DOL Proposes Unified Joint Employer Standard Under FLSA and Other Federal Laws
According to Construction Dive, the U.S. Department of Labor’s Wage and Hour Division announced on April 23 a proposed rule to streamline joint employer status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act.
What the Rule Would Change
The proposed rule would establish, in DOL’s words, “a single nationwide standard” that draws from federal court precedent and resolves inconsistencies among circuit courts, giving employers and employees “a clear, consistent understanding of when multiple employers are jointly responsible for protecting the wages and other rights of an employee.”
Acting Secretary of Labor Keith Sonderling framed the proposal as part of the Trump administration’s push to simplify compliance. “A clear standard on joint employment would give businesses more confidence to invest in partnerships, help employees understand their rights, and make the department’s investigations more efficient,” Sonderling said.
For determining vertical joint employment, the rule revives a four-factor balancing test: whether the company hires or fires the employee; supervises and controls the work schedule or conditions of employment to a substantial degree; determines the rate and method of payment; and maintains employment records. The rule also clarifies that horizontal joint employment requires a meaningful association between employers, and that sharing a vendor or operating as franchisees of the same franchisor alone is not enough to establish joint employer status. DOL last revised its joint employer regulations in 2021, when the Biden administration rescinded the first Trump administration’s rule.
What It Means for Subcontractors
- Review your staffing arrangements now. If your crews work alongside general contractors, labor brokers, or staffing agencies, those relationships may trigger joint employer status under the four-factor test. Understand which entity controls scheduling, pay, and hiring decisions.
- Document workforce controls clearly. The four-factor analysis puts a premium on who actually directs day-to-day labor. Contracts and on-site practices should consistently reflect the agreed division of supervisory responsibility.
- Vendor and franchisor relationships get a clearer pass. The proposed rule explicitly states that simply sharing a vendor or belonging to the same franchise network is not enough to establish joint employment, which reduces risk for subcontractors operating across multiple clients in the same supply chain.
- Watch the rulemaking timeline. This is a proposed rule, not a final one. A public comment period will follow. Field service companies should track the rule’s progress and consider submitting comments if their workforce model is affected.
- Compliance consistency across states becomes easier. A single nationwide standard reduces the patchwork risk for subcontractors operating across multiple states with workers placed through staffing firms or labor contractors.
