When Two Employers Share One Worker: What You Need to Know About FMLA Joint Employer Liability

FMLA leave joint employer liability affects thousands of workers and businesses across Michigan — yet most people don't realize it applies to them until a leave request goes wrong.

Here's the quick answer:

When two or more employers jointly employ the same worker, FMLA responsibilities are split between them — but not equally.

This matters most if you work through a staffing agency, a contractor, or any arrangement where more than one business has a say in your work life.

Say you're a nurse placed at a hospital through a staffing agency. The agency is almost certainly your primary employer under the FMLA — meaning they're the ones legally required to approve your leave, keep your health benefits running, and restore your job. The hospital? They're the secondary employer, and they can't interfere with your rights — but they're not on the hook for everything.

Understanding who owes you what — and when that line gets blurry — can mean the difference between getting the leave you're entitled to and getting nothing.

What is Joint Employment Under the FMLA?

In a standard single-employer situation, the lines of responsibility are crystal clear. You work for one business, they pay you, and if they meet the size threshold, they have to grant you leave when you need it.

But joint employment is a different beast. Under the Family and Medical Leave Act (FMLA), joint employment occurs when two or more businesses simultaneously share control over an employee's work or working conditions. Even if the businesses are completely separate legal entities, the law views them as partners in employing that worker.

This has massive implications for employee counting and FMLA coverage. Generally, to be covered by the FMLA, a private employer must have at least 50 employees. Under 29 CFR § 825.106 - Joint employer coverage, employees who are jointly employed must be counted by both employers when determining whether they meet the 50-employee threshold. This is true regardless of whose payroll the employee actually sits on.

For example, if a local manufacturer in Detroit has 40 permanent employees and brings in 15 temporary workers from a staffing agency, that manufacturer now has 55 employees for FMLA coverage purposes. Suddenly, they are a covered employer under the FMLA.

For the workers themselves, this counting rule is a lifesaver when determining Who is eligible for FMLA leave. To take FMLA leave, an employee must work for a covered employer, have 12 months of service, have worked 1,250 hours in the past year, and work at a location with 50 employees within a 75-mile radius. In joint employment, both your primary and secondary workforces count toward that 50-employee/75-mile pool, making it much easier to qualify.

Vertical vs. Horizontal Joint Employment

To understand how joint employment works in practice, we have to look at the two different ways it can manifest: vertical and horizontal joint employment.

• Vertical Joint Employment: This is the most common setup. It occurs when an employee has a direct employment relationship with one employer (like a staffing agency or subcontractor) who then leases or provides their labor to another business (the client employer). The employee is economically dependent on both. If you are placed at a worksite by a temporary agency or a Professional Employer Organization (PEO), you are likely in a vertical joint employment relationship.
• Horizontal Joint Employment: This happens when an employee is employed by two separate but closely associated businesses. For example, if you work 25 hours a week at a restaurant in Chicago and another 20 hours a week at a sister restaurant owned by the same parent company, with shared management and coordinated scheduling, those two entities are horizontally associated. Under the FMLA, your hours across both locations are aggregated, and both businesses share joint responsibility.

Understanding FMLA Leave Joint Employer Liability

What happens when an employer violates your rights under the FMLA? Under federal law, joint employers can face joint and several liability, meaning both can be held responsible for damages. However, the courts have set some important boundaries on this.

In the landmark case Arrigo v. Linkstop, the court clarified that joint employer status under the FMLA does not automatically mean both employers are equally liable for every single violation. Instead, liability is tied directly to the specific obligations assigned to each employer. If a staffing agency (the primary employer) wrongfully fires an employee for taking FMLA leave, the client company (the secondary employer) might not be held liable for those damages if they had no part in the termination and did not interfere with the leave.

However, if you are a victim of FMLA violations, knowing What are my rights if my employer violates FMLA in Michigan is crucial. You have the right to file a complaint with the Department of Labor or bring a private lawsuit to recover lost wages, benefits, and potentially liquidated damages.

Primary vs. Secondary Employer Roles

To keep the wheels turning without constant legal bickering, the Department of Labor divides joint employers into two camps: Primary Employers and Secondary Employers. Their duties are distinct, as outlined in the DOL's Fact Sheet #28N: Joint Employment and Primary and Secondary Employer Responsibilities.

Primary Employer Responsibilities

The primary employer bears the brunt of the administrative work. In most staffing agency arrangements, the agency is the primary employer. Their duties include:

• Providing all required FMLA notices to the employee.
• Processing leave requests and administering the FMLA leave.
• Maintaining the employee’s group health benefits during their absence.
• Restoring the employee to their equivalent position upon return.

Secondary Employer Responsibilities

The secondary employer (usually the client company hosting the worker) has fewer administrative burdens, but they still have strict legal guardrails:

• They must not interfere with, restrain, or deny an employee’s attempt to exercise their FMLA rights.
• They are prohibited from retaliating or discriminating against a joint employee who takes leave.
• They must keep basic payroll and employee identification records.
• They must accept the employee back to work when they return from leave if they are still using temporary workers from that agency.

How Staffing Agencies, PEOs, and Client Employers Fit In

Let's look at how these roles play out in the real world with staffing agencies, Professional Employer Organizations (PEOs), and client employers.

• Staffing Agencies: Because staffing agencies typically handle hiring, firing, payroll, and benefits, they are almost always classified as the primary employer. The client employer where the worker actually performs the day-to-day labor acts as the secondary employer.
• Professional Employer Organizations (PEOs): PEOs operate differently. They usually enter into "co-employment" agreements to handle administrative tasks like payroll, tax filings, and HR compliance. Under FMLA regulations, if a PEO only performs administrative functions and does not exercise direct control over the employees (such as hiring, firing, or scheduling), the PEO is not a joint employer. In this case, the client employer remains the sole employer and holds all FMLA responsibilities. However, if the PEO does exercise direct control, a joint employment relationship is established.

The 2026 DOL Proposed Joint Employer Rule

In April 2026, the Department of Labor published a highly anticipated Notice of Proposed Rulemaking (NPRM) designed to establish a single, unified standard for determining joint employer status across the FLSA, FMLA, and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

This proposed rule aims to replace years of legal confusion and varying standards across federal courts, providing a clearer "economic reality" framework. For a detailed breakdown of these developments, you can read Consistency and Clarity: DOL Proposes Unified Joint-Employer Standard.

To see how the landscape is shifting, let's compare the previous 2020 regulatory framework with the proposed 2026 rule:

How the 2026 Proposed Rule Impacts FMLA Leave Joint Employer Liability

The proposed 2026 rule relies heavily on a core four-factor test to determine whether a vertical joint employment relationship exists. Courts and investigators will look at whether the potential joint employer:

1. Hires or fires the employee.
2. Supervises and controls the employee’s work schedules or conditions of employment to a substantial degree.
3. Determines the employee’s rate and method of payment.
4. Maintains the employee’s employment records.

Crucially, the 2026 proposed rule reintroduces the concepts of reserved control and indirect control. If a client company reserves the contract right to demand that a staffing agency fire a specific worker—even if they never actually exercise that right—that reserved control can now weigh heavily in favor of finding a joint employer relationship.

This means businesses can no longer shield themselves from FMLA leave joint employer liability simply by writing "not a joint employer" into their contracts while retaining back-end control over the workforce.

Compliance Strategies for Joint Employers

For businesses operating in Michigan and Illinois, managing joint employment relationships requires proactive planning to avoid costly litigation and unexpected Department of Labor audits. If you are unsure of your standing, you may wonder, Can an employer deny an employee's request for FMLA or PMLA leave? The answer is yes, but only under very specific legal conditions. Denying leave incorrectly due to a joint employment misunderstanding is a fast track to a lawsuit.

Best Practices to Mitigate FMLA Leave Joint Employer Liability

To protect your business and ensure your workers are treated fairly under What is the Family and Medical Leave Act (FMLA), we recommend implementing these key operational practices:

• Conduct Regular Audits: Audit your relationships with third-party staffing agencies, subcontractors, and PEOs. Evaluate who actually controls hiring, firing, scheduling, and payroll using the DOL's four-factor test.
• Draft Clear Contracts: Ensure your vendor agreements explicitly define which entity is the primary employer responsible for FMLA notices, leave administration, and benefit maintenance. Include robust indemnification clauses to protect your business if the other party fails to comply.
• Align Contracts with Daily Operations: Do not rely on contract language alone. If your contract says you do not supervise temporary workers, but your shift managers are actively assigning tasks, tracking hours, and writing up disciplinary reports on the factory floor, the courts will look at your actual practices, not your paper contract.
• Train Your Supervisors: Ensure your managers and HR personnel understand that temporary or leased workers have FMLA rights. Supervisors must know that they cannot terminate a temporary worker's placement simply because they requested time off for a medical emergency.

Frequently Asked Questions About FMLA Joint Employment

How are employees counted for FMLA eligibility in a joint employment setup?

In a joint employment arrangement, the employee must be counted by both the primary and secondary employers. For the 50-employee/75-mile eligibility test, the employee's worksite is normally considered the office of the primary employer (the staffing agency) from which they are assigned or report. However, if the employee has been physically working at the secondary employer's facility for at least one year, that physical facility becomes their worksite for counting purposes.

Can a secondary employer be held liable for FMLA interference?

Absolutely. Even if a secondary employer is not responsible for administering the FMLA leave or paying benefits, they are strictly prohibited from interfering with, restraining, or denying an employee’s FMLA rights. They cannot retaliate against a joint employee, nor can they refuse to accept a worker returning from FMLA leave if they are still using other workers from the same staffing agency.

What happens if the primary employer fails to provide FMLA leave?

If the primary employer (such as a staffing agency) fails to fulfill its FMLA obligations—such as failing to provide required notices or maintain health benefits—the primary employer is liable for those violations. However, the secondary employer must still support compliance by not interfering with the worker's rights and accepting them back when they return. The primary employer's failure does not give the secondary employer a green light to violate FMLA rules.

Protecting Your Rights with Marko Law

Navigating the complexities of FMLA leave joint employer liability can be overwhelming, whether you are an employer trying to stay compliant or an employee fighting for the medical leave you deserve. The rules are intricate, and a single misstep can have massive legal and financial consequences.

At Marko Law, we are proud to be a premier Detroit-based law firm specializing in employment law, civil rights, and personal injury. Serving clients across Detroit, Mount Pleasant, and Chicago, our team has a proven track record of securing over $500 million in client recoveries.

We believe that everyone deserves access to high-quality legal representation, which is why we offer completely free consultations and operate on a contingency fee basis — meaning you pay absolutely no fees unless we win your case.

If you believe your FMLA rights have been violated, or if you need expert guidance on how federal leave laws apply to your unique joint employment situation in Michigan, do not wait. To learn more about how federal and state leave laws protect you, read our guide on What is the Family and Medical Leave Act (FMLA) and how does it apply in Michigan.

Contact us today to schedule your free, confidential consultation. Let us stand up for your rights and help you secure the justice you deserve.