Dive Brief:
- The U.S. Department of Labor advanced last week a proposed joint employer rule implementing laws such as the Fair Labor Standards Act and the Family and Medical Leave Act, according to a notice published by the White House Office of Management and Budget.
- DOL provided no additional details on the proposal, which OMB indicated was received March 16. The department previewed the rule last year as part of its Spring 2025 regulatory agenda, stating that the proposal would aim to “promote greater uniformity among court decisions nationwide.”
- The department last revised its joint employer regulations in 2021, when the Biden administration rescinded a rule issued during President Donald Trump’s first administration. Employers should expect the forthcoming rule to be a business-friendly regulation that will result in fewer joint employment relationships, Keith Kopplin, co-chair of Ogletree Deakins’ wage and hour practice group, said in an email.
Dive Insight:
DOL’s joint employer regulations address scenarios in which two or more employers share control of one employee’s terms and conditions of employment — and therefore responsibility for compliance with the FLSA, FMLA and Migrant and Seasonal Agricultural Worker Protection Act.
The exact definition of what constitutes a joint employer has shifted over time. The first Trump administration’s since-rescinded joint employer rule adopted a four-factor balancing test for evaluating potential joint employer relationships. The test asked whether an entity 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; and maintains the employee’s employment records.
The anticipated new rule may be especially key for employees in “vertical” joint employment scenarios, Kopplin said, which describes those in which workers are employed by one entity but assigned to work for another entity.
DOL’s rule is likely to focus on whether a purported joint employer actually exercises direct and immediate control over a worker’s employment terms and conditions while deemphasizing those scenarios where an entity has only potential control that is contractually or theoretically possible, according to Kopplin.
Such an approach would be similar to that taken by the National Labor Relations Board in its latest joint employer rule. Issued last month, NLRB’s rule limits joint employer status to those entities that possess and exercise “substantial direct and immediate control” over essential terms for purposes of the National Labor Relations Act.
Employers should keep in mind that regulations like the eventual final rule receive less deference from federal courts than statutes like the FLSA, Kopplin said, which may be important to consider in the event that the proposal is challenged in court.