The U.S. Department of Labor (DOL) has proposed a new rule to standardize the criteria for determining joint employer status under key labor statutes including the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act. This development fits into a broader regulatory trend toward tightening employer accountability for wage-hour and leave compliance across complex corporate structures.

From our practical experience representing Chinese enterprises sponsoring L-1 intracompany transferees and EB-1C multinational executives, this proposed rule signals a need to reassess how your U.S. entities manage labor relationships. The joint employer designation could extend liability to multiple entities within a corporate group or to contractors, thereby increasing compliance risks and potential penalties. For example, a parent company that exerts indirect control over worker schedules or pay through a subsidiary might now be considered a joint employer.

Specifically, the rule aims to establish a uniform standard by evaluating whether an employer "exercises substantial control" over workers, including decisions on hiring, firing, supervision, and employment conditions. This replaces the existing fragmented and often inconsistent tests used by courts and agencies. The proposed criteria are detailed in 29 CFR Part 791 and include factors such as control over work schedules, supervision, and economic dependence.

For companies sponsoring H-1B workers or filing L-1 petitions, the joint employer concept could complicate compliance with Department of Labor wage requirements (such as prevailing wage obligations) and affect how USCIS evaluates employer-employee relationships during visa adjudications (see 8 CFR 214.2(l)(1)(ii)(C) for H-1B employer-employee relationship standards). Employers must ensure that their contractual arrangements clearly delineate responsibilities and control to avoid unintended joint employer status.

We recently assisted a fintech client with a complex corporate structure involving a U.S. parent company and multiple subsidiaries. Due to overlapping supervisory roles, the client faced an RFE questioning the employer-employee relationship for their L-1 petition. After reorganizing management roles and clarifying contractual terms, the petition was approved without further issue. This case underscores the importance of proactively addressing joint employer risks under evolving regulations.

Attorney Insight
Actionable steps we recommend now include: 1) Conduct an internal audit of your U.S. labor arrangements to identify any overlapping control or shared supervision that could trigger joint employer liability; 2) Review and update contracts with staffing agencies and contractors to explicitly define control and responsibilities; 3) Document the employer-employee relationship carefully in L-1 and H-1B petitions, especially regarding supervision and direction, to meet USCIS standards and avoid RFEs; 4) Monitor DOL’s rulemaking updates and be prepared to adapt compliance policies accordingly.

In summary, while the proposed joint employer rule introduces new compliance challenges, it also offers an opportunity for companies to clarify labor relationships and strengthen risk management. For enterprise immigration clients, this means ensuring that your corporate structure supports clear employer-employee relationships consistent with visa requirements and wage laws. Early preparation will help you avoid costly delays or denials.

We will continue tracking this rulemaking closely and provide updates once it is finalized. In the meantime, companies sponsoring L-1, EB-1C, and H-1B workers should prioritize reviewing their labor practices and contracts to safeguard their immigration and labor compliance posture.