A new proposed rule from Department of Labor (DOL) would address joint employer status under the Fair Labor Standards Act (FLSA), and could have a wide-ranging impact on businesses and employees throughout the country.

The rule is aimed at clarifying when multiple businesses are considered “joint employers” under federal labor laws, a change that could significantly impact wage-and-hour compliance for employers and strengthen protections for workers.

Currently, different courts across the country use different tests to decide when two companies, such as a staffing agency and a client company, are both considered an employee’s “employer.”  The rule would make clear who is liable for all hours worked and any overtime owed and create one nationwide standard, replacing inconsistent court interpretations.

What is Joint Employer Status?

Under the FLSA, joint employers are jointly and severally liable for any wages, damages, and relief owed to an employee, and the total number of hours the employee worked each week for all joint employers is used to determine the employee’s entitlement to overtime pay.

Joint employment occurs when two or more employers share legal responsibility for the same employee, i.e., where each employer is jointly and severally responsible for ensuring that the employee receives all the benefits and protections they are owed under the law, according to the DOL.

Merely having multiple jobs does not establish that an employee is jointly employed by the employers that provide those jobs, the DOL states. Joint employment is also distinct from situations where an employee has jobs with nominally separate entities which are in fact a single entity and are thus a single employer responsible for ensuring the employee receives all the benefits and protections they are owed under the law, with respect to all jobs worked for the employer. For there to be joint employment, each employer must exist as a separate entity, according to the DOL.

What the New Rule Means for Employers and Employees

Under the proposal, if two companies or employers are considered joint employers, both can be held responsible for things like unpaid wages, overtime, and other violations, even if only one of them directly pays the worker. The DOL says the goal is to make the rules more consistent, reduce confusion, and ensure workers can recover unpaid wages even if one employer cannot pay. Employment attorneys say the rule could have real effects on how businesses structure their workforce.

Further, even though this proposal is meant to provide clarity, it could increase legal risk for companies that rely on staffing agencies, contractors, or layered employment arrangements. Employers may need to take a closer look at how their workers are managed and who could ultimately be responsible for wage and hour compliance.”

For employees, the new proposal is meant to create one consistent rule nationwide, and if finalized, the rule would apply to major labor laws covering minimum wage, overtime pay, family and medical leave, and protections for migrant and seasonal workers.

Comments on the proposed rule will be accepted until June 22, 2026. They can be electronically submitted via the Federal eRulemaking Portal (https://www.regulations.gov) to ensure timely receipt.

A knowledgeable employment attorney can help you gain an understanding of the unique difficulties each workplace conflict presents and work toward a solution that benefits you. Tully Rinckey attorneys have the experience to assist both employers and employees in achieving their objectives, regardless of the matter, which may include discrimination, sex harassment, or any other claim involving worker rights or employer responsibilities, including employee assessment or hiring practices. Call 8885294543 or contact us online today for a consultation.

Michael C. Fallings focuses his practice on federal sector labor and employment law. Michael has extensive experience litigating cases on behalf of employees at the U.S. Merit Systems Protection Board (MSPB), Equal Employment Opportunity Commission (EEOC), and in both state and federal courts. He also has experience negotiating settlement agreements on behalf of federal employees. Michael has received numerous awards, including the 2026 Lawdragon 500 Leading Litigators in America, LawDragon 500 the Next Generation (2024-25), Lawdragon 500 Leading Civil Rights & Plaintiff Employment Lawyers (2025), National Black Lawyers Top 40 under 40, and Super Lawyers Rising Star (2023).