Washington — The Department of Labor Wage and Hour Division is proposing to clarify its definition of two types of joint employment under three federal laws.
WHD published a notice of proposed rulemaking on April 23 titled, “Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act.”
The deadline to comment on the proposal is June 22.
The proposal is separate from the National Labor Relations Act’s definition of joint employer, which has undergone a recent set of back-and-forth changes. In October 2023, the National Labor Relations Board finalized a revised rule on the NLRA’s joint employer definition, but that was struck down by a federal court in 2024.
WHD’s proposed rule for the three laws features definitions for “horizontal joint employment” and “vertical joint employment.”
Horizontal: When an employee works separate hours for two or more employers in the same week.
Vertical: When an employee is “jointly employed” by two or more employers that “simultaneously benefit” from the employee’s work.
The main factors to assess horizontal joint employment:
- An arrangement between employers to share the employee’s services
- One employer who acts directly or indirectly in the interest of the other employer in relation to the employee
- Employers 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.
“However, the NPRM proposes to clarify that business relationships which have little to do with the employment of specific employees – such as sharing a vendor or being franchisees of the same franchisor – are alone insufficient to establish joint employment,” DOL says in a fact sheet accompanying the proposed rule.
In potential cases of vertical joint employment, WHD proposes the use of four factors: The joint employer:
- Hires or fires the employee.
- Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree.
- Determines the employee’s rate and method of payment.
- Maintains the employee’s employment records.
“The rule we propose today would deliver much-needed regulatory clarity in the face of divergent judicial precedent throughout federal courts of appeals,” WHD Administrator Andrew Rogers said in an April 22 press release. “Clear guidance strengthens worker protections because it ensures that employees receive all wages and benefits they are owed, even if one employer is unable or unwilling to pay.
“The proposal would also reduce compliance and litigation costs for employers while helping WHD investigators identify what is and is not a joint employment relationship.”
