Labor Department proposes narrower joint employer rule for wage violations

Workers trying to recover unpaid wages could face a steeper climb to hold a brand, parent company or franchisor liable after the Labor Department proposed a narrower joint-employer rule for wage violations. The proposal would limit liability to cases where a company exercises direct control over hiring, supervision, pay and employee records.

The Labor Department said the rule would create a single nationwide standard under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. It said the change was needed because too little regulatory guidance and conflicting rulings from federal appeals courts have left employers and workers with uneven standards across the country.

Under the department’s framework, joint employers would remain jointly and severally liable for wages, damages and other relief, including all hours worked and overtime premiums. But the practical effect of the new test would be to narrow the set of businesses that can be pulled into a wage case when contractors, franchisees or staffing intermediaries violate the law.

Acting Labor Secretary Keith Sonderling said the proposal was meant to make compliance easier, give businesses more confidence to invest in partnerships, help workers understand their rights and make investigations more efficient. Wage and Hour Division Administrator Andrew Rogers said it was designed to resolve divergent judicial precedent and strengthen worker protections by ensuring employees receive the wages and benefits they are owed even if one employer cannot or will not pay.

Worker advocates see the move differently. They argue that a tighter standard could let companies escape responsibility more easily when wage theft or other violations occur in franchise networks, subcontracting arrangements or other layered employment structures. The stakes are especially high in fast food, retail, logistics and hospitality, where control is often split among a brand, a local operator and outside contractors.

The proposal fits into a broader federal shift toward narrower joint-employer liability. The National Labor Relations Board withdrew its Biden-era joint employer rule on February 26, 2026, and restored the Trump-era standard that turns on “substantial direct and immediate control.” The Labor Department’s own approach has also swung over time: the Trump-era rule took effect on March 16, 2020, and the Biden Labor Department rescinded it in 2021.

The department set a 60-day public comment period that closes at 11:59 p.m. EDT on June 22, 2026. Workers and employers can call the Wage and Hour Division helpline at 866-4US-WAGE, or 487-9243, with questions and compliance requests as the rule moves toward a final decision later this year.