On September 30, 2025, the U.S. Department of Labor (DOL) issued an opinion letter describing when “horizontal” joint employment will require separate legal entities to be treated as a single employer for purposes of overtime under the Fair Labor Standards Act (FLSA).
The opinion letter involved employees who worked at a restaurant and a members-only club, both of which were located in the same hotel. After reviewing the facts pertinent to the employees’ work and the relationship between the entities, the DOL concluded that even if the restaurant and club are separate legal entities, the hours worked by employees at each establishment would need to be aggregated for purposes of FLSA compliance.
The DOL explained that separately incorporated entities may be considered a single employer under the principles of “horizontal” joint employment if they are “sufficiently associated” with respect to the employees. While there is no bright-line test, horizontal joint employment may be found where there is an arrangement between the employers to share an employee’s services. For example, if two retail establishments coordinate with each other over the pay or work schedule of the same cashier, they are likely to be considered joint employers of the cashier. In that scenario, if the cashier worked 30 hours for one establishment and 20 hours for the other establishment in the same workweek, the employee would be entitled to 10 hours of overtime because they worked a combined total of 50...
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