The last several federal administrations have gone back and forth regarding how to define a joint employer under federal law and specifically under the Fair Labor Standards Act (FLSA). For the uninitiated, a joint employer exists where two separately incorporated entities are treated as a single employer with respect to an employee or group of employees. Joint employers are jointly and severally liable for FLSA compliance, including any wages, damages and penalties owed to the employees. Importantly, this can be true even where the two entities are, by outward appearances, separate.

Last spring, the Department of Labor (DOL) announced that they were considering a notice of proposed rulemaking (NPRM) to adopt regulations regarding how the department would enforce joint employer liability going forward, which they hope will provide guidance and promote greater uniformity among courts nationwide. While the announcement stated that it would be a “major change,” there is no firm timetable for the adoption. Nonetheless, an opinion from the DOL from earlier this fall may give some indication of where the DOL is headed.

The opinion letter, FLSA 2025-05, responded to an individual employee’s request for an opinion concerning the application of the FLSA to the facts as alleged – facts which the DOL does not independently verify. The employee claimed she worked at both a restaurant and a members-only club, which operated on the first and second floors of an unnamed hotel. The restaurant was located inside the hotel with a members’ club on the second floor. Both the restaurant and members’ club shared a kitchen, offered substantially the same food and beverages, and operated under similar trade names.

The DOL noted that “when one employer employs a worker for one set of hours in a work week, and another employer employs the same worker for a separate set of hours in the same work week, that scenario may present an issue of “horizontal” joint employment.” As the DOL noted, horizonal joint employment can occur where “there is an arrangement between the employers to share an employee’s services.” In that circumstance, the employee’s total hours worked each work week for all of the joint employers must be totaled in order to determine if the employee has received the minimum wage and whether they are entitled to overtime pay. Further, each of the employers is “jointly and severally liable for any wages owed under the FLSA.”

In reviewing the facts presented, the DOL opined that “while the restaurant and member’s club may be separate legal entities, corporate formalities do not necessarily override the FLSA’s application.” In this case, the DOL stated “the two facilities appear to be operationally integrated with each other, including their physical proximity, their common kitchen, and the similar food and beverage menus.” Even though both entities had separate management teams, “some managers periodically supervised and managed both,” and there was overlapping ownership. The DOL’s opinion was further supported because an employee could be “clocked in” at the restaurant and then directed to work at the member’s club. Furthermore, there were identical rates of pay at each facility, and the shifts offered at each do not conflict with each other, which “suggests that they coordinate when scheduling.” All of these factors were indicia to the DOL that the two operations are joint employers under the FLSA, and therefore all of the hours worked in each work week at both facilities should be combined for determining an employee’s overtime, and that the overtime premium should be paid for all hours worked over forty in a work week.

The takeaway from this Opinion Letter is that despite the shifting landscape regarding what is meant by joint employers, the concept remains alive and well in the current DOL. Employers that share employees should carefully analyze their relationship to determine if there are indicia of joint employer status, such as interlocking ownership groups, management teams, operations and scheduling that could potentially lead to joint employer status. If you are unsure of how the latest joint employer decision may impact your business, do not hesitate to reach out to any member of the Spilman labor and employment team.