NLRB Finalizes Rule Reinstating 2020 Joint Employer Standard

On February 26, 2026, the National Labor Relations Board issued a final rule rescinding its 2023 joint employer regulation and formally reinstating its 2020 joint employer rule.

In practical terms, the rule largely confirms the existing legal framework, as the 2023 rule never took effect after being invalidated by a federal court.

The 2020 rule confirms that joint employer status depends on whether an entity exercises substantial direct and immediate control over essential terms and conditions of employment.

Why Does Joint Employer Status Matter?

Joint employer status can significantly affect an organization’s obligations under the National Labor Relations Act.

If two entities are found to be joint employers:

• Both may be required to bargain with a union;
• Both may be responsible for complying with collective bargaining obligations; and
• Both may face unfair labor practice liability.

Joint employer issues commonly arise in relationships involving staffing agencies, contractors, subcontractors, franchise operations, and service vendors. Even entities that do not directly employ workers may have obligations under the NLRA if they exercise sufficient control over working conditions.

How Has the Standard Changed Over Time?

The joint employer standard has shifted repeatedly, with the primary question being how much control is required to establish a joint employment relationship.

Earlier NLRB decisions generally required evidence of direct and immediate control over employment terms. In 2015, the NLRB broadened the test to include indirect control and unexercised contractual authority. In 2020, the NLRB adopted a regulation requiring proof that an entity actually exercises substantial direct and immediate control over essential employment terms.

What Does the 2020 Rule Require?

Under the reinstated rule, joint employer status exists only in those situations where an entity actually exercises substantial direct and immediate control over essential terms and conditions of employment.

Essential terms include:

• Wages and benefits;
• Hours and scheduling;
• Hiring and discharge;
• Discipline; and
• Supervision and direction.

Indirect influence, routine contract administration, or reserved authority generally are not sufficient on their own to establish joint employer status.

What Should Employers Do Now?

Although the rule does not represent a major shift in the applicable standard, joint employment remains an important consideration in relationships involving vendors, contractors, and other business partners.

Employers should consider reviewing their agreements and operational practices to ensure they reflect the intended division of responsibilities. Organizations may also wish to evaluate how managers interact with partner organizations and their employees and ensure that managers understand the potential implications of joint employment.

For additional information about the NLRB’s joint employer rule or assistance evaluating potential joint employment issues, please contact the author of this alert or your regular Franczek attorney.