DOL Proposes New Joint Employer Rule Defining Horizontal and Vertical Joint Employment Relationships
On April 22, 2026, the U.S. Department of Labor (DOL) issued a proposed rule that would establish a uniform standard 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 DOL’s proposal aims to bring greater uniformity, consistency, and transparency with respect to its enforcement actions under these statutes.
A finding of a joint employment relationship can significantly expand employer liability, as joint employers may each be held jointly and severally liable for wage-and-hour violations, leave obligations, and statutory compliance. Under the proposed rule, a vertical joint employment relationship exists where a worker is jointly employed by two or more employers that simultaneously benefit from the same work. A horizontal joint employment relationship exists where an employee works separate hours for two or more employers that are sufficiently associated with each other. The proposed rule identifies inconsistent legal precedent and the DOL’s own lack of interpretive guidance as core reasons for establishing a uniform analytical framework governing joint employment determinations.
To determine whether a vertical joint employment relationship exists, the DOL’s proposed rule examines whether the potential joint employer can:
- Hire or fire the employee;
- Supervise or control work schedules or conditions of employment to a substantial degree;
- Determine rate and method of pay; and
- Maintain employment records.
While no single factor is dispositive, finding all four factors in favor or against joint employment is substantially likely to establish the employer’s actual status. The rule also allows consideration of additional relevant factors for determining joint employer status, such as evidence of an employee’s economic dependance on the employer for work or whether an employee works at a location or facility that is owned or controlled by the potential joint employer.
With respect to determining horizontal joint employment relationships, employers are sufficiently associated where:
- There is an arrangement between employers to share the employee’s services;
- One employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or
- 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.
Under the proposed rule, a potential joint employer’s ability, power, or reserved right to act in relation to an employee is relevant, but the actual exercise of control is more relevant than a reserved right of control.
The proposed rule clarifies that business relationships that have little to do with the employment of specific employees—such as sharing a vendor or being franchises of the same franchisor—are alone insufficient to establish joint employment. The proposed rule also explains that certain common business practices cannot, on their own, establish a joint employment relationship. Some of these practices include:
- Requiring contractual compliance with legal obligations (e.g., compliance with anti-harassment policies);
- Providing sample employee policies or forms;
- Offering an association health plan or association retirement to the employer or participating in such a plan with the employer;
- Participating in joint apprenticeship programs with other employers;
- Maintaining brand standards in franchise relationships; or
- Conducting quality control or oversight typical of business relationships.
The proposed rule is currently undergoing a 60-day notice and comment period before a final regulation is issued. The comment period closes at 11:59 pm ET on June 22, 2026. Anyone who submits a comment (including duplicate comments) should understand and expect that comments, including any personal information provided, will become a matter of public record, and will be posted without change to www.regulations.gov.
This proposed rule has particularly important ramifications for employers engaging in potential joint employment relationships, such as staffing agencies, subcontractors, franchise models, or affiliated business structures. We will continue to monitor developments. Please contact your Miller Canfield attorneys if you would like to learn more about how this proposed rule may impact your organization.
