DOL Proposes New Joint-Employer Rule

The U.S. Department of Labor (DOL) has proposed a rule that could expand when two businesses are treated as a worker’s joint employers. The proposal would apply across the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). If finalized, the change could increase shared wage and hour and leave-related risk for companies that use staffing firms, subcontractors, or closely related affiliates.

What the proposed rule would change

• Use a four-factor test that looks at hiring and firing, supervision, pay control, and recordkeeping.
• Put more weight on what a company actually does in practice, not just what a contract says it can do.
• Cover both “vertical” arrangements (like staffing or subcontracting) and “horizontal” arrangements (related entities that share or shift workers).
• Keep certain common business practices from being treated as joint employment by themselves, such as brand standards, quality control, and legal or safety requirements.

Why business leaders should pay attention

Joint employment can lead to joint and several liability. In plain terms, the government can seek the full amount of back wages, damages, or other remedies from either business. The proposal also raises the stakes for affiliated companies, because hours may need to be combined for overtime and headcount rules may affect FMLA coverage.

What happens next

The proposal is open for public comment for 60 days. Companies that rely on third-party labor, franchises, or multi-entity structures may want to consider submitting data-driven comments before the deadline. Many employers will also watch closely for the final rule’s effective date and any guidance on how the DOL will enforce it.