On February 26, 2026, the National Labor Relations Board issued a final rule withdrawing its 2023 joint employer standard and reinstating the 2020 joint employer rule after a federal court vacated the 2023 rule as unlawful. The 2023 rule never took effect, so the 2020 “substantial direct and immediate control” standard continues to govern when two businesses are joint employers under federal labor law.

Relying on the Administrative Procedure Act’s “good cause” exception, the Board skipped notice and comment and made the rule effective immediately upon publication in the Federal Register.

This update is applicable to all businesses covered by the National Labor Relations Act (NLRA) when they may be treated as sharing responsibility for workers employed by another company, such as people supplied by staffing agencies, subcontractors, or franchisees.

What Employers Need to Do

1. Map high‑risk relationships

• Identify where the organization relies on third-party labor (staffing agencies, subcontractors, franchisees, janitorial/security vendors, logistics partners, etc.).

• Flag any situations where the organization’s managers direct, schedule, hire, or discipline workers employed by another company.

2. Review contracts and practical supervision

• Contracts: Businesses should review services, franchise, and project agreements for clauses that give the company direct control over another employer’s workers, and favor language focused on performance standards rather than day-to-day employment decisions.

• Day-to-Day Supervision: Businesses should instruct leaders not to directly manage non-employees; route instructions and performance concerns through the staffing firm, subcontractor, or franchisee so the direct employer handles scheduling, discipline, and discharge.

3. Train managers and HR on the current standard

• Provide a plain language briefing explaining that joint-employer findings now hinge on actual, substantial, direct control over essential terms, not just contractual rights.

• Use examples tailored to your environment (e.g., ‘Do not tell agency workers when and how to do their tasks—tell the agency supervisor instead’).

4. Align union and litigation strategy

• For locations with union activity or multi-employer worksites, revisit your collective bargaining and unfair labor practice strategies to ensure they reflect the 2020 standard rather than the broader 2023 rule that never took effect.

• Monitor developments in any appeals or new rulemaking efforts so you can adjust your approach if the joint-employer standard shifts again.

Overview

Current Joint-Employer Standard

• The new final rule simply removes the vacated 2023 text from the regulations and restores the 2020 joint‑employer rule in the Code of Federal Regulations.

• Under the 2020 rule, a business is a joint‑employer only if it possesses and actually exercises substantial direct and immediate control over at least one essential term or condition of employment, such as wages, benefits, hours, hiring, discharge, discipline, supervision, or direction.

• Indirect control, or control that is written into a contract but never used, can be considered supporting evidence, but it cannot, by itself, make a company a joint‑employer.

Why This Matters

Narrower but still meaningful exposure:

• The 2020 standard is narrower than the blocked 2023 rule. It generally requires proof that a company is directly and regularly involved in day‑to‑day decisions about another employer’s workers (for example, directing their work or deciding on discipline), rather than merely having that power on paper.

• Even so, a joint‑employer finding still brings significant consequences: shared duties to bargain with unions and shared liability for unfair labor practice claims involving those workers.

Additional Information

Narrower but still meaningful exposure:

• The 2020 standard is narrower than the blocked 2023 rule. It generally requires proof that a company is directly and regularly involved in day‑to‑day decisions about another employer’s workers (for example, directing their work or deciding on discipline), rather than merely having that power on paper.

• Even so, a joint‑employer finding still brings significant consequences: shared duties to bargain with unions and shared liability for unfair labor practice claims involving those workers.

Source Reference

• Federal Register – Withdrawal of 2023 Standard for Determining Joint Employer Status
• Federal Register Vol 91 – Rules and Regulations

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