One Driver, Two Companies in 2027: FLSA Joint Employer Overtime Rules for NEMT

Some NEMT owners end up with two companies: one for ambulatory trips and one for wheelchair vans, a second LLC for a new broker, or a partner’s company that shares the same office. Drivers float between them. Each payroll shows a part-time week, but federal wage law may see one long week, and it can make either company pay the overtime on all of it.

This guide covers when two companies count as one for overtime, how to figure the pay, and the Medicaid rules that apply when companies share drivers or vans. For the overtime basics for a single company, such as which waits count as work, see NEMT driver overtime.

When hours at two companies count as one workweek

Overtime is owed on hours over 40 in a workweek, and the employer must total every hour the employee works for it that week. The same rule says that when two or more employers jointly employ a worker, all the hours worked for those employers that week are totaled (29 CFR 778.103).

The Labor Department calls the two-company case horizontal joint employment: the driver works separate hours for each company in the same week. The question is whether the companies are sufficiently associated with each other about that driver. Since its 1958 rules, the Department has pointed to three situations:

1. The companies share the driver by arrangement, such as trading drivers back and forth.
2. One company acts directly or indirectly in the other’s interest in relation to the driver.
3. The companies share control of the driver because one controls the other, is controlled by it, or both are under common control.

The opposite case matters too. If the companies act independently and have nothing to do with each other about the driver, each one counts only its own hours. A driver who also works weekends for a NEMT company you do not own, with no coordination between you, does not add to your overtime.

Separate paperwork does not settle it. The Labor Department’s Opinion Letter FLSA2025-05 (September 30, 2025) says separately incorporated companies may even count as a single employer, and that corporate formalities do not necessarily override the wage law.

Signs the Labor Department looks for

That opinion letter found a restaurant and a members club in the same hotel to be joint employers of a hostess. The facts it relied on map closely onto two NEMT companies under one roof:

• The same owners, and managers who supervise at both.
• Operations that run together, in that case a shared kitchen and a similar menu. For NEMT, think one dispatch desk, one office, and one pool of vans.
• Clocking in at one while working for the other. A driver clocked in under one company while running the other company’s trips is the kind of fact the letter relied on.
• The same pay rate at both companies.
• Schedules that fit together, showing the companies plan the driver’s week as one.

If your two companies share an owner and one dispatcher sends the same drivers out for both, plan on being treated as joint employers.

Worked example: 30 hours at each sister company

Say you own two companies. Company A runs ambulatory trips and pays its drivers $18 an hour. Company B runs wheelchair trips and pays $20 an hour. One dispatcher schedules both, and in one workweek a driver works 30 hours for each.

1. Add the hours. 30 plus 30 is 60 hours, so 20 hours are overtime.
2. Add the straight-time pay. 30 hours at $18 is $540, and 30 hours at $20 is $600, for $1,140.
3. Find the regular rate. When a worker earns two rates in one week, the regular rate is the weighted average: total pay divided by total hours (29 CFR 778.115). $1,140 divided by 60 hours is $19.00.
4. Add the overtime premium. Half of $19.00 is $9.50, and 20 hours at $9.50 is $190.
5. Total for the week. $1,140 plus $190 is $1,330.

If each company paid only straight time, the driver came up $190 short that week. The Labor Department’s opinion letter uses the same split, a worker with 30 hours at each of two coordinated employers, and says the 20 hours of overtime premium can be collected from either employer. Each week stands alone, so a light week at both companies never offsets a heavy one (29 CFR 778.104).

An employer that misses overtime owes it plus an equal amount as liquidated damages (29 U.S.C. 216(b)), and claims reach back two years, or three for a willful violation (29 U.S.C. 255). NEMT driver overtime covers the penalties. Across 52 workweeks, this one driver’s shortfall would be $9,880 before damages.

Staffing agencies, payroll companies, and prime providers

The second kind of joint employment is vertical: the driver works one set of hours, and a second business also benefits from that work and may be an employer too. This is the staffing agency case, and in NEMT it can be the subcontract case.

• Staffing agencies. The Labor Department’s family leave rules say joint employment will ordinarily be found when a temporary placement agency supplies employees to another business (29 CFR 825.106). If you use an agency for drivers, settle in the contract who tracks their hours and who pays overtime before the first shift.
• Payroll companies. Under the same rules, a professional employer organization that only runs payroll, benefits, and paperwork is not a joint employer. One that can hire, fire, or direct your drivers may be.
• Prime providers and subcontractors. When you run trips under another provider’s contract, see NEMT subcontractor work for what each company answers for.

The April 2026 proposal would test vertical cases with four questions: does the business hire or fire the worker, supervise and control the schedule or conditions of work to a substantial degree, set the pay rate and method, and keep the employment records. It also says contract terms that only require the other company to follow the law, run background checks, set safety practices, or train workers on health, safety, or legal compliance do not make joint employment more or less likely. If the rule becomes final, a broker’s or prime provider’s background check and training requirements would likely fall under that language.

California goes further. Under Labor Code 2810.3 (as amended effective January 1, 2020), a business that gets workers from a labor contractor to do its regular work at its premises or worksite shares liability with the contractor for unpaid wages and for missing workers’ comp coverage. It does not apply to a business with fewer than 25 workers, counting supplied workers, or with 5 or fewer supplied workers at a time. A worker must give the business 30 days’ notice before suing, and any waiver of the law is void.

The 2026 proposed rule and where it stands

The federal rule has changed twice since 2020, and a third version is proposed.

• 2020. The Labor Department’s joint employer rule took effect March 16, 2020.
• 2021. The Department rescinded it (86 FR 40939, published July 30, 2021), effective October 5, 2021 after a delay, and removed its FLSA joint employer regulations entirely. It said the rescission was not meant to change its longstanding test for the two-company case.
• 2026. On April 23, 2026, it proposed new rules for the FLSA, the Family and Medical Leave Act, and the farmworker protection law (91 FR 21878). Comments closed June 22, 2026. As of October 6, 2026, the Federal Register lists no final rule under its regulation number, RIN 1235-AA48.

For sister companies, the proposal keeps the same three situations listed above and adds two examples. Two restaurants owned by different franchisees of one chain, with no coordination about the cook, are not joint employers. Two restaurants owned by the same person, which set the cook’s schedule together and agreed on one pay rate, are, and must add the hours. The proposal also says each joint employer is liable for all the hours in the workweek and may take credit for wages the other one paid.

Because the two-company test has stayed the same through every version, you can set up payroll now without waiting for a final rule.

Other rules that tie sister companies together

Overtime is not the only place the law looks past separate LLCs.

• Federal wage law coverage. Related activities run through unified operation or common control for a common business purpose form one enterprise, and the $500,000 yearly sales test applies to the whole enterprise (29 U.S.C. 203(r) and (s)). Two small companies run together for one business purpose can be covered as one even if each sells under $500,000 a year.
• Family and medical leave. The FMLA covers employers with 50 or more employees in each of 20 or more workweeks in the current or prior year. Separate companies count as one employer when they meet its integrated employer test, which looks at common management, linked operations, central control of labor relations, and common ownership (29 CFR 825.104). Workers jointly employed by two companies are counted by both.
• Medicaid ownership disclosures. Each enrolled provider must name any other enrolled provider in which one of its owners has an ownership or control interest, and say whether owners are related as spouse, parent, child, or sibling (42 CFR 455.104). These are due at application, at signing, at revalidation, and within 35 days after an ownership change. Starting a NEMT business with a partner covers who else Medicaid screens.
• Louisiana vans. Louisiana’s Medicaid manual (section 10.3, issued July 14, 2025) says NEMT providers may not share vehicles with other NEMT providers, even when one entity owns more than one provider. See the Louisiana guide.
• Workers’ comp. Overtime pay also shows up when each company’s insurer audits its payroll at the end of the policy year, and states count the overtime part differently. See workers’ comp audit for NEMT.

How to set up two companies so overtime comes out right

1. List the drivers who work for both companies. For each one, ask whether the companies share an owner, a dispatcher, an office, or a pay decision. If any answer is yes, treat that driver’s hours as one workweek.
2. Use one workweek for both companies, with the same start day and hour in writing, so the weeks line up.
3. Keep one timesheet per driver that shows both companies’ hours day by day. Each company still keeps its own payroll records, including the day and time its workweek begins (29 CFR 516.2). The driver timesheet template has a line for the workweek start; add the company name next to each day’s hours.
4. Agree in writing which company pays the overtime premium and how the two companies split the cost.
5. Figure the regular rate across both pay rates, including any bonus either company promised, before multiplying.
6. Check combined hours by midweek, and move late-week trips to a driver who works for only one company when someone is close to 40.
7. Ask each broker how it wants a shared driver listed, and get the answer in writing before the driver runs trips for both companies.

Whether a shared driver should be an employee at all is covered in NEMT drivers: 1099 or W-2. Calling a driver a contractor at one company does not take those hours out of the count if the driver is an employee under the wage law.