When a business sets its sights on expanding to the United States, there are numerous options to consider in terms of how that expansion takes shape, and one of the most complex areas of consideration for businesses entering the US undoubtedly involves labor regulations. Labor laws in the US are multilayered and constantly changing, with a lot happening in recent years to challenge established best practices, particularly those relating to joint employment or co-employment.
Under the Trump administration, the US has witnessed significant regulatory shifts that directly affected how businesses—domestic and international—navigate these types of employee relationships. So, if you’re looking into joint employment arrangements or using third-party partners to manage US personnel, understanding these changes is critical.
Understanding the Impact of Trump Co-employment Regulations on Global Expansion Strategies
What Is Joint Employment?
Joint employment occurs when two entities effectively employ the same employee at the same time—the most common example being a staffing agency and the company where the jointly employed worker performs tasks. If both entities directly control or influence employment terms such as hiring, firing, wages, and work schedules, they would likely be considered joint employers under US labor law.
Similarly, while often used interchangeably with joint employment, the term co-employment may describe a slightly more intentional situation in which employment responsibility is shared between two entities, yet where the responsibilities remain somewhat divided (such as in the case of outsourcing payroll duties to a third party).
In addition to staffing agencies, these terms could also apply to:
- Franchisors and franchisees
- Companies using subcontractors
- Businesses working with Professional Employer Organizations (PEOs) for payroll or HR management
- Any situation involving outsourced labor and co-managed workforces
The stakes are particularly high when talking about joint employment because joint employers can both be held liable for numerous different violations under the Fair Labor Standards Act (FLSA), as well as obligations related to discrimination claims, union bargaining rights, and more.
Concepts like these often determine whether two or more entities share responsibility for the same employee, and they’ve been at the center of a political shift in recent years that puts joint employment into a new focus.
How Trump Changed Joint Employment Rules
The Trump era introduced a more business-friendly framework that narrowed the definition of joint employment by a lot. This was largely seen as an overt reversal of the Obama-era rules, which had broadened the scope of who could be considered a joint employer.
The Key Aspects of Trump-Era Joint Employment Rules
- Final Rule Issued by the DOL (January 2020) – The US Department of Labor (DOL) published a final rule under Trump, emphasizing “direct and immediate control” over an employee’s terms and conditions of employment as the key determinant of joint employment.
- Four-Factor Test for FLSA Cases – A new rule made it harder to establish joint employment liability, especially for franchisors or companies using staffing agencies. An attached test used in cases of dispute focused on whether the potential joint employer: Who can hire or fire the employee? Who supervises and controls the employee’s work schedule or conditions of employment? Who determines the employee’s rate and method of payment? Who maintains employment records?
- National Labor Relations Board (NLRB) Ruling (2020) – The NLRB also issued its own joint employment rule in 2020 that aligned with the DOL’s interpretation. It stated that an entity is a joint employer only if it exercises substantial direct and immediate control over essential employment terms.
The Trump administration’s approach to joint employment was meant to allow more flexibility in outsourcing labor to boost efficiency without automatically assuming legal liability. While the Biden administration made moves to cancel or rescind much of this legislation, Trump’s second term is set to confirm and continue many of the moves made in his first term regarding labor.
This ongoing regulatory back-and-forth has left many companies confused. As an employer, should you plan your hiring strategies around stricter or looser interpretations? What if you expand now, but the rules shift again next year?
Trump Co-employment Concerns: How It Affects Global Companies
While joint employment mainly deals with direct liability between multiple companies, co-employment may quickly become conflated or confused with joint employment, with misunderstanding often arising in the context of PEO arrangements. Under co-employment:
- A PEO handles HR functions (payroll, benefits, compliance)
- A client company directs daily tasks and work performance
This type of relationship clearly defines roles and comes with established liability expectations. Under Trump, co-employment risks were reduced, encouraging more companies to use third-party HR services in order to streamline their expansion.
However, many organizations misunderstood the line between co-employment and joint employment, potentially exposing themselves to future compliance issues as legal definitions continue to evolve and shift.
The Real Risks of Joint Employment Noncompliance
In cases where employment relationships break down and legal trouble becomes a potential, joint employment may put companies at risk of the following:
- Wage disputes or worker misclassification
- Unclear responsibilities between the primary employer and the third party
- Increased risk of IRS scrutiny or Department of Labor audits
How Trump Joint Employment Rulings and INS Global’s EOR Services Reduce Joint Employment Risk
Whether you’re a large multinational entering a specific market in the US or a smaller startup taking the first steps toward hiring overseas talent, co-employment and joint employment rules can always be a legal minefield. However, instead of relying on long-term stability or predictable changes, let INS Global offer a simple way to manage the processes involved.
Here’s how our US Employer of Record (EOR) model protects your business:
- You Avoid Direct Employment Liability – INS Global can become the sole legal employer of your US-based staff, meaning we handle payroll, taxes, and benefits, and we assume compliance responsibility while you focus solely on operations and performance.
- No Joint Employment Ambiguity – Because INS Global directly hires your workforce, there’s no gray area about who’s responsible for what. You’re not a joint employer under FLSA standards, whether under Trump’s rules or any future changes.
- Stay Ahead of Compliance – US labor law changes rapidly, and we stay updated on federal rulings (DOL, NLRB, IRS), state-specific employment laws (like California or New York), and ongoing policy reversals between presidential administrations so you don’t have to.
- Flexibility Without the Risk – Want to scale up or down quickly? Hiring in multiple states at once, or need to compare opportunities? INS Global gives you the freedom to grow without needing to register a US entity or hire new local administrative support teams.
A Future-Proof Hiring Strategy in a Politically Volatile Environment
The Trump Joint Employment rules reset might have offered temporary relief, but relying on regulatory stability is not a sustainable strategy for long-term growth.
What companies should do now:
- Audit Your Current Partnerships – Are you using contractors, freelancers, or staffing agencies? Are you aware of the rules surrounding your local employment and service contracts?
- Consult Legal Experts – Even if you feel confident now, legal advice is essential—especially if you’re expanding into the US for the first time.
- Use an EOR to Remove the Guesswork – Why risk liability or operational delays when a compliant hiring partner like INS Global can manage everything for you?
With experience helping companies expand globally since 2006, INS Global specializes in navigating complex employment landscapes. Our services go beyond just compliance—we act as a strategic growth partner, offering advice and services tailored to your unique situation.
What you get with INS Global:
- 100% compliant US hiring without opening a local entity
- Dedicated account managers for smooth onboarding and ongoing contract management
- Multilingual support and local labor law expertise
- Quick and easy scalability for short- or long-term projects
In the post-Trump regulatory environment, the level of clarity and control an EOR brings is more important than ever.
The US employment law environment can change quickly, and even small changes can bring catastrophic consequences. So, whether you’re dealing with Trump co-employment questions or future changes under a different administration, the message is clear – don’t wait for the rules to change.
Be proactive, be compliant, and be confident with INS Global.
We help businesses like yours avoid joint employment uncertainty while unlocking the full potential of global talent, without the headache.
Ready to hire in the US with zero risk? Contact INS Global today to learn more about how our EOR services can help you grow faster, smarter, and safer.
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