Joint-employer rule proposed

The Labor Department has proposed a rule that would make it harder to treat a parent company, franchisor, or contractor as a worker’s second employer under three federal labor laws. (dol.gov) The proposal was announced April 22 and published in the Federal Register on April 23. It would apply one joint-employer test across the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act, with public comments due by June 22, 2026. (federalregister.gov) Joint employment means two businesses can share legal responsibility for the same worker, including wage, leave, or farm-labor obligations. The Labor Department says that does not arise just because companies share a vendor or operate in the same franchise system. (dol.gov) For “vertical” cases, where one company uses another company’s workers, the draft centers on four questions: who hires or fires, who substantially controls schedules or working conditions, who sets pay, and who keeps employment records. The department said exercised control counts more than control a company merely reserves on paper. (dol.gov) That matters for franchising, staffing, and subcontracting, where workers may wear one company’s logo but get hired and paid by another. Under the Fair Labor Standards Act, joint employers can be jointly and severally liable for minimum wage and overtime violations, which makes the threshold a high-stakes question for both workers and brands. (dol.gov; dol.gov) The proposal also reopens a fight that has swung with each administration. The Labor Department issued a narrower joint-employer rule in January 2020, and the current proposal says the agency has had no regulatory guidance on the Fair Labor Standards Act standard since 2021. (federalregister.gov; federalregister.gov) A related fight at the National Labor Relations Board moved in the same direction this year. On February 27, 2026, the board formally restored its 2020 joint-employer rule after a federal court in Texas vacated the board’s 2023 version on March 8, 2024. (public-inspection.federalregister.gov) Business groups backed the Labor Department’s move within hours. The U.S. Chamber of Commerce said the draft would “restore certainty for employers,” and the International Franchise Association said it would give America’s 832,000 franchised businesses a clearer nationwide standard. (uschamber.com; franchise.org) Worker advocates have long argued the opposite approach, saying joint-employer rules are needed so companies cannot avoid responsibility by pushing work through temp firms, subcontractors, or franchisees. The National Employment Law Project says the doctrine keeps corporations that use outsourced labor accountable for labor standards. (nelp.org) The next step is procedural, not immediate. The rule is only a proposal, and the Labor Department will take comments until June 22 before deciding whether to issue a final version that could reshape who pays when wage, leave, or farmworker violations happen. (federalregister.gov)