On April 23, 2026, the U.S. Department of Labor issued a proposed rule to narrow when two businesses are treated as 'joint employers' under the Fair Labor Standards Act. It targets arrangements involving staffing companies, franchisor-franchisee relationships, vendor-supplier setups, and contractor-subcontractor chains. The SBA's Office of Advocacy flagged the rule as significant for small businesses in a May 6, 2026 post.
Why this matters for founders
If you use a staffing agency, run a franchise, or rely heavily on subcontractors, joint-employer status determines whether you can be held liable for another company's wage-and-hour violations. A narrower test generally reduces your exposure, but the rule is only proposed, watch for the final version before assuming it applies. Review your staffing and franchise contracts now so you know where liability sits today.
Source: SBA Office of Advocacy
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