DOL's 2026 Joint Employer Rule: When Two NJ Companies Share FLSA and FMLA Liability for Your Wages

Subcontracting relationships and franchise systems place New Jersey employees under the direction of multiple companies at once. 

The Department of Labor’s proposed joint employer rule addresses overlapping work relationships. It examines when companies share responsibility for wages and leave protections. Our attorneys at Brandon J. Broderick often see workers receive paychecks from one company while taking day-to-day direction from another. Employers sometimes structure these arrangements to separate payroll responsibility from operational control. 

Joint employer analysis looks past those labels and focuses on how authority works in practice. A relationship presented as staffing or subcontracting on paper can still create shared liability when multiple companies control supervision or working conditions. 

Two companies controlling the same worker can both face liability under the FLSA and FMLA for wage and leave violations. 

In this guide, we discuss how the DOL’s 2026 joint employer rule applies, how shared control is evaluated by courts, and when to consult a wage and hour lawyer in New Jersey. 

Understanding the DOL’s 2026 Joint Employer Rule in New Jersey

Staffing agencies, subcontractors, franchises, and labor vendors shape large parts of New Jersey’s workforce. A worker may receive paychecks from one company while reporting to another company’s warehouse or medical facility. Supervisors from the second company control schedules, approve overtime, assign tasks, and enforce workplace rules.

The setup is the center of the Department of Labor’s 2026 proposed joint employer rule.

On April 22, 2026, the DOL announced a Notice of Proposed Rulemaking addressing joint employment under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. The proposal would restore guidance under 29 CFR part 791. It would also align parts of the FMLA analysis with this approach. 

Federal agencies already pursued similar claims before this proposal. What changed is the DOL’s attempt to create a unified and direct standard explaining when multiple businesses share responsibility for wages and leave rights.

Joint employment isn’t rare in New Jersey. It appears in:

• Warehousing and logistics
• Construction
• Health care staffing
• Cleaning and janitorial work
• Delivery services
• Hotel operations
• Franchise businesses
• Manufacturing
• Temporary staffing arrangements

Many employers assume the company handling payroll carries all legal responsibility, even when probationary employees take direction from another business. Federal agencies and courts look more closely at who actually controls the work. 

Control matters. The DOL’s proposal focuses heavily on working relationships. Federal investigators reviewing wage claims examine how businesses operate day to day. 

A staffing contract describing the relationship as an “independent business relationship” doesn’t automatically shield a client company from liability. If the client company controls schedules, supervises workers, requires mandatory training, or dictates working conditions, investigators may view it as a joint employer. 

FLSA joint employment has financial consequences. When companies qualify as joint employers, both can share responsibility for unpaid salaries and training wages under federal wage law. This can include liquidated damages. 

The FLSA combines hours across joint employers. If a worker spends 25 hours working for one connected company and another 25 hours working for the second company in the same workweek, those hours count together for overtime. 

New Jersey employers already operate in a state with aggressive wage enforcement rules. Federal joint employer scrutiny adds another layer.

Many workers who come to Brandon J. Broderick initially believe they have claims against the staffing company listed on the paycheck. A closer review of supervision and timekeeping often shows that another company controlled important parts of the work. The distinction changes the case. It changes who faces liability and who must answer for violations.

Speaking with a wage and hour attorney in New Jersey helps workers identify every employer involved in the relationship. 

How Joint Employer Liability Works in New Jersey Under the FLSA

The Fair Labor Standards Act governs federal minimum wage and overtime obligations. Joint employment rules decide whether multiple companies share responsibility for compliance.

The DOL’s 2026 proposal states that employers under the FLSA are jointly and severally liable for wages owed to the employee. This means a worker doesn’t need to divide unpaid overtime claims between companies based on percentages of responsibility. Each employer can answer for the full amount owed. Intentional violations may also trigger criminal wage theft exposure. 

Federal investigators and courts look beyond payroll records. Several factors appear in investigations:

• One company controls the employee’s schedule while another company processes payroll.
• A client company supervises workers supplied through a staffing agency.
• A business controls overtime approval even though another company technically employs the worker.
• Supervisors from multiple companies direct the same employee.
• One company controls the timekeeping systems used by another company’s workers.
• A client company disciplines workers supplied through subcontractors or staffing vendors.
• Workers perform labor integral to the client company’s normal operations.

New Jersey industries operate this way more often than many workers realize. We regularly see these arrangements in warehouse and logistics operations. A staffing agency recruits and pays workers. Managers track productivity and enforce attendance rules. Workers never interact with the staffing agency except regarding payroll.

Construction sites create similar issues. Some subcontractors employ workers formally, but the general contractor controls safety requirements and operational direction.

Franchise systems also draw scrutiny. A franchisee may handle payroll while corporate entities impose scheduling systems affecting employees directly.

New Jersey law already leans toward broad worker protections in wage disputes. Employees working more than 40 hours in a workweek are entitled to overtime pay under the New Jersey Wage and Hour Law. These hours must be paid at one-and-one-half times the regular hourly rate. Exemptions are narrow. 

State law also expanded joint liability. P.L. 2019, c.374 imposes shared civil legal responsibility on client employers and labor contractors. The law applies to violations involving state wage laws, tax laws, retaliation provisions, and misclassification-related claims. This law changed the landscape for staffing arrangements in New Jersey. Employers no longer easily distance themselves from labor contractors.

A warehouse company cannot point at the agency if it exercised meaningful control over the workforce. Time records become critical evidence. Courts typically review:

• Clock-in and clock-out records
• Overtime approvals
• Supervisor emails
• Staffing contracts
• Jobsite rules
• Production quotas
• Payroll records
• Scheduling systems
• Communications between vendors and client companies

New Jersey’s Workplace Accountability in Labor List now includes 357 businesses that collectively owe $32.2 million either to workers for unpaid wages or to the state for unpaid taxes and contributions. The list reflects a broader push toward holding businesses accountable for wage and labor violations. 

The DOL’s Joint Employer Rule and Shared FLSA and FMLA Responsibility 

The Family and Medical Leave Act applies to covered employers and eligible employees. A business doesn’t avoid FMLA obligations simply because workers appear on another company’s payroll.

The DOL’s existing FMLA guidance distinguishes between “primary” and “secondary” employers in joint employment situations. A staffing agency commonly serves as the primary employer in temporary placement arrangements. They handle:

• FMLA notices
• Leave administration
• Health insurance maintenance
• Required recordkeeping
• Job restoration obligations

Secondary employers still carry responsibilities. They cannot interfere with FMLA rights or retaliate against workers using protected leave.

Health care staffing arrangements create recurring disputes in New Jersey. Our team often sees nurses and support staff placed through staffing agencies while reporting every day to hospitals, nursing homes, rehabilitation facilities, or medical offices. 

Warehouse operations create similar issues. A worker assigned through a staffing company may spend years working full-time at the same client location under the same supervisors. Once leave is requested, companies sometimes begin separating responsibilities. 

Eligibility becomes important. It depends partly on hours worked and employer coverage thresholds. Joint relationships affect how those calculations work. A business with a relatively small direct payroll may still fall within FMLA coverage.

Joint employment issues also intersect with retaliation claims.

A worker who requests leave shouldn’t lose assignments because two entities refuse to accept responsibility for the compliance. If a client pressures a staffing agency to remove the worker after a leave request, investigators examine both entities closely.

Why New Jersey Businesses Face Added Exposure Under Joint Employer Rules

New Jersey already has some of the country’s strongest wage-and-hour protections. The DOL’s proposed rule arrives in a state where labor contractors, staffing agencies, subcontractors, and franchise systems already operate under heavy scrutiny.

Joint employer liability expands exposure for businesses relying on layered structures. Common problems include:

• Staffing agencies supplying warehouse labor while client companies supervise daily work
• Subcontractors providing labor on construction sites controlled by general contractors
• Franchise operations using corporate scheduling systems and operational policies
• Cleaning vendors working inside office buildings controlled by property management companies
• Health care staffing companies are assigning workers to hospitals and nursing facilities
• Related corporate entities sharing payroll systems and workers

New Jersey’s 2019 client employer and labor contractor law already established joint and several liability in many arrangements. Companies benefiting from labor should not easily escape responsibility for wage violations.

Sometimes a staffing agency closes down or doesn’t have enough money to pay workers what they are owed. Joint employer liability allows workers to pursue companies that also benefited from the labor. This is common in warehouse and logistics operations. Employees work inside facilities run by large corporations but remain officially employed through smaller agencies. 

The DOL’s proposed rule reflects a broader enforcement trend already developing across federal and state labor law. Agencies are looking harder at how businesses structure labor relationships and who truly controls the workforce. 

If you believe multiple companies controlled your work or affected your wages or leave rights, contact us today for a free consultation.