DOL’s proposed Joint Employer Rule could reshape liability for food and agriculture employers

In late April, the U.S. Department of Labor (DOL) published a proposed rule that would revise how joint employment status is determined under several major federal employment laws. The proposal establishes a single, nationwide framework for assessing joint employment under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). If adopted, the rule could significantly affect food and agriculture employers that rely on staffing agencies, farm labor contractors and other third-party labor arrangements.

What is joint employment?

Joint employment arises when more than one person or entity exercises sufficient control over an employee’s terms and conditions of employment to be considered that employee’s employer under federal law. When joint employment exists, each employer may be held jointly and severally liable for payment of wages, FMLA compliance issues, housing, transportation, and disclosure obligations under the MSPA, and other relief that might be owed to employees.

In the food and agriculture context, business needs such as time-sensitive harvest windows, fluctuating production demands, and geographically dispersed worksites sometimes lead employers to rely on complex employment arrangements involving contractors, staffing agencies, transportation providers, and more. While these labor models offer flexibility and efficiency, they also raise difficult questions about legal responsibility for employee conduct, wage payment, and compliance issues.

A shifting joint employer landscape

Prior to 2020, the DOL relied primarily on case law applying a multi-factor “economic reality” test to determine whether joint employment existed. In 2020, towards the end of the first Trump administration, the DOL issued a rule narrowing the circumstances under which another entity could be considered a joint employer. However, a federal court largely vacated the rule, and the Biden administration later rescinded it.

Since 2021, no binding, nationwide standard surrounding joint employment has been adopted. The DOL believes the 2026 proposal will bring uniformity to enforcement actions “by adopting a transparent nationwide analysis, which could have benefits for all interested parties.”

Proposal framework

The 2026 proposal addresses two common scenarios: vertical and horizontal joint employment. Vertical joint employment typically involves an employee who is employed by one entity (like a staffing agency or farm labor contractor) while another entity also benefits from the employee’s labor (like a grower, processor, or facility operator). Meanwhile, horizontal joint employment generally involves an employee working for two related or associated entities during the same workweek.

Vertical joint employment

The proposed rule introduces a four-factor test for determining whether vertical joint employment exists. Those factors include whether a person or entity:

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.

No single factor is dispositive, and the DOL notes “the determination will depend on all of the facts in a particular case.” While other factors may be considered in determining whether vertical joint employment exists, the proposal indicates that, if the four factors unanimously point to the existence of joint employment, there is a “substantial likelihood” it is present.

Horizontal joint employment

Additionally, the proposed rule provides that horizontal joint employment exists when the potential employers are “sufficiently associated.” This type of association arises where:

• There is an arrangement between two or more entities to share an employee’s services;
• One employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or
• The entities 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. Such a determination depends on all the facts and circumstances.

If horizontal joint employment is present, the rule notes employers “must aggregate the hours worked for each employer with respect to the employee for purposes of determining compliance with the FLSA.”

Practical takeaways for food and agriculture employers

As the proposed rule moves through the regulatory process, it signals a clear shift in how the DOL intends to evaluate joint employment. To be prepared in the likely event the proposed rule is adopted, employers should keep the following in mind:

• Labor contracts matter, but conduct matters more. Well-drafted agreements with contractors, staffing agencies, and other affiliated entities remain important. Employers should review their agreements with other entities to identify potential joint employer liability. However, employers should also keep in mind that, under the proposed rule, contractual disclaimers alone will carry limited weight if relationships operate differently in practice. 
• Now is the time for proactive audits. Employers should review their labor relationships to ensure they have a clear understanding of potential joint employment risk. This includes evaluating work rules, timekeeping practices, how work is assigned and performed, supervision and discipline practices, pay decisions, and more to determine whether workplace conduct aligns with the intended allocation of responsibilities among entities.
• Prepare for questions. If the DOL investigates, employers will want a consistent narrative supported by documentation to explain their relationship to an employee. Inconsistent explanations or unclear lines of authority can quickly undermine an employer’s position.

Public comment on the proposed rule runs through June 22, 2026.