Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act

Federal RegisterApr 23, 2026

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DEPARTMENT OF LABOR

Wage and Hour Division

29 CFR Parts 500, 780, 791, and 825

[Docket No. WHD-2026-0067]

RIN 1235-AA48

Joint Employer Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act

AGENCY:

Wage and Hour Division, Department of Labor.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

Since 2021, the Department has not provided any regulatory guidance addressing joint employer status under the Fair Labor Standards Act (FLSA or Act) for the benefit of workers, employers, or its enforcement personnel. In this rulemaking, the Department proposes to clarify how to determine joint employer status under the FLSA in Part 791 of Title 29, where its joint employer regulations were located prior to 2021. Additionally, the Department is also proposing to amend provisions in its regulations implementing the Family and Medical Leave Act (FMLA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA) to provide that joint employer status under those laws be determined using the Department's FLSA analysis, as the FMLA and MSPA both incorporate the FLSA's employment definitions. This rulemaking is intended to provide clarity and a measure of uniformity for employers and employees in an area of the law where components of legislative, executive, and judicial branches—at both the federal and state levels—have presented widely varying tests and standards. In addition, the proposed rule offers a nationwide standard for use by the Department's investigators and law enforcement personnel that would not only ensure the evenhanded application of the Act in matters that often cross state and circuit lines but also preserve core consistency with the wide variety of potentially relevant judicial frameworks. The proposed rule intends to marshal the commonality between those approaches closest to the statute as construed by the courts and, in so doing, simplify the Department's enforcement of the law, reduce litigation, and provide a reliable and uniform analysis for workers and employers that ultimately applies and complements the core commonality between the various tests applied by the federal courts.

DATES:

Interested persons are invited to submit written comments on this notice of proposed rulemaking (NPRM). Comments must be received on or before June 22, 2026.

ADDRESSES:

You may submit comments, identified by Regulatory Information Number (RIN) 1235-AA48, by either of the following methods:

•

Electronic Comments:

Submit comments through the Federal eRulemaking Portal at

https://www.regulations.gov.

Follow the instructions for submitting comments.

•

Mail:

Address written submissions to: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210.

Instructions:

Response to this NPRM is voluntary. The Department requests that no business proprietary information, copyrighted information, or personally identifiable information be submitted in response to this NPRM. Commenters submitting file attachments on

https://www.regulations.gov

are advised that uploading text-recognized documents—

i.e.,

documents in a native file format or documents which have undergone optical character recognition (OCR)—enable staff at the Department to more easily search and retrieve specific content included in your comment for consideration.

Anyone who submits a comment (including duplicate comments) should understand and expect that the comment, including any personal information provided, will become a matter of public record and will be posted without change to

https://www.regulations.gov.

The Department posts comments gathered and submitted by a third-party organization as a group under a single document ID number on

https://www.regulations.gov.

All comments must be received by 11:59 p.m. ET on June 22, 2026, for consideration in this rulemaking; comments received after the comment period closes will not be considered.

The Department strongly recommends that commenters submit their comments electronically via

https://www.regulations.gov

to ensure timely receipt prior to the close of the comment period, as the Department continues to experience delays in the receipt of mail. Please submit only one copy of your comments by only one method.

Docket:

For access to the docket to read background documents or comments, go to the Federal eRulemaking Portal at

https://www.regulations.gov.

In accordance with 5 U.S.C. 553(b)(4), a summary of this rule may also be found at

https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

Daniel Navarrete, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division (WHD), U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Alternative formats are available upon request by calling 1-866-487-9243. If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.

Questions of interpretation or enforcement of the agency's existing regulations may be directed to the nearest WHD district office. Locate the nearest office by calling the WHD's toll-free help line at (866) 4US-WAGE ((866) 487-9243) between 8 a.m. and 5 p.m. in your local time zone, or log onto WHD's website at

https://www.dol.gov/agencies/whd/contact/local-offices

for a nationwide listing of WHD district and area offices.

SUPPLEMENTARY INFORMATION:

I. Background

A. Relevant FLSA, FMLA, and MSPA Statutory Definitions

Enacted in 1938, the FLSA requires that, among other things, covered employers pay their nonexempt employees at least the federal minimum wage for every hour worked and overtime pay for every hour worked in excess of 40 in a workweek, and it mandates that employers keep certain records regarding their employees.

Section 3(d) of the Act defines “employer” to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee.”

Section 3(e) generally defines “employee” to mean “any individual employed by an employer”

and identifies certain specific groups of workers who are not “employees” for purposes of the FLSA.

Finally, section 3(g) defines “employ” to “include[ ] to suffer or permit to work.”

See

29 U.S.C. 206(a) (minimum wage requirement), 207(a) (overtime pay requirement), 211(c) (recordkeeping requirements).

29 U.S.C. 203(d).

29 U.S.C. 203(e)(1).

29 U.S.C. 203(e)(2)-(5).

29 U.S.C. 203(g).

Congress enacted MSPA in 1983 to protect migrant and seasonal agricultural workers by establishing employment standards related to wages, housing, transportation, disclosures,

and recordkeeping.

Agricultural employers, agricultural associations, and farm labor contractors (as those terms are defined in MSPA) must comply with such applicable standards in their employment of migrant and seasonal agricultural workers.

MSPA also requires farm labor contractors to register with the Department and obtain a certificate of registration.

It is a violation of MSPA to threaten, discharge, or in any manner discriminate against any migrant or seasonal agricultural worker because such worker, with just cause, files a complaint, institutes a proceeding, testifies or is about to testify in a proceeding, or exercises any right under MSPA.

MSPA adopts the FLSA's definition of “employ.”

See generally

29 U.S.C. 1801,

et seq.

See

29 U.S.C. 1821-1823, 1831-32, 1841-1844.

See

29 U.S.C. 1811-1815.

29 U.S.C. 1855(a).

29 U.S.C. 1802(5) (“The term `employ' has the meaning given such term under [the FLSA, 29 U.S.C. 203(g)].”).

The FMLA was enacted in 1993. It entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons while continuing group health insurance coverage under the same terms and conditions as if the employee had not taken leave.

Eligible employees who take such leave must generally be restored to the same or an equivalent position when they return to work after FMLA leave.

An employer cannot interfere with, restrain, or deny an employee's exercise of or attempt to exercise any rights under the FMLA.

The FMLA adopts the FLSA's definitions of “employ” and “employee.”

See

29 U.S.C. 2611-2614.

See

29 U.S.C. 2614(a)(1)-(2).

See

29 U.S.C. 2615.

29 U.S.C. 2611(3) (providing that the terms “employ” and “employee” for purposes of the FMLA have the same meanings given such terms in 29 U.S.C. 203(e) and (g)). The FMLA has its own definitions for whether an employee is “eligible” for FMLA leave and whether his or her employer is covered by the FMLA.

See

29 U.S.C. 2611(2), (4).

B. Early Guidance and Regulations Regarding FLSA Joint Employment

A year after the FLSA's enactment, WHD issued Interpretative Bulletin Number 13 in July 1939 addressing, among other topics, whether two or more companies could be jointly and severally liable for a single employee's hours worked under the FLSA.

The Bulletin acknowledged the possibility of what we consider today as joint employer liability and offered an illustration where two companies arranged “to employ a common watchman” who had “the duty of watching the property of both companies concurrently for a specified number of hours each night.”

The Bulletin concluded that the companies “are not each required to pay the minimum rate required under the statute for all hours worked by the watchman . . . but . . . should be considered as a joint employer for purposes of the [FLSA].”

This scenario—where an employee is jointly employed by two or more employers that simultaneously benefit from the employee's work—is understood today as vertical joint employment.

Interpretative Bulletin No. 13, “Hours Worked: Determination of Hours for Which Employees are Entitled to Compensation Under the Fair Labor Standards Act of 1938,” ¶¶ 16-17. Shortly thereafter, WHD revised other portions of the Bulletin that are not pertinent here.

Id.

¶ 16.

Id.

See, e.g., Clifton

Famous Bourbon Mgmt. Grp., Inc.,

762 F. Supp. 3d 480, 496 n.125 (E.D. La. 2025).

The Bulletin provided a second example of an employee who works 40 hours for company A and 15 hours for company B during the same workweek.

The Bulletin explained that if the two companies are “acting entirely independently of each other with respect to the employment of the particular employee,” they are not joint employers and may “disregard all work performed by the employee for the other company” in determining their obligations to the employee under the FLSA for that workweek.

On the other hand, if “the employment by A is not completely disassociated from the employment by B,” they are joint employers and must consider the hours worked for both as a whole to determine their obligations to the employee under the FLSA for that workweek.

This scenario—where an employee works separate hours for two (or more) employers in the same workweek that are sufficiently associated with each other with respect to the employment of the employee—is understood today as horizontal joint employment.

Interpretative Bulletin No. 13, ¶ 17.

Id.

See supra

fn.18.

The Bulletin concluded by saying that, “at least in the following situations, an employer will be considered as acting in the interest of another employer in relation to an employee: If the employers make an arrangement for the interchange of employees or if one company controls, is controlled by, or is under common control with, directly or indirectly, the other company.”

See

29 CFR part 791 (1958 or 1959);

see also

Interpretative Bulletin No. 13, ¶ 17.

In 1958, the Department published regulations that expounded on the concepts WHD had set forth in Interpretative Bulletin No. 13.

Those regulations explained that there is joint employment under the FLSA and that the determination “depends upon all the facts in the particular case.”

They further explained that two or more employers that “are acting entirely independently of each other and are completely disassociated” with respect to the employee's employment are not joint employers, but joint employment exists if “employment by one employer is not completely disassociated from employment by the other employer(s).”

The regulations also advised that, “[w]here the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek,” the employers are joint employers in situations such as: (1) where there is an arrangement between the employers to share the employee's services, as, for example, to interchange employees; (2) where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or (3) where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.

Joint Employment Relationship under Fair Labor Standards Act of 1938, 23 FR 5905 (Aug. 5, 1958) (promulgating 29 CFR part 791).

29 CFR 791.2(a) (1958).

Id.

29 CFR 791.2(b) (1958) (footnotes omitted).

In 1961, the Department amended a footnote in those regulations to clarify that a joint employer is also jointly liable for overtime pay.

Nearly 60 years passed before the Department amended and updated Part 791 in 2020. However, in 1973, the Department did promulgate regulations addressing joint employment in certain agricultural contexts that remain in effect today.

Specifically, subsection 780.305(c) provides that “[a] farmer whose crops are harvested by an independent

contractor is considered to be a joint employer with the contractor who supplies the harvest hands if the farmer has the power to direct, control or supervise the work, or to determine the pay rates or method of payment for the harvest hands” (citing 29 CFR 780.331). Also, subsection 780.331(d) provides that “[w]hether or not a labor contractor or crew leader is found to be a bona fide independent contractor, his employees are considered jointly employed by him and the farmer who is using their labor if the farmer has the power to direct, control or supervise the work, or to determine the pay rates or method of payment” (citing cases).

Miscellaneous Amendments, 26 FR 7730, 7732 (Aug. 18, 1961).

Clarification of Employment Status of Certain Agricultural Labor, 38 FR 27520-21 (Oct. 4, 1973) (adding 29 CFR 780.305(c) and revising 29 CFR 780.331(d)).

C. Regulations Regarding FMLA and MSPA Joint Employment

1. FMLA Regulations

The Department's FMLA regulations define various terms under the FMLA, and consistent with the FMLA's adoption of the FLSA's statutory definitions, define “employ” to mean “to suffer or permit to work” and “employee” to generally mean “any individual employed by an employer.”

The regulations also address joint employment under the FMLA, providing: “Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers, and facilities.”

The regulations then restate, almost verbatim, the three joint employment situations identified in the 1958 regulation.

The FMLA regulations add: “A determination of whether or not a joint employment relationship exists is not determined by the application of any single criterion, but rather the entire relationship is to be viewed in its totality.”

29 CFR 825.102.

29 CFR 825.106(a).

Id.; see supra

n. 24.

29 CFR 825.106(b)(1).

Where joint employment exists, the FMLA regulations clarify that employees who are jointly employed by two or more employers must be counted by all joint employers in determining employer coverage and employee eligibility under the FMLA.

However, only an employee's “primary employer” is responsible for giving required notices to the employee, providing FMLA leave, and maintaining health benefits.

Job restoration is the primary responsibility of the primary employer, while a secondary employer would be responsible for accepting an employee returning from FMLA leave in certain circumstances.

See

29 CFR 29 CFR 825.106(d). Among other coverage requirements, “eligible employees” covered by the FMLA must work at a location where their employer has at least 50 employees within a 75-mile radius.

See

29 U.S.C. 2611(2)(B)(ii).

See

29 CFR 825.106(c).

See

29 CFR 825.106(e);

see also

The Family and Medical Leave Act of 1993, Final Rule, 60 FR 2180-01, 2183 (Jan. 6, 1995).

Finally, the regulations provide FMLA-specific guidance for the joint employer status of “temporary placement agencies” and “Professional Employer Organizations (PEOs),” which are described as companies that “[contract] with client employers to perform administrative functions such as payroll, benefits, regulatory paperwork, and updating employment policies.”

When joint employment exists in a scenario involving a temporary placement agency, “the placement agency most commonly would be the primary employer.”

By contrast, where a PEO is a joint employer, “the client employer most commonly would be the primary employer.”

29 CFR 825.106(b)(2).

29 CFR 825.106(c).

Id.

The Department's initial FMLA regulations (promulgated in an Interim Final Rule in 1993 and which the Department applied through 1995) had set forth the following factors to determine joint employment: (1) the nature and degree of control of the workers; (2) the degree of supervision, direct or indirect, of the work; (3) the power to determine the pay rates or the methods of payment of the workers; (4) the right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers; and (5) preparation of the payroll and payment of wages.

The Family and Medical Leave Act of 1993, Interim Final Rule, 58 FR 31794, 31814 (§ 825.106(a)(1)-(5)) (June 4, 1993).

2. MSPA Regulations

Shortly after Congress enacted MSPA in 1983, the Department issued regulations that included factors for determining joint employer status under the statute. They were: (A) the nature and degree of control of the workers; (B) the degree of supervision, direct or indirect, of the work; (C) the power to determine the pay rates or the methods of payment of the workers; (D) the right, directly or indirectly, to hire, fire, or modify the employment conditions of the workers; and (E) preparation of payroll and the payment of wages.

WHD and the Department applied these factors between 1983 and 1997.

Migrant and Seasonal Agricultural Worker Protection Regulations, Final Rule, 48 FR 36736-01, 36745 (§ 500.20(h)(4)(ii)(A)-(E)) (Aug. 12, 1983).

In 1997, the Department's revised its MSPA regulations that address joint employment, adopting the framework it applies today.

These regulations provide that “the definition of the term

employ

includes the

joint employment

principles applicable under the Fair Labor Standards Act,”

and that “[

]

oint employment

under the Fair Labor Standards Act is joint employment under the MSPA.”

Where joint employment exists, each joint employer must ensure that the employee receives all employment-related rights granted by MSPA, such as accurate and timely disclosure of the terms and conditions of employment, written payroll records, and payment of wages when due.

These employer responsibilities need only be carried out by one joint employer, but the failure to provide an employee with any of these required protections will result in joint liability for all joint employers.

Migrant and Seasonal Agricultural Worker Protection Act, Final Rule, 62 FR 11734 (Mar. 12, 1997).

29 CFR 500.20(h)(5).

29 CFR 500.20(h)(5)(i).

See

WHD Fact Sheet #35: Joint Employment and Independent Contractors Under the Migrant and Seasonal Agricultural Worker Protection Act,

https://www.dol.gov/agencies/whd/fact-sheets/35-mspa-joint-employment.

Id.

To determine if joint employment exists, the MSPA regulations borrow from the 1958 regulation, explaining: “A determination of whether the employment is to be considered joint employment depends upon all the facts in the particular case. If the facts establish that two or more persons are completely disassociated with respect to the employment of a particular employee, a joint employment situation does not exist.”

29 CFR 500.20(h)(5).

The MSPA regulations further explain that the common scenario for joint employment under MSPA involves whether agricultural workers employed by a farm labor contractor are jointly employed by the agricultural employer/association.

When making such a determination, “the ultimate question to be determined is the economic reality—whether the worker is so economically dependent upon the agricultural employer/association as to be considered its employee.”

For use “in determining the ultimate question of economic dependency,” the MSPA regulations provide seven non-exhaustive factors:

29 CFR 500.20(h)(5)(i).

29 CFR 500.20(h)(5)(iii).

(A) Whether the agricultural employer/association has the power, either alone or through control of the farm labor contractor to direct, control, or supervise the worker(s) or the work performed (such control may be either direct or indirect, taking into account the nature of the work performed and a reasonable degree of contract performance oversight and coordination with third parties);

(B) Whether the agricultural employer/association has the power, either alone or in addition to another employer, directly or indirectly, to hire or fire, modify the employment conditions, or determine the pay rates or the methods of wage payment for the worker(s);

(C) The degree of permanency and duration of the relationship of the parties, in the context of the agricultural activity at issue;

(D) The extent to which the services rendered by the worker(s) are repetitive, rote tasks requiring skills which are acquired with relatively little training;

(E) Whether the activities performed by the worker(s) are an integral part of the overall business operation of the agricultural employer/association;

(F) Whether the work is performed on the agricultural employer/association's premises, rather than on premises owned or controlled by another business entity; and

(G) Whether the agricultural employer/association undertakes responsibilities in relation to the worker(s) which are commonly performed by employers, such as preparing and/or making payroll records, preparing and/or issuing pay checks, paying FICA taxes, providing workers' compensation insurance, providing field sanitation facilities, housing or transportation, or providing tools and equipment or materials required for the job (taking into account the amount of the investment).

29 CFR 500.20(h)(5)(iv).

The MSPA regulations further provide that no one factor “will be dispositive of the ultimate question,” and “[h]ow the factors are weighed depends upon all of the facts and circumstances.”

Id.

D. Federal Caselaw on Joint Employer Liability Under the FLSA

Federal courts generally identify two Supreme Court cases as relevant precedent for adjudicating FLSA joint employment disputes:

Rutherford Food Corp.

McComb,

331 U.S. 722 (1947), and

Falk

Brennan,

414 U.S. 190 (1973).

WHD noted in its 2020 Joint Employer Rule that

Rutherford Food

“focus[ed] . . . on whether the workers were employees under the FLSA or independent contractors.” 85 FR 2827;

see also

86 FR 52412-13 (noting the effective date of the 2020 Rule's rescission).

I. Resolution of the Appeal

The Department filed an opening brief with the Second Circuit in support of the 2020 Rule on January 15, 2021.

112

The Intervenors filed their opening brief on the same day.

113

On March 31, 2021, following the change in administration, the Department filed a motion seeking to hold the appeal in abeyance in light of the proposal that it had published to rescind the 2020 Rule.

114

The Second Circuit denied the motion.

115

The States filed their response brief on April 16, 2021.

116

The Intervenors filed their reply brief on May 7, 2021.

117

On May 28, 2021, the Department filed a reply brief.

118

In its reply brief, the Department explained that the rulemaking proposing to rescind the 2020 Rule may moot the States' challenge to that rule, making any resolution of the appeal unnecessary.

119

The Department took no position on the merits of the 2020 Rule in its reply brief. The Department argued that if the Second Circuit resolves the appeal, it should reverse the district court's decision on the grounds that the States had no standing to challenge the 2020 Rule.

120

112

New York

Walsh,

No. 20-3806 (2d Cir. 2021) (No. 58).

113

Id.

(No. 59).

114

Id.

(No. 90).

115

Id.

(No. 97).

116

Id.

(No. 101).

117

Id.

(No. 118).

118

Id.

(No. 121).

119

Id.

(No. 121, at p. 11).

120

Id.

(No. 121, at p. 2-7).

On October 6, 2021, following the effective date of the Rescission Rule, the Department filed a motion with the Second Circuit seeking to dismiss the appeal because the Department's rescission of the 2020 Rule had eliminated the States' dispute with the Department and had rendered the case moot.

121

On October 29, 2021, the Second Circuit granted the motion to dismiss the appeal and vacated the district court's order and judgment.

122

121

Id.

(No. 128, at p. 5).

122

Id.

(No. 145).

J. Recent Opinion Letter

On September 30, 2025, WHD issued Opinion Letter FLSA2025-5, addressing whether a restaurant and members club for whom an employee worked separate hours are horizontal joint employers based on the facts presented.

123

The opinion letter reiterated that horizontal joint employment “typically occurs when employers are sufficiently associated with respect to the employment of the particular employee(s),” including where there is an arrangement between the employers to share an employee's services or interchange employees.

124

The letter concluded that the restaurant and members club are horizontal joint employers because they “are sufficiently associated with each other with respect to [the employee's] employment.”

125

123

See https://www.dol.gov/sites/dolgov/files/WHD/opinion-letters/FLSA/FLSA-2025-05.pdf.

124

Id.

at 2.

125

Id.

at 2-3.

II. Need for Rulemaking

The Department believes that regulations addressing joint employment is necessary to promote clarity and uniformity in the Department's nationwide enforcement of federal wage and hour law. The Department further believes that the proposed analysis in this NPRM represents the best construction of the FLSA—and by extension the FMLA and MSPA—with respect to determining joint employer status under those statutes, follows the decisions of the Supreme Court, and is broadly consistent with the commonality among varying approaches to joint employment in the federal circuit courts.

As noted above, for many decades, the Department maintained interpretive guidance on joint employer status under the Act in Part 791. Since rescinding those regulations in 2021, despite suggesting that the rescission did not abandon “longstanding horizontal joint employment analysis,”

126

the Department has provided no guidance on the topic, apart from WHD Opinion Letter FLSA2025-5. The absence of any direction has created uncertainty for businesses, workers, and courts, particularly for “vertical” scenarios where multiple entities are simultaneously benefiting from the same work performed by one or more workers.

127

In fact, the Department has not been applying a uniform standard to assess vertical joint employment under the FLSA. Instead, in each enforcement action, the Department attempts to apply a vertical joint employment standard consistent with the judicial precedent that may apply in that case, which—as described in this NPRM—varies between federal courts.

128

At a minimum, by clearly articulating the Department's position and approach, this rulemaking would bring greater uniformity and consistency to the

Department's enforcement actions by adopting a transparent nationwide analysis, which could have benefits for all interested parties.

126

86 FR 40954.

127

Although the 2021 Rescission Rule advised that the Department would continue applying its “longstanding horizontal joint employment analysis,” 86 FR 40954, the Rescission Rule did not specify how the Department would investigate FLSA cases involving possible vertical joint employment. WHD Opinion Letter FLSA2025-5 addressed a scenario that constituted horizontal joint employment.

128

Of course, the workers and employers encompassed in a particular WHD investigation under the FLSA often do not fall neatly within the geographic territories of the federal circuit courts. As a result, the appropriate judicial framework (and thus the standard that the Department would apply) may not be clear either as a factual or legal matter.

Promulgating regulations on joint employment should improve the Department's ability to enforce the FLSA, especially in cases involving egregious child labor violations.

129

Here, the Department believes that it should make clear to employers and employees its position regarding FLSA joint employment and provide publicly available direction that its enforcement personnel could apply in those cases. Making its position clear regarding the degree to which sometimes sprawling supply chains may be deemed joint operations in published regulations could make the resolution of such cases more likely. At the very least, it would ensure that there is a common understanding regarding the Department's position among workers, employers, and its own enforcement personnel.

129

See

Rebecca Rainey,

Perdue, Tyson Face `Unique' Probe in Child Labor Crackdown,

Bloomberg Law (Oct. 10, 2023) (suggesting that the absence of any “official regulatory test on the books governing the [Department]'s approach to joint employment” could be a “potential hurdle” in its investigation of child labor violations involving meatpacking companies and their subcontractors and staffing agencies).

Relatedly, a cohesive standard drawn from and consistent with commonality between federal circuits would benefit the courts that hear and decide joint employment issues in private FLSA lawsuits. According to the Fourth Circuit, efforts by federal appellate courts to address FLSA joint employment “have spawned numerous multifactor balancing tests, none of which has achieved consensus support” among the circuits that have addressed the issue.

130

Still other circuits have yet to adopt a definitive analysis. In this context, guidance from the Department may be of help to courts as they develop and refine their approaches to the issue. In addition, there are a number of federal courts that have continued to cite to various iterations of Part 791 even though it has not existed since October 5, 2021,

131

indicating a willingness by courts to consider regulations from the Department. Regulations from the Department that are current and in effect would assist courts that look to the Department's position on FLSA joint employment. That the proposed regulation would not bind or control the courts—only Department investigators—is unremarkable. Courts have always been the final word on the meaning and application of the law. But, as noted above, regulations and guidance serve other purposes, including public direction from the Department to its investigators regarding how to apply a legal standard. The value of interpretative rules has not been lost on the Supreme Court, which has noted that they “constitute a body of experience and informed judgement to which courts and litigants may properly resort for guidance,” particularly because such interpretations are “based upon more specialized experience and broader investigations and information than is likely to come to a judge in a particular case.”

132

130

Salinas,

848 F.3d at 135;

see also

85 FR 2833 (explaining that “all four factors need not necessarily be satisfied in order for an entity to be deemed a joint employer” and that, “consistent with case law, the four factors represent a balancing test”).

181

704 F.2d at 1469 (quoting

Rutherford Food,

331 U.S. at 730).

The Department welcomes comments on all aspects of its proposed four factors.

Finally, the 2020 Rule, in explaining the vertical joint employment analysis that it adopted, stated that FLSA section 3(d)'s definition of employer “is the statutory basis for determining joint employer status under the FLSA.”

182

The 2020 Rule further stated that FLSA section 3(e)'s definition of “employee” and section 3(g)'s definition of “employ” “determine whether an individual worker is an employee under the [FLSA]” and do not provide a basis for determining joint employment.

183

Accordingly, the 2020 Rule's regulatory text cited 29 U.S.C. 203(d) and provided that, in the vertical joint employer scenario, “[t]he other person is the employee's joint employer

only

if that person is acting directly or indirectly in the interest of the employer in relation to the employee.”

184

182

85 FR 2827-28.

183

Id.

184

29 CFR 791.2(a)(1) (2020) (emphasis added).

But here the Department is not proposing that regulatory text from the 2020 Rule or that section 3(d) is the exclusive statutory basis for determining joint employment under the FLSA to the exclusion of sections 3(e) and 3(g). Section 3(d)'s definition of “employer” as including “any person acting directly or indirectly in the interest of an employer in relation to an employee” is of course relevant when considering joint employment under the FLSA. The Department recognizes, however, that section 3(e)'s definition of “employee” and section 3(g)'s definition of “employ” as including “to suffer or permit to work” are relevant too.

In the 2020 Rule, the Department explained that, “[a]s the Supreme Court has ruled, the [FLSA's] definition of `employ' was a rejection of the common law standard for determining who is an employee under the FLSA in favor of a broader scope of coverage.”

185

Having considered the issue further, the Department notes that courts have found section 3(g) to also address joint employment. For example, the Eleventh Circuit has stated that “[t]he `suffer or permit to work' standard derives from state child-labor laws designed to reach businesses that used middlemen to illegally hire and supervise children.”

186

Rutherford Food,

the Supreme Court held that the meat boners employed by several intermediaries were, based on the facts of that case, employees of the slaughter-house that benefitted from their work.

187

In so doing, the Court cited sections 3(d), 3(e), and 3(g) as having “some bearing,”

188

and added that the “definition of `employ' is broad” and “evidently derives from the child labor statutes.”

189

Similarly, the Court in

Darden

described section 3(e) as “evidently deriv[ing] from the child labor statutes” and noted that the FLSA “defines the verb `employ' expansively.”

190

Characterizing these cases, the district court in

Scalia

stated that “they [a]ll agreed that the `middlemen' who directly employed children were their employers” and that “[t]he only question was whether businesses that `used' middlemen were also (joint) employers.”

191

185

85 FR 2827 (citing

Nationwide Mut. Ins. Co.

Darden,

503 U.S. 318, 326 (1992);

Walling

Portland Terminal Co.,

330 U.S. 148, 150-51 (1947)).

186

Antenor

D & S Farms,

88 F.3d 925, 929 n. 5 (11th Cir. 1996) (citing

Rutherford Food,

331 U.S. at 728 n.7;

People ex rel. Price

Sheffield Farms-Slawson-Decker Co.,

225 N.Y. 25, 29-31 (1918)).

187

331 U.S. at 729-30.

188

Id.

at 728 & n.6.

189

Id.

at 728 & n.7 (citing the Department's brief in that case).

190

Darden,

503 U.S. at 326 (citing

Rutherford Food,

331 U.S. at 728).

191

490 F. Supp. 3d at 779.

For all these reasons, the Department recognizes that the FLSA's employment definitions must be viewed together; none should be excluded when considering potential joint employment. The Department welcomes comments on this proposed approach.

2. Meaning of “Employment Records” (Proposed § 791.115(b))

Proposed § 791.115(b) is substantively similar to an analogous provision in the 2020 Rule.

192

The proposal defines “employment records”—a term used in the fourth proposed factor—to mean records, such as payroll records, that reflect, relate to, or otherwise record information pertaining to the hiring or firing, supervision and control of the work schedules or conditions of employment, or determining the rate and method of payment of the employee. The proposal provides that records maintained by the potential joint employer related to the employer's compliance with the contractual agreements identified in § 791.125 do not make joint employer status more or less likely under the FLSA and are not considered employment records. For example, if a company has a contractual agreement with a business partner requiring certain quality control standards and the company documents the efforts by the partner's employees to fulfill those standards, those records would not be indicative of whether the company is a joint employer of the partner's employees.

192

29 CFR 791.2(a)(2) (2020).

The proposal further provides that the potential joint employer's satisfaction of the maintenance of employment records factor alone will not demonstrate joint employment. The Department believed, and continues to be believe, that the maintenance of employment records

factor may be probative of joint employment and rejected requests to delete the factor from the analysis when promulgating the 2020 Rule.

193

The Department did note, however, that “courts have not found joint employer status when maintenance of employment records is the only evidence to support such a finding.”

194

The Department thus clarified that, although the maintenance of employment records is a relevant factor, satisfaction of the fourth factor alone cannot lead to a finding of joint employer status.

195

The Department is not aware of any reason or legal basis to support changing that approach. Where an employer maintains the employee's employment records, but no other factors indicate that the employer is a joint employer, the employment records factor alone will not result in joint employment.

193

85 FR 2832.

194

Id.

(citing cases).

195

Id.

The Department welcomes comments on all aspects of its proposed maintenance of employment records factor.

3. Relevance of Reserved Control (Proposed § 791.115(c))

Proposed § 791.115(c) states that the potential joint employer's ability, power, or reserved right to act in relation to the employee is relevant for determining joint employer status, but the potential joint employer's actual exercise of control is more relevant than such ability, power, or right. It further states, as an example, that a potential joint employer's contractual authority to supervise, discipline, or fire employees is less relevant if in practice the potential joint employer never exercises such authority. The subsection also clarifies that, although contractual authority is generally relevant, a potential joint employer's ability, power, or reserved right to act in connection with any of the contractual provisions or business practices identified in § 791.125 is not relevant. This clarification is necessary to ensure that this proposal's general consideration of contractual authority does not override the position explained in § 791.125 that authority with respect to certain contractual provisions is not relevant to determining joint employer status under the FLSA.

The Department recognizes that the potential joint employer's ability, power, or reserved right to act in relation to the employee is relevant for determining joint employer status. Consistent with the “ultimate determination [being] based `upon the circumstances of the whole activity,'”

196

actual practices and contractual rights must both be considered. Courts view the power to control the employee or the work as an aspect of the joint employment determination.

197

196

Bonnette,

704 F.2d at 1470 (quoting

Rutherford Food,

331 U.S. at 730).

197

See, e.g.,

Bonnette,

704 F.2d at 1470 (considering whether the potential joint employer has “the

power

to hire and fire” employees) (emphasis added);

Enterprise Rent-A-Car,

683 F.3d at 468 (considering authority to control employee and their work);

Baystate,

163 F.3d at 675-76 (citing a potential joint employer's power to decline to send a worker back to a job site as relevant to the joint employment determination).

The 2020 Rule similarly recognized the relevance of the potential employer's reserved right to control, but stated that the “potential joint employer must actually exercise—directly or indirectly—one or more of the[ ] indicia of control” to be a joint employer under the FLSA.

198

The 2020 Rule further stated that “[t]he potential joint employer's ability, power, or reserved right to act in relation to the employee may be relevant for determining joint employer status, but such ability, power, or right alone does not demonstrate joint employer status without some actual exercise of control.”

199

The 2020 Rule added that “[s]tandard contractual language reserving a right to act, for example, is alone insufficient for demonstrating joint employer status.”

200

198

29 CFR 791.2(a)(3)(i) (2020) (citing 29 U.S.C. 203(d)).

199

29 CFR 791.2(a)(3)(i) (2020).

200

Id.

However, the Department is not again proposing that regulatory text, nor does it maintain that actual exercise of control is necessary to find joint employment under the FLSA. Having further considered the matter, the Department believes that the more nuanced position it is proposing here—not requiring actual exercise of control for there to be joint employment, but recognizing that exercised control is more relevant than reserved control which is rarely or never exercised—is more consistent with the FLSA and longstanding caselaw, which focuses both on the “degree” of control

201

and on “the `economic

reality'

of the situation.”

202

For example, in

Bonnette,

the court focused on the actual exercise of control where there was a factual dispute over reserved right of control, stating that “[r]egardless of whether the [counties] are viewed as having the power to hire and fire . . . [they]

exercised

considerable control over the nature and structure of the employment relationship.” 704 F.2d at 1470 (emphasis added). Similarly, in

Salinas

Commercial Interiors,

the Fourth Circuit determined that a general contractor was a vertical joint employer in part because, in addition to its other control, it “could—

and did

” impose requirements on how the workers performed the work. 848 F.3d at 146 (emphasis added);

cf. Bartels

Birmingham,

332 U.S. 126, 128-32 (1947) (applying an “economic reality” test under the original Social Security Act and declining to find that a dance hall jointly employed a group of musicians (along with their band leader), despite an unexercised contract clause that gave the dance hall “complete control” over the musicians).

201

Layton,

686 F.3d at 1178-79;

Torres-Lopez,

111 F.3d at 642-43;

see also

84 FR 14044 (“Requiring the actual exercise of power ensures that the four-factor test is consistent with the provision of 3(d) that determines joint employer status, which requires an employer to be `acting . . . in relation to an employee.' ”) (quoting 29 U.S.C. 203(d)). In addition, the Seventh Circuit has advised in an FMLA case that, for joint employment to exist, “each alleged employer must exercise control over the working conditions of the employee, although the ultimate determination will vary depending on the specific facts of each case.”

Moldenhauer,

536 F.3d at 644 (citing

Remington Hybrid Seed,

495 F.3d at 408).

204

29 U.S.C. 203(g).

205

See Sec'y of Lab., U.S. Dep't of Lab.

Lauritzen,

835 F.2d 1529, 1543 (7th Cir. 1987) (Easterbrook, J., concurring) (explaining that the “suffer or permit” phrasing potentially “sweeps in” any work “done for the employer's benefit or with the employer's acquiescence”). The Eleventh Circuit has noted that courts have found employment relationships “under a multitude of circumstances where the alleged employer exercised little or no [actual] control or supervision

over the putative employees.”

Antenor,

88 F.3d at 933 n.10.

Taking into consideration this caselaw and all the FLSA's employment definitions, the Department believes that proposed § 791.115(c) will provide greater clarity on the respective roles that actual practice and contractual provisions play in determining the economic reality of potential joint employment.

The Department welcomes comments on all aspects of proposed § 791.115(c).

4. Indirect Control (Proposed § 791.115(d))

Proposed § 791.115(d) recognizes that indirect control may be considered when applying the four factors identified in proposed § 791.115(a). The former provides that indirect control is exercised by the potential joint employer through mandatory directions to another employer that controls the employee but adds that the other employer's voluntary decision to grant the potential joint employer's request, recommendation, or suggestion does not constitute indirect control that can demonstrate joint employer status. In addition, proposed § 791.115(d) also clarifies that acts which incidentally impact the employee also do not indicate joint employer status. The 2020 Rule contained the same provision.

206

29 CFR 791.2(a)(3)(ii) (2020).

A potential joint employer may exercise indirect control by directing an intermediary employer to hire or fire an employee, set an employee's schedule, or determine an employee's pay, or otherwise effectuating these actions through the intermediary employer. Thus, indirect control is control that flows from the potential joint employer through the intermediary employer to the employee. If the potential joint employer directs the intermediary employer's exercise of control over the employee, indirect control of the employee exists. But agreeing to a mere request or recommendation, alone, is not enough for indirect control, although it can be indicative in rare circumstances.

The Third Circuit articulated this distinction in

Enterprise Rent-A-Car,

holding that such recommendations are not relevant to joint employer status. In that case, the parent company lacked the necessary direct control or authority over a subsidiary's assistant managers for joint employer status.

207

The plaintiffs sought to demonstrate joint employer status on the basis of indirect control by arguing that the parent company “functionally held many of these [authority] roles by way of the guidelines and manuals it promulgated to its subsidiaries.”

208

But the Third Circuit found “no evidence that [the parent company's] actions at any time amounted to mandatory directions rather than mere recommendations.”

209

Therefore, “[i]nasmuch as the adoption of [the parent company's] suggested policies and practices was entirely discretionary on the part of the subsidiaries, [the parent company] had no more authority over the conditions of the assistant managers' employment than would a third-party consultant who made suggestions for improvements to the subsidiaries' business practices.”

210

207

683 F.3d at 471.

208

Id.

209

Id.

at 470.

210

Id.

The Department continues to believe, as it did when promulgating the 2020 Rule,

211

that the Third Circuit's description of indirect control is correct and sensible. If a parent company lacks authority to require a subsidiary to adopt certain employment practices, it cannot indirectly require the subsidiary's employees to adopt such practices. In sum, a potential joint employer exercises indirect control over an intermediary employer's employee by issuing “mandatory directions” to the intermediary employer. On the other hand, a potential joint employer's request, recommendation, or suggestion for an employment action, even if granted, is rarely evidence of indirect control because the intermediary employer has discretion to grant or refuse the request. In rare circumstances, such as when an intermediary employer repeatedly follows without question a potential joint employer's requests regarding employees, it may be inferred that the intermediary employer lacks discretion to refuse those requests, and therefore, indirect control exists. Proposed § 791.115(d) captures this distinction, and the illustrative examples in proposed § 791.115(g)(2) and (3) provide additional guidance.

211

85 FR 2834-35.

Additionally, proposed § 791.115(d) clarifies that acts which incidentally impact the employees of another employer do not indicate joint employer status. General decisions by a business may impact other businesses with whom that business contracts or partners (and their employees), and the Department in the 2020 Rule sought to clarify that incidental impacts on their employees from these decisions do not indicate that the business is a joint employer.

212

For instance, a shipping facility that cuts back on its staffing needs during a slow period may incidentally impact the work schedules of its staffing agency's employees, but that general business decision would fall short of control over the employees' work schedules that would indicate joint employer status.

213

Similarly, the Eleventh Circuit in

Layton

found that certain business decisions made by a shipping and logistics company which incidentally impacted the workdays of drivers employed by a third party contractor, such as establishing the time that packages were available for pick-up each morning or relaying “erratic pick-up orders” that required drivers to work longer hours, were insufficient to indicate joint employment. 686 F.3d at 1178. While acknowledging that such business decisions “may have incidentally impacted Drivers' working conditions,” the court concluded that such decisions did not establish joint employment where the company “did not involve itself with the specifics of how those goals would be reached” or otherwise “exert control as an employer would have.”

Id.

The Department believes that proposed § 791.115(d) would bring helpful clarity to businesses as they make decisions that could potentially affect their business partners.

212

Id.

at 2835-36.

213

Id.

at 2835 n.72.

The Department welcomes comments on all aspects of proposed § 791.115(d).

5. Consideration of Additional Factors (Proposed § 791.115(e))

Proposed § 791.115(e) explains that additional factors beyond the four factors identified in proposed § 791.115(a) may be relevant for determining vertical joint employment. Proposed § 791.115(e) provides that, for example, additional indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee's work in addition to the four factors may be relevant. Proposed § 791.115(e) further provides that indicia of whether the employee is economically dependent on the potential joint employer for work may also be relevant. Proposed § 791.115(e) provides two examples of additional factors that may be considered. First, if the employee has a continuous or repeated relationship with the potential joint employer in that the potential joint employer continuously or repeatedly benefits from the employee's work whether or not the other employers involved change, that may indicate joint

employment. Second, if the employee works at a location or facility that is owned or controlled by the potential joint employer that benefits from the employee's work, that may indicate joint employment. Of course, if there is no continued or repeated relationship and the employee does not work at a location or facility that is owned or controlled by the potential joint employer, those facts would indicate no joint employment if they are considered. Proposed § 791.115(e) cautions, however, that any additional factors are generally less relevant than the four factors identified in proposed § 791.115(a), which typically carry greater weight in the analysis than any additional factors. Proposed § 791.115(e) adds that if the four factors identified in proposed § 791.115(a) unanimously indicate joint employment or no joint employment, there is a substantial likelihood that the indicated outcome is correct, and additional factors are highly unlikely, either individually or collectively, to outweigh the combined probative value of those four factors. This provides application clarity to workers, employers, and the Department's investigators alike—either demonstrating joint employer status or its absence—that is very likely to broadly align with the wide variety of tests, standards, and analyses applied by the federal circuit courts.

It is well-settled that factors in multi-factor tests for determining FLSA joint employment are not exhaustive and that additional factors may be considered where material and appropriate.

214

The 2020 Rule allowed for the consideration of additional factors, “but only if they are indicia of whether the potential joint employer exercises significant control over the terms and conditions of the employee's work.”

215

The Department is not proposing to adopt this provision from the 2020 Rule. Although limiting the consideration of additional factors to those that relate to control is supported by the Third Circuit,

216

the Department, having considered the issue further for purposes of this proposal, recognizes that courts, including

Bonnette,

generally do not place such limits on the consideration of additional factors.

217

The Department further recognizes that the district court in

Scalia

ruled that the 2020 Rule's provision regarding the consideration of additional factors, in its view, “unlawfully limits the factors the Department will consider in the joint employer inquiry.”

218

Accordingly, this proposal does not limit the consideration of additional factors beyond the four factors identified in § 791.115(a) to those that relate to control, but recognizes that such factors are likely to be relevant where the four factors point to different conclusions.

214

See, e.g.,

85 FR 2836 (“Courts that apply multi-factor balancing tests leave open the possibility of considering other factors.”) (citing cases);

Bonnette,

704 F.2d at 1470 (“The ultimate determination must be based `upon the circumstances of the whole activity.' ”) (quoting

Rutherford Food,

331 U.S. at 730);

Zheng,

355 F.3d at 71-72 (explaining that a joint employment “determination is to be based on `the circumstances of the whole activity,' ” and informing the district court that, on remand, it is “free to consider any other factors it deems relevant to its assessment of the economic realities”) (quoting

Rutherford Food,

331 U.S. at 730);

Torres-Lopez,

111 F.3d at 639 (“A court should consider all those factors which are relevant to the particular situation in evaluating the economic reality of an alleged joint employment relationship under the FLSA.”) (brackets and internal quotation marks omitted) (citing

Bonnette,

704 F.2d at 1470).

215

29 CFR 791.2(b) (2020). The 2020 Rule stated that, “[b]ecause evaluating control of the employment relationship by the potential joint employer over the employee is the purpose of the Department's four-factor balancing test, it is sensible to limit the consideration of additional factors to those that indicate control.” 85 FR 2836.

216

Enterprise Rent-A-Car,

683 F.3d at 469-470 (stating that its enumerated “factors

do not constitute an exhaustive list

of all potentially relevant facts” and that “other indicia of `significant control' ” beyond the enumerated factors may be relevant to determining joint employer status under the FLSA) (emphasis in original).

217

See supra

fn. 214.

218

490 F. Supp. 3d at 790.

Moreover, the Department is not proposing to exclude from the analysis any factors solely because they may assess or relate to economic dependence on an employer for work. The 2020 Rule excluded consideration of factors relating to the employee's economic dependence on the potential joint employer.

219

The Department's exclusion of economic dependence factors from the analysis in the 2020 Rule was predicated on its effort to bring analytical clarity by distinguishing between the analysis for determining a worker's status as an employee or not under the FLSA and the analysis for determining whether a worker who has already been determined to be an employee of an employer has a joint employer. The 2020 Rule advised that the analysis to determine a worker's status as an employee or not is based on sections 3(e) and 3(g) and assesses economic dependence, and that the analysis for determining joint employment is based on section 3(d) and does not assess economic dependence.

220

However, as explained above, the Department in this proposal recognizes that these FLSA definitions should be viewed together and that none of them should be excluded when considering joint employment. Moreover, the Department, having considered the issue further, recognizes that some courts consider economic dependence on an employer for work when determining joint employment under the FLSA,

221

and the Department notes that the district court in

Scalia

ruled that the 2020 Rule's provision excluding consideration of economic dependence, in its view, “contradict[ed] caselaw and the Department's [prior] views.”

222

219

29 CFR 791.2(c) (2020) (“[T]o determine joint employer status, no factors should be used to assess economic dependence.”).

220

85 FR 2838;

see also

85 FR 2837-38.

239

29 CFR 791.2(c)(1) (2020);

see also

85 FR 2837-38.

240

See, e.g.,

Layton,

686 F.3d at 1176 (considering, among other factors, whether the employees perform “a specialty job integral to the business”);

Remington Hybrid Seed,

495 F.3d at 408 (concluding that a corn grower jointly employed workers hired to provide detasseling and rogueing services in part because “detasseling is a specialty job in an agricultural operation”);

Zheng,

355 F.3d at 72-74 (considering “the extent to which [workers] performed a discrete line-job that was integral to [the joint employer's] process of production,” informed by “industry custom and historical practice”);

Torres-Lopez,

111 F.3d at 639-40 (considering, among other factors, “whether the work was a `specialty job on the production line'”) (quoting

Rutherford Food,

331 U.S. at 730). The district court in

Scalia

noted that the 2020 Rule rejected “considering `whether the employee is in a specialty job' in the joint employer inquiry,” but stated that the rejection contradicted Supreme Court precedent because

Rutherford Food

“held that it

was

relevant that the workers `did a specialty job on the production line.'” 490 F. Supp. 3d at 791 (citing 331 U.S. at 730) (emphasis in original). The Department additionally notes that consideration of whether the work is “integral” is a departure from the Supreme Court's consideration in

Rutherford Food

of whether work was “part of the integrated unit of production.” 331 U.S. at 729;

see

also 91 FR 9956 (discussing this consideration in the context of determining employee or independent contractor status under the FLSA).

Finally, the Department is not proposing to identify as an irrelevant factor the

number

of contractual relationships, other than with the employer, that the potential joint employer has entered into to receive similar services. The 2020 Rule included such a provision, explaining that the factor assesses economic dependence and is not relevant, like all factors assessing economic dependence.

241

As explained above, however, the Department is not proposing in this NPRM to exclude consideration of any factor simply because it assesses economic dependence for work, even though the number of contractual relationships is less likely to be probative of joint employment. The Department welcomes comments on whether consideration of the number of contractual relationships, other than with the employer, that the potential joint employer has entered into to receive similar services should be expressly excluded or included or not addressed in any final rule.

241

29 CFR 791.2(c)(4) (2020);

see also

85 FR 2821.

The Department welcomes comments on all aspects of proposed § 791.115(f).

7. Examples (Proposed § 791.115(g))

Proposed § 791.115(g) includes five examples illustrating and applying the Department's proposed analysis for vertical joint employment, generally tracking the factual scenarios addressed in the examples in § 791.2(g)(3) through (7) of the 2020 Rule.

242

Each proposed example provides a hypothetical factual situation, explains how the vertical joint employment standard applies, and concludes whether the persons or entities are joint employers. The Department's conclusions following each example are, like all illustrative examples, limited to substantially similar factual situations.

242

See

29 CFR 791.2(g)(3)-(7) (2020).

The Department welcomes comments on all aspects of the proposed examples.

E. Determining Horizontal Joint Employment (Proposed § 791.120)

The Department proposes to readopt as § 791.120 most of the regulatory text regarding horizontal joint employment from the 2020 Rule. Specifically, the Department proposes to readopt the regulatory text from § 791.2(e)(2) of the 2020 Rule (except for the last sentence) as § 791.120(a), the last sentence of the regulatory text from § 791.2(e)(2) of the 2020 Rule as § 791.120(b), and the examples regarding horizontal joint employment from § 791.2(g)(1) and (2) of the 2020 Rule as § 791.120(c). The Department is not proposing to readopt the regulatory text from § 791.2(e)(1) of the 2020 Rule because that provision merely explained what horizontal joint employment is and would be repetitive of proposed § 791.110(b). The Department is proposing non-substantive changes to the regulatory text that it adopted in the 2020 Rule, such as changing references to the “Act” to the “FLSA” and changing references to “second” joint employer scenario and “this” scenario to “horizontal” joint employer scenario. As noted above,

while the Department did not use terms such as “vertical” or “horizontal” joint employment in the 2020 Rule, it is in this proposal due both to their ubiquity and the clarity they provide.

Proposed § 791.120(a) describes the circumstances in which there may be horizontal joint employment, explaining how to determine if the employers are joint employers in this scenario and focusing on the association or lack thereof between the employers. The proposed regulatory text explains 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. The proposed regulatory text further explains 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. As in prior versions of part 791, the proposed regulatory text provides three situations where the employers will generally be sufficiently associated: (1) there is an arrangement between them to share the employee's services; (2) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (3) they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer. The proposed regulatory text advises that such a determination depends on all of the facts and circumstances.

Proposed § 791.120(b) explains that business relationships between two employers that have little to do with their employment of specific workers, such as sharing a vendor or being franchisees of the same franchisor, are not generally probative, and could not alone indicate a sufficient association between the employers to establish that they are joint employers.

Proposed § 791.120(c) provides two illustrative examples which imitate the factual scenarios previously adopted in § 791.2(g)(1) and (2) of the 2020 Rule.

243

Each example provides a hypothetical factual situation and discusses how the Department's standard for determining horizontal joint employment would apply and whether or not there is joint employment.

243

29 CFR 791.2(g)(1)-(2) (2020).

The standard for determining horizontal joint employment reflected in proposed § 791.120 is longstanding and well-settled. For example, the Department's pre-2020 version of 29 CFR part 791, which was adopted in 1958 and derived from the 1939 Interpretative Bulletin No. 13, explained that, when one employee performs separate work for two or more employers in the same workweek, the determination of a joint employment relationship turns on the association or lack thereof between the two potential joint employers.

244

The pre-2020 regulation elaborated on this guidance with three non-exhaustive situations where there would generally be sufficient association between the employers and thus horizontal joint employment.

245

244

29 CFR 791.2(a) (1958).

245

29 CFR 791.2(b) (1958).

The 2020 Rule explained that the pre-2020 FLSA regulation provided “clear and useful” guidance in the horizontal joint employment scenario.

246

The 2020 Rule added that “focusing on the relationship between the two employers is the correct approach” in this scenario, and that the pre-2020 regulation's “focus on the relationship between the two employers has been useful to both the public and courts.”

247

For these reasons, the 2020 Rule retained the analysis provided in the pre-2020 regulation (with non-substantive revisions) as its standard for determining horizontal joint employment.

248

246

85 FR 2851.

247

Id.

at 2845;

see also

84 FR 14052 (citing

A-One Med. Servs.,

346 F.3d at 917-18;

Murphy

Heartshare Human Servs. of New York,

254 F. Supp. 3d 392, 399-404 (E.D.N.Y. 2017);

A Perfect Day Franchise, Inc.,

281 FRD. 373, 400-01 (N.D. Cal. 2012);

Chao

Barbeque Ventures, LLC,

No. 8:06CV676, 2007 WL 5971772, at *6 (D. Neb. Dec. 12, 2007); WHD Opinion Ltr. FLSA 2005-17NA, 2005 WL 6219105 (June 14, 2005) (applying 1958 regulation to determine that separate health care facilities were joint employers and employees' hours worked for different facilities must be aggregated in a workweek to calculate whether overtime pay is due); WHD Opinion Ltr., 1998 WL 1147714 (Jul. 13, 1998) (applying 1958 regulation to determine that separate health care entities were joint employers and employees' hours worked for different entities must be aggregated in a workweek for purposes of calculating any overtime pay due under the FLSA).

248

85 FR 2844-45. The district court decision that vacated the 2020 Rule's vertical joint employer standard severed the horizontal joint employer standard and did not vacate it.

Scalia,

490 F. Supp. 3d at 795-96 (agreeing that the 2020 Rule “makes only `non-substantive revisions' to existing law for horizontal joint employer liability”) (quoting 85 FR 2844).

The Department's subsequent Rescission Rule agreed that the 2020 Rule's horizontal joint employment standard “reflected the Department's historical approach to the issue, and was consistent with the relevant case law.”

249

The Rescission Rule rescinded the 2020 Rule in its entirety because it would have been “difficult and impractical” to leave the horizontal joint employer provision standing alone.

250

However, the Department emphasized that it was not reconsidering the substance of that standard and that the “focus of a horizontal joint employment analysis will continue to be the degree of association between the potential joint employers, as it was in the [2020] Rule and the prior version of part 791.”

251

249

86 FR 40954.

250

Id.

251

Id.

In 2025, WHD again applied its historical approach to the horizontal joint employment scenario, analyzing in Opinion Letter FLSA2025-5 whether a restaurant and a members club for whom an employee w

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