On April 23, 2026, the Department of Labor’s (DOL) Wage and Hour Division issued a notice of proposed rulemaking (NPRM) addressing joint employer status under the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The proposed rule seeks to establish a consistent, nationwide standard for determining joint employer status, an area where federal and state courts, agencies and legislatures have long applied widely varying tests.
The comment period is open through June 22, 2026.
Background
Joint employer status determines when two or more entities share responsibility for a worker’s employment conditions and has significant implications for wage and hour obligations, FMLA leave administration and other compliance requirements. In January 2020, the DOL issued a final rule establishing a four-factor test to determine joint employer classification under the FLSA. It focused on direct control over hiring, supervision, pay and recordkeeping. That rule was subsequently partially vacated by a federal court, and the remaining provisions were rescinded by the Biden administration in July 2021, leaving employers without a regulatory standard since then.
What the Proposed Rule Would Do
The 2026 NPRM proposes to restore regulatory guidance on joint employer status while addressing the legal shortcomings identified by the court that vacated the 2020 rule. Key features of the proposed rule include:
- A unified standard across three statutes. The proposed rule would align joint employer analysis across the FLSA, FMLA and MSPA — three statutes that share the same underlying employment definitions.
- A retained four-factor test for vertical joint employment. The NPRM retains the same four-factor test from the 2020 rule, which includes whether the potential joint employer hires or fires the employee, supervises and controls work schedule or conditions of employment, determines the employee’s rate and method of payment, and maintains employment records. This test would be used to determine vertical joint employment, which is where an employee is “jointly employed by two or more employers that simultaneously benefit from the employee’s work.”
- Horizontal joint employment is largely unchanged. The proposed rule readopts the 2020 rule’s horizontal joint employment analysis, which addresses situations where an employee works separate hours for two associated employers in the same workweek. The proposal specifically notes that “if the employers are acting independently of each other and are disassociated with respect to the employment of the employee, each employer may disregard all work performed by the employee for the other employer in determining its own responsibilities under the FLSA.” On the other hand, it states that “if the employers are sufficiently associated with respect to the employment of the employee, they are joint employers and must aggregate the hours worked by the employee for each of them for purposes of determining compliance with the FLSA.”
- Reserved rights can be relevant, even without exercise. The proposed rule does not require that a potential joint employer actually exercise control to be classified as a joint employer. Actual exercise of control is considered more relevant than unexercised reserved rights, but the mere ability or authority to control may still be a factor in the analysis.
- Economic dependence is a secondary factor. The proposed rule permits economic dependence to be considered as a secondary factor where material and appropriate, though it is expressly not the ultimate question of the analysis.
- Location of work may now be considered. The 2020 rule included a “store-within-a-store” protection, providing that allowing another employer to operate on one’s premises did not affect joint employer status. The proposed rule does not readopt this provision, and identifies the location where work is performed as a potentially relevant additional factor. The DOL states that they are not readopting the 2020 provision because “many courts do not include a location-related factor in their joint employer analyses” and that “the location where work is performed may not be relevant in every case.”
What This Means for Higher Ed
The FLSA, FMLA and MSPA joint employer standard applies broadly to higher education institutions regardless of their public or private status. HR professionals should work with their institution’s legal counsel to understand the changes in this proposal.
CUPA-HR is reviewing the proposed rule and will keep members apprised of further updates.