The U.S. Department of Labor has issued a proposed rule that would establish a single nationwide framework for determining joint employer status 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 proposal sets out distinct standards for vertical and horizontal joint employment scenarios, signaling a meaningful shift for employers that rely on staffing agencies, franchise models, contractor relationships, or other shared workforce arrangements.
At the heart of the proposal is a four-factor vertical joint employer analysis. Under this test, the determination of joint employer status turns on whether a putative joint employer possesses authority to hire and fire, exercises supervision and control over work conditions, determines the rate and method of pay, and maintains employment records. Each factor is intended to capture practical indicia of control, and together they form the framework regulators would apply when assessing whether two or more entities share responsibility for a worker under the covered statutes.
For employers, the implications are significant. A finding of joint employer status can extend wage and hour liability under the FLSA, leave administration obligations under the FMLA, and recordkeeping and worker protection duties under the MSPA. Companies that engage contingent labor, operate franchise systems, or coordinate workforce arrangements with vendors should carefully evaluate how the four-factor vertical test, as well as the proposed horizontal analysis, may apply to their existing structures. Early review can help identify exposure points, inform contracting practices, and shape any responsive comments to the agency.
The comment window is short. Public comments must be submitted by 11:59 p.m. EDT on June 22, 2026. Employers and industry groups that wish to influence the final rule should prepare submissions promptly, focusing on operational realities, compliance burdens, and any unintended consequences the proposed framework may introduce. Documenting concrete examples and quantifiable impacts tends to be particularly persuasive in rulemaking proceedings of this scope.
This update is intended for general informational purposes only and does not constitute legal advice. Clients should consult counsel for guidance tailored to their specific workforce arrangements and compliance obligations.