Labor Department Issues Final Joint Employer Rule
The Labor Department (DOL) yesterday announced a final rule to provide a clearer methodology for determining joint employer status. The rule will provide employers clarity and certainty regarding their responsibility to pay federal minimum wage and overtime for all hours worked over 40 in a workweek.
Where an employee performs work for the employer that simultaneously benefits another individual or entity, the Labor Department provides a four-part test to determine whether the potential joint employer actually exercises the power to:
- Hire or fire the employee;
- Supervise and control the employee’s work schedules or conditions of employment;
- Set the employee’s pay rate and method of payment; and
- Maintain the employee’s employment records.
Whether a person is a joint employer will depend on all the facts in a particular case. Additional factors may also be relevant in determining whether another person is a joint employer in this situation, but only when they show whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.
The new rule will take effect on March 16. It includes a set of joint employment examples to further assist in clarifying joint employer status.
“This final rule furthers President Trump’s successful, government-wide effort to address regulations that hinder the American economy and to promote economic growth,” said Secretary of Labor Eugene Scalia.
NAHB welcomes the rulemaking from DOL's Wage and Hour Division as two other federal agencies similarly seek to narrow their definitions of joint employment. Under the broader interpretations utilized by the Obama administration, builders faced uncertainty about what level of necessary oversight and coordination of their subcontractors might trigger joint employer liability.
For more information, contact David Jaffe.
Latest from NAHBNow
Building material costs increased by 6.7% over the past 12 months, according to results from the survey for the July 2026 NAHB/Wells Fargo Housing Market Index (HMI).
Shirley McVay Wiseman, 1989 NAHB president, passed away on Sunday, Aug. 23. A pioneer in the home building industry, Wiseman was the first woman elected president of NAHB.
Latest Economic News
The latest report shows the Federal Reserve’s preferred inflation gauge remains sticky in July, complicating the Fed’s path to its long-term 2% target. Meanwhile, consumer spending remains resilient but is showing signs of slowing, with real consumer spending unchanged in July. Households are pulling back on spending amid persistent inflation.
Multifamily missing middle construction declined during the second quarter of 2026.
Elevated borrowing costs, rising inflation and broad economic uncertainty continue to curb buyer demand and hold back new home sales.