Insights

DOL Proposes New Joint Employer Rule Under FLSA, FMLA, and MSAWPA

By Brian N. McCracken

Labor & Employment

The Joint Employer Landscape and the 2020 Rule

On April 23, 2026, the U.S. Department of Labor (“DOL”) proposed a new rule (the “Proposed Rule”) for assessing joint employer status under the Fair Labor Standards Act (“FLSA”), the Family Medical Leave Act (“FMLA”), and the Migrant and Season Agricultural Worker Protection Act (“MSAWPA”).  The Proposed Rule seeks to apply a uniform federal test across these statutes for determining joint employer status, replacing different approaches developed by various circuit courts.  Crucially, while the Proposed Rule is not as business-friendly as past proposed rules for assessing joint employment, it does identify certain business practices which, on their own, do not create joint employer liability. This rule would create a single federal standard for determining joint employer status across multiple employment laws.

So, how did we get to the Proposed Rule? Joint employment as a concept is notorious for being subject to multiple standards across different federal statutes, and the analysis for any given statute can differ by circuit court.  For example, in analyzing joint employment under the FLSA, the Fourth Circuit assesses whether the two employers are “completely disassociated” from one another.  In contrast, the Second Circuit assesses whether a certain employer has “functional control over workers.” The DOL has not proposed a uniform joint employer rule since it finalized a rule in 2020 (the “2020 Rule”), advising President Trump’s original term in office, largely adopting the analysis in Bonnette v. California Health & Welfare Agency, a Ninth Circuit case.  The 2020 Rule, which notably was limited solely to the FLSA, emphasized four Bonnette-style factors when assessing “vertical” joint employment, or when an employee works one set of hours for the benefit of two entities. These factors included whether the putative 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.

The 2020 Rule further placed emphasis on those factors that bear on control of the employee, and it did not consider evidence or the worker’s economic dependence on the employer.

You may be wondering whatever happened to the 2020 Rule. It was struck down in September 2020 by the Southern District of New York in the case of New York v. Scalia, where the court held that the 2020 Rule’s focus on control contradicted the FLSA’s broad “suffer or permit” definition of employment. The court also found that a worker’s economic dependence on the employer should be considered in any joint employment analysis.

The Proposed Rule

The new Proposed Rule, like the 2020 Rule, once again calls for analysis of the four Bonnette factors with respect to vertical employment, and further distinguishes between vertical joint employment and “horizontal” joint employment, which involves an employee working separate hours for two employers in the same workweek. The Proposed Rule is similar to the 2020 Rule with respect to horizontal joint employment in that it focuses on the key inquiry of whether the putative joint employers are “acting independently of each other and are dissociated with respect to the employment of the employee,” as opposed to being “sufficiently associated with respect to the employment of the employee.”  In assessing association between horizontal entities, the Proposed Rule further considers whether:

  1. There is an arrangement between them 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 putative joint employers 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.

With respect to both vertical and horizontal employment, however, the Proposed Rule approaches the concept of control a bit differently, with the apparent intent of avoiding invalidation by a court once more. Instead of emphasizing factors that bear on control, the Proposed Rule states that “[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.” The Proposed Rule is also willing to consider “[i]ndicia of whether the employee is economically dependent on the potential joint employer,” unlike the 2020 Rule. Still, with respect to vertical employment, the Proposed Rule clarifies that the four Bonnette factors described above are still the most relevant, and if all four factors align in any analysis, then that has a “substantial likelihood” of outweighing any other factors.

Even with this relative softening of the DOL’s stance with respect to factors of control, however, the Proposed Rule actually goes farther than the 2020 Rule in the sense of applying not just to the FLSA, but also the FMLA and the MSAWPA.  If the Proposed Rule survives in its current form, therefore, it could apply a uniform joint employment standard across three major federal employment statutes which every circuit court would have to acknowledge and analyze.

What the Proposed Rule Means for Employers

While the concept of joint employment may be confusing for employers, there are certain takeaways that employers should take note of with respect to the Proposed Rule. The first takeaway is that control over a worker still matters, if not as much as it used to under the 2020 Rule. The Proposed Rule clarifies that there is a difference between reserved control—control that is contractually granted—versus control that is actually exercised over an employee. If a putative joint employer actually hires or fires workers, supervises and controls the workers’ day-to-day terms and conditions of employment, and determines the workers’ rate and method of payment, as opposed to simply having the contractual right to control these things, then a finding of joint employment is likely. The analysis would lean further toward a finding of joint employment if the workers are economically dependent on the putative joint employer, meaning the workers rely on the employer for a substantial portion of their total income. Overall, it is strongly advisable for employers to thoroughly document all of these factors if they want to avoid a finding of joint employment.

The second takeaway is that the Proposed Rule identifies certain business practices which, by themselves, do not contribute to a finding of joint employment, including: (1) requiring anti-harassment policies or background checks through a contract for services; (2) providing an employee handbook to another employer; (3) operating as a franchisor; (4) imposing quality control standards; or (5) offering an association health plan (i.e., a health plan where multiple employers join to offer benefits to their workers).  This is with the apparent intent of giving subcontractors, staffing arrangements, and franchisees more clarity as to what practices will and will not contribute to a joint employment analysis.

Lastly, since the Proposed Rule applies to the FMLA as well as the FLSA, potential joint employers may now need to count jointly employed workers for the purposes of determining FMLA coverage.  If the FMLA applies to joint employers, then any job restoration obligations would apply to both employers.

As always, when in doubt, employers are encouraged to reach out to legal counsel for assistance.