If you use a staffing agency, farm labor contractor, or PEO to supply workers, this proposal could make you liable for their wage and hour violations, even if you never controlled how they were paid.
On April 23, 2026, the U.S. Department of Labor published a notice of proposed rulemaking (RIN 1235-AA48) that would establish, for the first time, a single unified standard for determining “joint employer” status across three separate federal laws: the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The public comment period closed June 22, 2026. The rule has not been finalized, but it’s past comment, so employers should treat it as something that could take effect on short notice, not a distant hypothetical.
What “Joint Employer” Means, and Why It Matters
When two businesses are both considered “joint employers” of the same worker, both can be held liable for wage and hour violations, overtime miscalculations, and recordkeeping failures, even if only one of them actually cut the paycheck.
This is exactly the kind of issue I saw repeatedly as a WHD investigator: a grower using a farm labor contractor (FLC), a restaurant using a staffing agency for banquet staff, a general contractor using subcontracted crews. When the contractor underpays workers or misses overtime, DOL doesn’t stop at the contractor. If the businesses using that labor are joint employers, they’re on the hook too.
The Proposed Standard: Two Tests, Not One
The proposed rule distinguishes between two kinds of joint employment:
Vertical joint employment (the FLC/staffing agency scenario): One employer contracts with another to supply workers, but a third party also benefits from and directs that work. The proposal uses a four-factor test focused on whether the potential joint employer actually exercises control:
- Hiring or firing the employee
- Supervising and controlling work schedules or conditions of employment
- Determining the rate and method of pay
- Maintaining employment records
Horizontal joint employment: Two or more employers are “sufficiently associated” with each other with respect to the same employee, for example, two related businesses sharing staff or management. This test looks at the degree of association and control between the employers themselves, not just their control over the worker.
Notably, the proposal readopts a scaled-back version of the 2020 joint-employer rule and applies it uniformly across FLSA, FMLA, and MSPA for the first time. Previously, each statute could be interpreted differently, which created real uncertainty for employers operating across state and program lines.
Why This Matters More If You Touch H-2A, H-2B, or MSPA-Covered Work
This proposal isn’t abstract for agricultural employers, staffing agencies, and companies that rely on labor contractors. MSPA already carries its own joint employer exposure for growers and farm labor contractors, and this rule would formalize a single test to apply it by. If you:
- Use a farm labor contractor (FLC) to supply H-2A workers
- Staff seasonal or peak-season positions through a staffing agency (including H-2B placements)
- Operate as a general contractor with subcontracted crews
- Share management, scheduling, or payroll functions with a related business
…you should be paying attention to how this rule finalizes, because it directly determines whether your business shares liability for a contractor’s wage and hour mistakes.
What Employers Should Do Now
Review your contracts. Vendor and staffing agreements should clearly define who controls hiring, firing, scheduling, pay rates, and recordkeeping. Under the proposed four-factor test, the party who actually exercises that control is the one exposed, so contract language that doesn’t match operational reality won’t protect you.
Audit actual practices, not just paperwork. If your contract says the staffing agency controls scheduling, but your on-site manager is the one setting shifts, that’s the kind of gap DOL investigators look for first.
Map your labor supply chain. List every FLC, staffing agency, and subcontractor relationship your business relies on. For each one, note who controls the four factors above. This is the same exercise I ran as an investigator when determining joint employer status, and it’s far better to run it on your own terms than under audit.
Watch for the final rule. A proposed rule can change in response to comments before it’s finalized. Don’t restructure contracts around the current draft until the final language is published, but do use this window to get your documentation in order.
Get ahead of it with a compliance review. If your business relies on contracted or staffed labor in agriculture, hospitality, or construction, a wage and hour review now, before this rule is finalized, is far cheaper than sorting out shared liability during a DOL investigation.
Bottom Line
This proposal would be the first time FLSA, FMLA, and MSPA share one joint-employer test, and it lands squarely on the businesses that rely on staffing agencies, farm labor contractors, and subcontractors to get work done. As a former DOL Wage & Hour Investigator, I can tell you that joint employer determinations are fact-specific and contract language alone won’t save you if actual practice says otherwise. The businesses that come out ahead are the ones that map their labor relationships now, not after a complaint is filed.
If you’re not sure whether your staffing, farm labor, or subcontracting relationships would create joint employer exposure under this proposal, a compliance review can walk through your specific contracts and practices.
Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Wage and hour laws vary by state and change frequently. Consult a qualified professional regarding your specific situation before making compliance decisions.
