The U.S. Department of Labor released a proposed joint employer rule, the Society for Human Resource Management reported, reopening the federal rulemaking that determines when two employers share wage-and-hour liability for a single worker.

Why the rule matters

A joint-employer standard defines when two or more businesses can be held jointly responsible for a worker's pay, overtime and benefits compliance under the Fair Labor Standards Act. The classification affects minimum-wage and overtime exposure, recordkeeping obligations, unemployment insurance assessments and collective-bargaining obligations.

For HR, a shifted standard changes three operational levers:

• Contractor, franchise and staffing classification reviews
• Indemnification language in master service agreements
• Timekeeping, scheduling and wage-and-hour audit controls

A rulemaking shaped by politics

Joint-employer rulemaking has reversed course under successive administrations since 2015. The Obama-era DOL broadened joint liability through the Browning-Ferris Industries administrator's interpretation, which recognized indirect or unexercised control as a basis for shared employer status. The Trump administration's 2020 final rule narrowed the test, requiring proof of direct and substantial control over essential terms of employment. The Biden DOL moved to rescind the 2020 standard and revise the framework again.

Each shift produced an immediate compliance cycle: contract renegotiations, worker-classification re-audits and back-wage litigation. HR leaders have repeatedly asked for a stable standard, arguing that rapid reversals raise compliance costs without clearer worker protections.

What HR should prepare for next

A proposed rule normally triggers a public comment period of 30 to 60 days following publication in the Federal Register. After the comment window closes, the agency reviews submissions, finalizes the regulation and sets an effective date — often at least 60 days later.

HR teams that want to be ready when the comment period opens can take four steps now:

1. Inventory contingent-workforce relationships — contractors, temporary staff, franchisees and parent-subsidiary arrangements — with classification exposure
2. Review indemnification and allocation-of-responsibilities clauses in vendor contracts
3. Brief employment counsel on audit timing and risk prioritization
4. Map supervisor and timekeeping systems to whichever standard the final rule adopts

Questions for outside counsel

The substantive text of the proposed rule — not yet detailed in SHRM's headline report — will determine the answers. HR should ask the following:

• Does the rule revert to a broad indirect-control standard, retain the 2020 narrow test, or set out a new formulation?
• How does the DOL standard interact with the National Labor Relations Board's separate joint-employer precedent, which the NLRB is also revising?
• What safe-harbor language, if any, does the rule offer franchisors, staffing customers and parent companies?
• How does the rule treat vertical (upstream and downstream) versus horizontal (peer) joint-employer relationships?

The calendar ahead

SHRM's headline signals the opening of a rulemaking cycle that will likely shape HR compliance priorities through the next fiscal year. Federal Register publication will start the comment clock. A final rule typically lands six to twelve months later, with an effective date 30 to 60 days after that.

HR's job between now and that effective date is to translate the new standard into operational controls — contract templates, classification audits, payroll configurations and supervisor training. The DOL has reopened the file. The next move belongs to employers and their counsel.