The U.S. Department of Labor (DOL) has proposed a new rule clarifying when two or more entities may be considered joint employers under three different federal statutes, including the Fair Labor Standards Act (FLSA). The proposal signals a renewed focus on how business relationships can drive wage and hour liability.
Although framed as a clarification, the proposal highlights meaningful risk for organizations that rely on franchises, subcontractors, staffing firms, or affiliated entities to do business or deliver services. At the same time, it presents opportunities for employers to reassess how their operational practices align with both their legal strategy and their insurance protections before enforcement and litigation activity accelerates.
An evolving regulatory landscape
Last month, the DOL put forward a new proposal aimed at clarifying when two or more entities may be considered a “joint employer” under the FLSA, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act. Joint employment has long been relevant to various workplace laws, but the applicable standard has shifted repeatedly over the past decade, largely in response to changing presidential administrations and court challenges. The current proposal reflects an effort to restore clarity after years of shifting standards.
The modern debate over joint employment began in 2015, during the Obama administration, following a National Labor Relations Board (NLRB) decision that...
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