DOL Announces New Proposed Guidance for Joint Employer Liability Under the FLSA, FMLA, AND MSPA 

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On April 22, 2026, the U.S. Department of Labor Wage and Hour Division issued a Notice of Proposed Rulemaking, setting forth new standards for determining joint employer status under the Fair Labor Standards Act (FLSA), the Family Medical Leave Act (FMLA), and the Migrant Seasonal Agricultural Workers Protection Act (MSPA). The proposed rule, which ends the DOL’s five-year silence on the issue of joint employment, aims to align and provide regulatory clarity to the various joint employment standards currently applied by state and federal courts. The rule purports to “reduce compliance burdens for employers” and focuses primarily on two key frameworks: “vertical” and “horizontal” joint employment.   

1. Vertical Joint Employment 

Vertical joint employment arises when an employee is “jointly employed by two or more employers that simultaneously benefit from the employee’s work.” The proposed rule outlines a four-factor test, requiring consideration of the following: ability to (1) hire or fire employees; (2) supervise and control the employee’s work schedule or conditions of employment to a substantial degree; (3) determine the employee’s rate of pay and method of payment; and (4) maintain the employee’s employment records. In addition, under the proposed rule, certain factors such as whether the employee has a  “continuous or repeated relationship” with the potential joint employer, and whether the employee “works at location or facility that is owned or controlled by the potential joint employer,” may also be considered.  

Notably, the rule explicitly states that factors such as whether the employee (1) is in a job that requires skill, initiative, judgment, or foresight; (2) has the opportunity for profit or loss based on managerial skill; and (3) invests in equipment or materials required for work, should not be considered, as those factors relate exclusively to the employee-independent contractor classification and not the joint employer analysis. 

2. Horizontal Joint Employment. 

Horizontal joint employment exists when two employers are “sufficiently associated” with respect to a specific employee. This type of joint employment typically involves situations in which an employee works separate hours for two or more employers within the same workweek. Under the horizontal framework, if employers are sufficiently related to an employee, the employers are required to aggregate the employee’s total work hours. Horizontal joint employment is generally established under the following circumstances: (1) where there is an arrangement between the two employers to share the employee’s services; (2) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (3) the employer 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 rule clarifies, however, that general business relationships between two employers, such as sharing the same vendor, or being a franchisee of the same franchisor, will not trigger horizontal joint employment. The key consideration for horizontal joint employment is whether the employers’ relationship develops as result of their connection to a specific employee.  

Employer Takeaways:  

If adopted, employers in industries such as agriculture, manufacturing, and healthcare, as well as employers that rely heavily on staffing agency support, should be mindful of their possible exposure to liability under this employment framework. In addition, while the rule distinguishes the employee/independent contractor classification from the joint employment analysis, employers must carefully consider whether their workers are, in fact, employees, to confirm that the joint employment analysis is applicable. Employers should take proactive steps to evaluate their business relationships, including by conducting a review of relevant policies and employment practices.  

The proposed rule is subject to a 60-day comment period which is set to conclude on June 22, 2026. The Maynard Nexsen Labor and Employment team is closely monitoring this rule and its developments and stands ready to provide guidance and assist in the review of employment policies should the rule become final.