On February 26, 2026, the National Labor Relations Board (“NLRB” or the “Board”) formally reinstated its employer-friendly 2020 rule governing when an employer can be held legally responsible for alleged labor law violations as a so-called “joint employer” (think staffing agencies, franchisees, and related entities).
If you feel like you’ve read this e-blast before, it’s not just déjà vu: the NLRB’s joint employer rule has had a bit of a tumultuous journey.
A Familiar Tale
The joint employer standard remained static for more than 30 years. During that time, the NLRB considered two companies to be joint employers only if they shared or co-determined matters governing the essential terms and conditions of employment and actually exercised the right to control those terms and conditions.
In 2015, however, things got interesting. The Board issued its controversial Browning-Ferris decision, renouncing this well-established test and eliminating the requirement that an employer actually exercise control. An employer simply retaining the contractual right to exercise control, even indirect or limited and routine control, was sufficient for a finding of joint employment under this new standard. Browning-Ferris was briefly vacated in December 2017, then reinstated in February 2018.
In 2020, the Board returned to a more employer-friendly standard: in order to be a joint employer, an employer must possess and exercise “substantial direct and immediate control” over one or more essential terms and conditions of employment of another entity’s employees. The rule made it clear that control exercised on a sporadic, isolated, or de minimis basis was not “substantial.”
Just three years later, in 2023, the Board swung back toward a more employee-friendly standard, issuing a rule providing that joint employment exists when one employer simply has the right to exert control over the terms and conditions of employment of another entity’s employees, regardless of whether that right was exercised and without regard to whether any such exercise of control was direct or indirect. A Texas court struck that rule down before it went into effect, however, leaving the 2020 standard in place.
The Ghost of Standards Past
The specter of the less-employer-friendly Browning-Ferris rule continued to haunt employers, though. The prospect of returning to that standard particularly concerned those employers that were operating under parent-subsidiary models in which the parent entity only set general standards but was not involved in day-to-day employee management.
A return to Browning-Ferris also stood to affect employers that used employment agencies to make hiring, wage, benefits, and separation decisions for workers provided under contract to a client entity. In addition to potential unfair labor practice liability, the stricter standard would likely obligate employers that had little to no direct control over employment terms to recognize and bargain with unions and abide by labor contract terms.
Where Are We Now?
The Board issued a final rule on February 26, 2026, withdrawing the 2023 standard for determining joint employer status. This action represents a formal return to the employer-friendly 2020 standard and reinstates the 2020 rule in the Code of Federal Regulations.
What Does This Mean for Employers?
Because the 2023 rule never went into effect, employers have been operating under the 2020 standard for several years now. In other words, practically speaking, absolutely nothing has changed.
As a reminder, under this current standard, an employer is considered a joint employer of another entity’s employees when it both possesses and actually exercises “substantial direct and immediate control over one or more essential terms or conditions of their employment.” Control exercised on a sporadic, isolated, or de minimis basis is not “substantial.”
The rule defines “essential terms and conditions of employment” as an employee’s wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. It also explains precisely what the exercise of direct and immediate control looks like (and doesn’t) with respect to each of these terms and conditions.
Check out our summary below for a refresher, and if you have questions about how this rule applies to your organization, please contact any K|W|W attorney.
| Direct and Immediate Control: | No Direct and Immediate Control: | |
|---|---|---|
| Wages | Actually determining the wage rates, salary or other rate of pay that is paid to another employer’s individual employees or job classifications. | Entering into a cost-plus contract (with or without a maximum reimbursable wage rate). |
| Benefits | Actually determining the fringe benefits to be provided or offered to another employer’s employees, including selecting benefit plans (such as health insurance plans and pension plans) and/or level of benefits provided to another employer’s employees. | Permitting another employer, under an arm’s length contract, to participate in its benefit plans. |
| Hours of Work | Actually determining work schedules or the work hours, including overtime, of another employer’s employees. | Establishing an enterprise’s operating hours or when it needs the services provided by another employer. |
| Hiring | Actually determining which particular employees will be hired and which employees will not. | Requesting changes in staffing levels to accomplish tasks or by setting minimal hiring standards such as those required by government regulation. |
| Discharge | Actually deciding to terminate the employment of another employer’s employee. | Bringing misconduct or poor performance to the attention of another employer that makes the actual discharge decision, expressing a negative opinion of another employer’s employee, refusing to allow another employer’s employee to continue performing work under a contract, or setting minimal standards of performance or conduct, such as those required by government regulation. |
| Discipline | Actually deciding to suspend or otherwise discipline another employer’s employee. | Bringing misconduct or poor performance to the attention of another employer that makes the actual disciplinary decision, expressing a negative opinion of another employer’s employee, or refusing to allow another employer’s employee to access its premises or perform work under a contract. |
| Supervision | Actually instructing another employer’s employees how to perform their work or by actually issuing employee performance appraisals. | Employer’s instructions are limited and routine and consist primarily of telling another employer’s employees what work to perform, or where and when to perform the work, but not how to perform it. |
| Direction | Assigning particular employees their individual work schedules, positions, and tasks. | Setting schedules for completion of a project or by describing the work to be accomplished on a project. |
