On April 22, 2026, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) issued a Proposed Rule to establish a uniform standard for joint employer status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Seasonal Agricultural Worker Protection Act (“Proposed Rule”). The Proposed Rule is the second attempt by the Trump Administration to establish a new joint employer liability rule. During the first Trump Administration, a proposed joint employer rule was issued and adopted; was legally challenged; and ultimately rescinded by the Biden Administration.
There are a number of significant provisions in the Proposed Rule, including the two types of potential joint employer liability: vertical joint employment and horizontal joint employment.
Vertical joint employment refers to unrelated entities. The Proposed Rule outlines the following four factor test in determining whether there is vertical joint employment: a) hires or fires the employee; b) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; c) determines the employee’s rate and method of payment; and d) maintains the employee’s employment records. It is important to note that as to factor b) in regard to “control”, the Proposed Rule provides that “a potential joint employer’s ability, power or reserved right to act in relation to the employee is relevant for determining joint employer status, but the potential joint employer’s actual exercise of control is more relevant than such ability, power or right.”
Horizontal joint employment refers to related entities. Per the Proposed Rule, entities are sufficiently associated or related to be considered a joint employer if: a) there is an arrangement between them to share an employee’s services; b) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or c) 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.
The Proposed Rule clarifies that the relevance of certain business types is excluded in determining joint employment, which include the following: a) certain contractual agreements related to health, safety, or legal compliance, including anti-harassment policies, background checks and workplace safety protocols; b) providing a sample employee handbook or other forms to another employer; c) offering an association health plan or association retirement plan to another employer or participating in such a plan with the employer; d) jointly participating in an apprenticeship program with another employer; e) operating as a franchisor or entering into a brand and supply agreement, or using a similar business model; and f) quality control standards to ensure the proposed quality of the work product, brand or business reputation.
Employers can submit comments on the Proposed Rule to the DOL. The deadline for comments is June 22, 2026.
The employment attorneys at Poyner Spruill will monitor the developments in regard to the Proposed Rule and provide updates in the future. If you have any questions about the Proposed Rule or other employment issues, the employment attorneys at Poyner Spruill are happy to assist.
