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🗞️ NLRB Resets the Clock: Joint-Employer Standard Reverts to 2020 Rule

On Feb. 26, 2026, the NLRB formally withdrew its Biden-era joint-employer rule and reinstated the narrower 2020 standard, requiring proof of substantial direct and immediate control over workers.

onthelaborfront

26 Feb 2026 — 4 min read

On February 26, 2026, the National Labor Relations Board (NLRB) issued a final rule formally withdrawing its October 2023 joint-employer rule and reinstating the standard it established in February 2020. The rule is set for publication in the Federal Register on February 27, 2026, and takes effect immediately.

The joint-employer doctrine determines when two separate businesses — such as a franchisor and franchisee, or a staffing agency and its client — are legally treated as co-employers of the same workers, triggering shared bargaining obligations and potential shared liability for unfair labor practices under the National Labor Relations Act (NLRA).

The history of this standard reflects a decade of regulatory volatility. The 2015 Browning-Ferris Industries decision under the Obama-era Board significantly broadened the standard by allowing joint-employer findings based on reserved or indirect control — even where such control was never actually exercised. That ruling drew intense business-community opposition and a series of attempted reversals, including the short-lived Hy-Brand decision in 2017, which was vacated in 2018 on procedural grounds and restored the Browning-Ferris standard by default.

The 2020 final rule, issued during the first Trump administration, drew the line more narrowly: joint-employer status would require that an entity both possess and exercise "substantial direct and immediate control" over one or more essential terms and conditions of employment — defined exclusively as wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. Indirect control and contractually reserved but unexercised authority were explicitly excluded.

The Biden-era Board replaced that standard in October 2023 with a rule rooted in common-law agency principles, under which joint-employer status could be found based on an entity's authority to control essential employment terms — regardless of whether that control was ever actually exercised, and regardless of whether it was direct or indirect. Before the 2023 rule could take effect, however, a U.S. District Court for the Eastern District of Texas vacated it in March 2024 as both "contrary to law" and "arbitrary and capricious." The NLRB subsequently voluntarily dismissed its appeal.

Today's action formally closes that chapter. The Board determined that good cause existed to bypass a notice-and-comment period — characterizing the action as "ministerial" given that the 2023 rule never took effect and the 2020 standard has functionally governed all joint-employer determinations since the Texas court's ruling. The reinstated standard retains the requirement that direct and immediate control have a "regular or continuous consequential effect" on an essential employment term, expressly excluding control exercised on a "sporadic, isolated, or de minimis basis."

In a concurrent development, the NLRB also reaffirmed the outcome of its 2015 Browning-Ferris decision at the direction of a federal court, while specifying that the ruling has "no application to cases arising after the effective date of the Board's 2020 joint employer rule" — effectively limiting Browning-Ferris to its own historical facts.

The practical consequences of this rule are most acute in industries with complex, multi-party employment structures: franchise systems, temporary staffing arrangements, construction subcontracting, and gig economy platforms. Under the now-withdrawn 2023 standard, workers in these arrangements had a broader pathway to establishing joint-employer relationships, which supporters argued strengthened their ability to organize and hold multiple controlling entities accountable at the bargaining table. The reinstated 2020 standard narrows that pathway by requiring proof of substantial direct and immediate control, which proponents contend provides greater legal predictability for businesses while critics argue it limits workers' ability to address the full scope of entities that may influence their working conditions. The absence of a notice-and-comment period may itself invite future legal challenge, though the Board's procedural rationale is grounded in the judicial history of the 2023 rule.

Key Points

The NLRB's February 26, 2026, final rule formally withdraws the October 2023 joint-employer rule and reinstates the 2020 standard, effective immediately.
Under the reinstated standard, joint-employer status requires that an entity possess and exercise "substantial direct and immediate control" — not merely reserved or indirect authority — over essential employment terms.
Essential terms are narrowly defined as: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.
The Board bypassed notice-and-comment rulemaking, citing the 2023 rule's judicial vacatur and the ministerial nature of the restoration.
The 2023 rule was struck down in March 2024 by the U.S. District Court for the Eastern District of Texas as "arbitrary and capricious" and "contrary to law."
The standard has oscillated across five iterations since 2015, reflecting persistent regulatory instability in this area of labor law.
The Board simultaneously reaffirmed the Browning-Ferris outcome per court order, while limiting its precedential scope to pre-2020 cases.
Industries most affected include franchise systems, staffing agencies, construction subcontractors, and gig economy platforms.

Primary Source Authors: NLRB Board Members Prouty, Murphy, and Mayer

Primary Source: Standard for Determining Joint-Employer Status — Final Rule (Feb. 26, 2026)

Primary Source Link: https://www.nlrb.gov/news-publications/news/news-releases