On April 22, 2026, the United States Department of Labor announced a Notice of Proposed Rulemaking,[1] which would revise the Department’s joint employer analysis under the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

Joint employment occurs when multiple, purportedly separate employers share legal responsibility for the same employee. Under this scenario each employer is jointly and severally responsible for ensuring that the employee receives all the benefits and protections owed under the law. This dynamic differs from that of an employee who has two unrelated jobs, such as a public school English teacher who moonlights as a ballet teacher at a private dance studio.

There are two categories of joint employment: “horizontal” and “vertical.” “Horizontal” joint employment relationships involve an employee working separate hours for multiple employers in the same workweek, and the issue turns on whether the employers are jointly oversee the terms and conditions of employment as to jointly employ him/her. By comparison, “vertical” joint employment involves an employee who is jointly employed by multiple employers that simultaneously benefit from the employee’s work, and the issue is whether another person or entity that also benefits from the employee’s work is the employee’s joint employer.

The proposed analysis would establish separate standards for determining joint employer status in “vertical” and “horizontal” scenarios and provide examples demonstrating the application of the proposed analysis. For horizontal joint employment, the rule would establish such a relationship exists when separate employers are sufficiently associated with respect to the employment of the same employee. Conversely, business relationships which have little to do with the employment of the specific employee are insufficient to establish joint employment on their own.

For vertical joint employment, the rule would adopt a four-factor analysis to evaluate whether the potential joint employer:

1. hires or fires the employee;
2. supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
3. determines the employee’s rate and method of payment; and
4. maintains the employee’s employment records.

While additional factors could be relevant in assessing vertical joint employment, a unanimous finding on the four factors in either direction would establish a “substantial likelihood” regarding whether an individual or entity is a joint employer with another. Consistent with  courts’ focus on “economic reality” in FLSA employment disputes, the proposed rule would clarify that “exercised control,” or actual control, is more indicative of vertical joint employment than “reserved control,” or theoretical control.

The Department anticipates the proposed rule would reduce litigation and compliance costs and facilitate uniformity in analysis across jurisdictions.[2] The comment period on the proposed rule ends on June 22, 2026.

Considerations for Employers

While the proposed rule undergoes the comment period, employers should examine their relationships with other entities, irrespective of whether the companies are nominally separate or not, to determine who controls the terms and conditions of their employees’ day-to-day work. Because federal law normally serves as a floor for employee rights, employers also should examine the state laws where they operate to determine whether such states impose a more relaxed standard for joint employment than the current or proposed federal rule. Taft will continue to monitor the proposed rule and advise of any developments on this issue.

Contact Taft’s Employment and Labor Relations team with any questions regarding this proposed rule.

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[1] 2026-07959.pdf

[2]Notice of Proposed Rule: Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act, RIN 1235-AA48 | U.S. Department of Labor)