DOL's New Joint Employer Proposal: What It Means for Manufacturers Using Staffing, Subcontractors, and On‑Site Vendors

Comments are due 60 days after publication and are currently scheduled to close on June 22, 2026.

The Rule in Brief

The proposal would align FMLA and MSPA joint employment concepts with a core FLSA‑based analysis, so that a single framework applies across all three statutes. It distinguishes between:

• Vertical joint employment, where workers are supplied by one entity to perform work that benefits another entity; and
• Horizontal joint employment, where employees are shared across related or commonly controlled entities.

For vertical joint employment, the Department focuses on four main questions:

1. Does the putative joint employer have the power to hire or fire the worker?
2. Does that employer supervise or control the worker's schedule or other conditions of employment to a substantial degree?
3. Does the employer determine the rate and method of pay?
4. Does the employer maintain employment records for the worker?

These factors are not exhaustive, and both direct and indirect control over working conditions may be relevant. In making these determinations, the Department emphasizes "economic reality" over labels.

At the same time, the proposal identifies common business practices that, standing alone, should not be treated as evidence of joint employment – such as requiring vendors to follow safety and quality standards; comply with anti‑harassment and EEO policies; use sample policies; participate in apprenticeship or association benefit programs; or operate under brand or supply agreements that do not control the workforce. For manufacturers, this "excluded practices" concept is central to designing lower‑risk relationships that still meet compliance and performance expectations.

Why Manufacturers Should Pay Attention

Many manufacturing operations already resemble the "vertical" scenarios the Department addresses in the proposed rule. A manufacturer may rely on temporary workers on the production line, contract sanitation crews, third‑party maintenance technicians, and on‑site logistics or packaging vendors, all working in the same plant and under the host company's safety rules. In that environment, plant and line leaders may treat everyone on the floor as if they were direct employees, regardless of who is on the payroll.

The four factors map directly onto day‑to‑day practices:

• Hire/fire control: Risk increases if supervisors can effectively veto or demand termination of individual vendor employees, with the vendor merely processing the decision. Risk is lower when the manufacturer sets performance standards, but the vendor retains responsibility for hiring and discipline, and concerns are raised through a vendor manager.
   
• Schedules and supervision: When the host company directly sets start and stop times, break schedules, overtime, and shift assignments for vendor employees – or approves individual time‑off requests – it resembles an employer under the proposed rule. A lower-risk structure is for the manufacturer to define production windows and output targets, with the vendor deciding staffing levels and directing daily work.
   
• Pay: Dictating hourly rates or salary ranges for vendor employees or making "recommendations" that function as mandatory pay levels are activities that support a joint employer finding. Negotiating rates and requiring legal compliance, while avoiding involvement in individual pay decisions, is less likely to give rise to a "joint employer" finding.
   
• Records: Maintaining detailed personnel or time records for vendor employees in the manufacturer's HR systems makes the relationship appear more like direct employment. Limiting records to what is needed for contract management and safety compliance – while the vendor keeps official personnel and payroll records – aligns more closely with the proposed approach to avoid the "joint employer" label.

By contrast, the Department signals that manufacturers may continue to impose robust safety, quality, and legal compliance requirements on vendors – backed by audits and corrective action – without those expectations alone being treated as evidence of joint employment. The practical challenge is keeping compliance oversight from drifting into day‑to‑day workforce management.

Different Statutes, Different Consequences

Although the proposal unifies the test, the consequences of a joint employer finding differ depending on the law in question:

• Under the FLSA, joint employment can result in joint and several liability for minimum wage and overtime violations and may require aggregating hours worked across joint employers for overtime purposes. This is particularly relevant where workers split time between entities under coordinated scheduling.
   
• Under the FMLA, joint employment affects how employees are counted for coverage and eligibility and how primary versus secondary employer responsibilities are allocated. The primary employer typically must provide notices, maintain health benefits, and restore employees at the end of leave, even when another entity hosts the worksite. Manufacturers using temporary or shared services models should understand how these obligations might apply.
   
• Under MSPA, which covers certain migrant and seasonal agricultural workers and related operations, joint employment can extend liability for required disclosures, pay, housing, and transportation compliance to upstream entities that effectively control the work. This is most relevant to manufacturers with integrated agricultural or seasonal supply chains.

Practical Steps for Manufacturers Now

During the comment period, manufacturers can take concise, targeted steps:

1. Identify key third‑party labor relationships: Identify where facilities rely on staffing agencies, sanitation and maintenance contractors, logistics providers, and co‑packers or other on‑site vendors. For each, compare the contract terms to actual practice: who selects and removes workers, who sets schedules and approves overtime or time off, who influences pay, and who maintains personnel and time records.
    
2. Align contracts and behavior with the four‑factor framework: Contract terms that focus on compliance and safety expectations, quality standards, and basic audit rights are generally easier to defend, especially if audits do not become routine operational direction. Provisions giving the manufacturer direct authority over hiring, firing, individual pay rates, or detailed scheduling for vendor employees are more likely to be scrutinized and may warrant revision or clearer boundaries.
    
3. Train plant and line leadership: Even well‑drafted contracts will not offset a record showing that supervisors routinely direct vendor employees as if they were direct reports. Short, practical training on what supervisors can and cannot do with third‑party workers can meaningfully reduce risk.
    
4. Revisit FMLA practices in shared‑workforce models: In arrangements involving temporary or shared employees, clarify who tracks hours, issues FMLA notices, and manages benefits and job restoration if joint employment is found, and align those responsibilities with actual roles.

For more information about the proposal or assistance evaluating your manufacturing operations and third‑party labor arrangements under this framework, please contact Martha L. Boyd or Denmark J. Grant.