Joint‑employer rule proposal

The U.S. Labor Department moved to narrow when one business can be held liable for another company’s workers under federal wage and leave laws. (dol.gov) The proposal, released April 22 and published in the Federal Register on April 23, would set one nationwide test for joint-employer status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. The public comment period runs 60 days, through June 22, 2026. (federalregister.gov) Under the draft, a company would generally be a joint employer only if it directly or indirectly controls another employer’s workers, including power over hiring, firing, pay, scheduling, supervision, or employment records. The department said the rule is meant to replace what it called a lack of regulatory guidance since 2021. (dol.gov) Joint-employer rules decide when a larger company can be on the hook for unpaid wages or leave violations involving contractors, staffing firms, franchisees, or labor suppliers. That question matters in franchise systems, warehouse logistics, janitorial contracts, hospitality, and farm labor, where one company often sets terms while another signs the paycheck. (federalregister.gov) The new proposal would pull the Labor Department closer to the narrower approach it adopted in January 2020 during President Donald Trump’s first term. A federal judge later struck down key parts of that Fair Labor Standards Act rule, and the Biden administration rescinded it in 2021. (federalregister.gov) Business groups backed the move within hours. Marc Freedman, the U.S. Chamber of Commerce’s vice president for employment policy, said the proposal would “restore certainty for employers” and reverse “Biden-era policy.” (uschamber.com) Worker advocates have argued the earlier Trump rule made wage enforcement harder in fissured workplaces where lead companies outsource labor. The Economic Policy Institute said in 2020 that the first-term rule would make wage theft cases harder to pursue and could cost workers more than $1 billion a year. (whbl.com) The department said the draft also aims to reduce conflicting court rulings by using a single framework across three statutes instead of separate tests. Bloomberg Law reported the agency is pitching the change as a uniform national standard for wage, leave, and migrant-worker cases. (news.bloomberglaw.com) If the rule is finalized, companies that use franchise models or layered contractor networks may face less automatic exposure, but the proposal still turns on evidence of actual control. That keeps contracts, supervision practices, audits, and recordkeeping at the center of any future Labor Department investigation. (federalregister.gov)