The Wage and Hour Division of the U.S. Department of Labor has issued a proposed rule to clarify the joint employer status under the Fair Labor Standards Act for the benefit of workers, employers, or its enforcement personnel.

In this rulemaking, the Department proposes explaining how to determine joint employer status under the FLSA. Additionally, the Department is also proposing to amend provisions in its regulations implementing the Family and Medical Leave Act and Migrant and Seasonal Agricultural Worker Protection Act 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.

The FLSA requires covered employers to 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 (the federal overtime requirement does not apply to truck drivers who are subject to the federal driver hours of service regulations, however). But when a worker is employed by two or more employers, questions arise as to whether two or more companies could be jointly and severally liable for a single employee’s hours worked under the FLSA.

The agency has offered various guidance and imposed regulations over the years, and courts have struggled to define the criteria for joint employer status. But the Department now believes that regulations addressing joint employment are necessary to promote clarity and uniformity in the Department’s nationwide enforcement of federal wage and hour law.

The proposed rule recognizes that many employees have more than one employer, but notes that in most cases each employment will be distinct from the others, and each employer will be responsible on its own for complying with the FLSA with respect to the employee.

The proposal describes vertical and horizontal joint employment. Vertical joint employment is where an employee is employed by two or more employers that simultaneously benefit from the employee’s work. These scenarios might describe whether contractors and subcontractors or staffing agencies and their clients are joint employers of the employee.

Horizontal joint employment involves situations in which an employee works separate hours for two or more joint employers in the same workweek, and the employers are sufficiently associated with each other with respect to the employment of the employee such that they are joint employers. When there is horizontal joint employment, an employee’s total hours worked across the workweek for each of the employers must be aggregated for purposes of FLSA compliance, and each employer is jointly and severally liable for the employee’s wages due under the FLSA, including any overtime premiums due based on the aggregated hours worked.