On April 22, 2026, the U.S. Department of Labor announced a Notice of Proposed Rulemaking (NPRM) to revise its analysis for assessing joint employer status under three federal wage and hour laws.  Specifically, the NPRM proposes to: (1) to implement regulatory guidance for determining joint employer status under the Fair Labor Standards Act (FLSA) at 29 CFR part 791; and (2) amend provisions in existing regulations implementing the Family and Medical Leave Act (FMLA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA) so that the proposed FLSA analysis would be used to determine joint employer status under those laws too.

In particular, the NPRM's proposed analysis would:

  • Set forth distinct standards for determining joint employer status in "vertical" and "horizontal" scenarios—a distinction that courts and the Department have long drawn.
  • Advise that horizontal joint employment exists when separate employers are sufficiently associated with respect to the employment of the same employee, but that business relationships which have little to do with the employment of specific employees—such as sharing a vendor or being franchisees of the same franchisor—are alone insufficient to establish joint employment.
  • Adopt a four-factor analysis for use in every case of potential vertical joint employment, examining whether the potential 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.
  • Explain that additional factors may be relevant in assessing vertical joint employment, but that a unanimous finding on the four factors in either direction would establish a "substantial likelihood" regarding whether an individual or entity is a joint employer with another.
  • Advise that "reserved control" may be considered but is less indicative of vertical joint employment than exercised control, consistent with the judicial focus on "economic reality" in FLSA employment disputes.
  • Exclude the consideration of factors that are relevant only in assessing whether a worker is an employee or independent contractor—specifically:
    1. Whether the employee is in a job that otherwise requires special skill, initiative, judgment, or foresight;
    2. Whether the employee has the opportunity for profit or loss based on his or her managerial skill; and
    3. Whether the employee invests in equipment or materials required for work or the employment of helpers.
  • Exclude the relevance of the following general business models and business practices when determining joint employment:
    1. certain contractual agreements related to health, safety, or legal compliance, including anti-harassment policies, background checks, and workplace safety protocols;
    2. providing a sample employee handbook or other forms to another employer;
    3. offering an association health plan or association retirement plan to another employer or participating in such a plan with the employer;
    4. jointly participating in an apprenticeship program with another employer;
    5. operating as a franchisor or entering into a brand and supply agreement, or using a similar business model; and
    6. quality control standards to ensure the consistent quality of the work product, brand, or business reputation.
  • Provide examples illustrating how the proposed analysis would apply in certain factual circumstances.

The Department believes that its proposal would reduce compliance and litigation costs, improve the Department's ability to enforce the law, and help workers to better understand their rights and available remedies. At the same time, the Department believes the proposed rule would increase the prevalence of beneficial business practices and promote greater uniformity in the analysis applied by courts—a win-win outcome for all interested parties.

The Department encourages interested parties to submit comments on this proposal.The NPRM's 60-day 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 the comment, including any personal information provided, will become a matter of public record and will be posted without change to www.regulations.gov. The Department posts comments gathered and submitted by a third-party organization as a group under a single document ID number on www.regulations.gov, including any personal information provided.

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