aggregated for FLSA compliance, and each employer would be “jointly and severally liable” for wages due under the FLSA, including any overtime premiums based on the aggregated hours. The proposed rule largely retains the long-standing analysis from the pre-2020 regulations for horizontal joint employment, which focuses on the relationship between employers based on all the facts and circumstances.

Under the proposed rule, two employers would be considered “sufficiently associated” if:

  • “there is an arrangement between them to share [an] employee’s services”
  • “one employer is acting directly or indirectly in the interest of the other employer in relation to the employee,” or
  • “they 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.”

Excluded Business Practices

The new proposed rule, like the 2020 rule, seeks to exclude certain common general business models from determining joint employer status:

  • Operating as a franchisor or brand-and-supply arrangements or similar business models
  • Contractual provisions requiring compliance with general legal obligations or health and safety standards 
  • Requiring quality control standards to protect brand reputation 
  • Providing sample employee handbooks, association health/retirement plans, or participating in apprenticeship programs 

Key Takeaways

The DOL’s proposed rule is not final and, if finalized, would provide interpretive guidance for WHD’s enforcement activities, meaning it would directly shape how audits and investigations of your organization are conducted.

Employers and other stakeholders may submit comments on the proposed rule and the four-factor test during the public comment period. In the meantime, organizations should assess their exposure and evaluate whether any operational or contractual changes are warranted.

Thus, HR professionals should consider whether your current staffing agency, contractor and vendor arrangements could trigger joint employer status under these proposed changes.

Zachary V. Zagger, Senior Marketing Counsel at Ogletree Deakins, contributed to this article.

Filed under
  • Employment Law
  • Share on

Get the HRMorning Newsletter

With HRMorning arriving in your inbox, you will never miss critical stories on labor laws, benefits, retention and onboarding strategies.

  • This field is for validation purposes and should be left unchanged.

Free Training & Resources

White Papers

State of Women’s and Family Health Benefits 2026

Provided by Maven Clinic

Webinars

5 Compliance Signals HR Should Review Before 2027

Provided by Navex

White Papers

The New Rules of Engagement: Rethinking How Employees Connect to Work

Provided by Inspirus

White Papers

Maven’s State of Women’s and Family Health Benefits — 2025 Report

Provided by Maven Clinic

SPONSORED CONTENT

Compensation

Recruiting

sponsored content
Salary Benchmarking: 6 Choices That Decide Whether Your Pay Data Holds Up

Courtesy of MARSH

Employment Law

Policy & Procedures

sponsored content
Policy Rollout: 4 Checkpoints That Show Employees Got the Message

Courtesy of NAVEX

Benefits

Staff Administration

sponsored content
PEO ROI: 3 Numbers to Know Before You Leave Patchwork HR

Courtesy of TRINET

Further Reading

  • Employment Law
New Wage Settlement: Worker Misclassification Leads to $243K Payout

A D.C. hospitality business will pay more than $243,000 after an investigation found worker misclassification and other wage and hour viola...

  • Employment Law
Religious accommodation case: City settles with DOJ

A recent settlement secured by the U.S. Department of Justice (DOJ) provides a basic lesson on how not to respond to requests for religious...

  • Employment Law
Heads up: OSHA announces new reporting requirements

Beginning at the start of 2024, certain employers in specified industries will need to electronically submit injury and illness information...

  • Employment Law
  • Payroll
Immigration and Nationality Act: Trump Steps Up Enforcement

You already understand the need to have new hire paperwork, such as Form I-9, in order. Now with the spotlight on illegal immigration, that...

  • Employment Law
$10 Million Judgment Highlights Risks of Worker Misclassification

Heads up, HR pros: Misclassifying workers as independent contractors when they are really employees can end up being an expensive mistake. ...

  • Employment Law
Inadequate training can support race bias claim, court says

Race bias claims can be based on inadequate training, a new ruling from the U.S. Court of Appeals for the Fifth Circuit says. In this case,...

Get the latest from HRMorning in your inbox PLUS immediately access 10 FREE HR guides.

I WANT MY FREE GUIDES
HR Morning Logo
  • Facebook
  • Linked In
  • ABOUT HRMORNING
  • ADVERTISE WITH US
  • WRITE FOR US
  • CONTACT
  • Employment Law
  • Benefits
  • Recruiting
  • Talent Management
  • Performance Management
  • HR Technology
  • Leadership & Strategy
  • Compensation
  • Policy & Procedures
  • Wellness
  • Staff Departure
  • HR Career & Self-Care
  • Health Care
  • Retirement Plans
  • DEI

HRMorning, part of the Rover Insights Network, provides the latest HR and employment law news for HR professionals in the trenches of small-to-medium-sized businesses. Rather than simply regurgitating the day's headlines, HRMorning delivers actionable insights, helping HR execs understand what HR trends mean to their business.

Powered By Rover Insights
Privacy Policy | Terms of Service
Copyright© 2026 Rover Insights
HRMorning Logo

WELCOME BACK!

Enter your username and password below to log in

Forget Your Username or Password?

Reset Password

Lost your password? Please enter your username or email address. You will receive a link to create a new password via email.

Log In

Why do we need your credit card for a free trial?

We ask for your credit card to allow your subscription to continue should you decide to keep your membership beyond the free trial period.  This prevents any interruption of content access.

Your card will not be charged at any point during your 21 day free trial
and you may cancel at any time during your free trial.

During your free trial, you can cancel at any time with a single click on your “Account” page.  It’s that easy.