On February 26, 2026, the National Labor Relations Board (NLRB) formally reinstated its 2020 joint-employer standard, replacing a broader rule issued in 2023 that had been struck down in federal court.
The reinstatement returns labor law to a narrower definition of when two companies are considered “joint employers.” The change has important implications for businesses that rely on staffing agencies, subcontractors, franchise arrangements, and other shared workforce models—as well as for employees and unions navigating collective bargaining rights.
Below is a breakdown of the rule, why it matters, and what workers and employers should understand going forward.
What Is the Joint-Employer Standard?
The joint-employer standard determines when two separate companies share legal responsibility for the same workers under the National Labor Relations Act.
Under the reinstated 2020 rule, a business will only be considered a joint employer if it:
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Possesses and exercises substantial, direct, and immediate control over employees, and
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That control affects essential terms and conditions of employment.
These “essential terms” include:
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Wages
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Benefits
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Hours of work
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Hiring and firing decisions
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Discipline
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Supervision and direction of employees
Importantly, indirect influence or unexercised contractual authority alone is not enough to establish joint-employer status. The control must be actual, substantial, and direct.
Why the Rule Changed
The joint-employer standard has shifted several times over the past decade due to changes in administration and legal challenges.
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2015: A broader standard allowed joint-employer status based on indirect control.
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2020: The NLRB narrowed the standard to require direct and immediate control.
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2023: A new rule attempted to expand the definition again.
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2026: The NLRB formally withdrew the 2023 rule and reinstated the 2020 standard.
The decision is widely viewed as more favorable to businesses, particularly those operating franchise systems or using staffing agencies.
Impact on Businesses
For many companies, the reinstated rule reduces potential liability and compliance complexity.
1. Reduced Legal Exposure
Businesses are less likely to be deemed joint employers, which means they may avoid responsibility for labor violations committed by contractors or franchisees.
If two companies are considered joint employers, both may be required to:
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Bargain with a union
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Share liability for unfair labor practices
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Be subject to union picketing or economic pressure.
By narrowing the standard, the 2020 rule limits when those obligations apply.
2. Greater Certainty for Franchise and Contract Models
Industries that commonly rely on shared employment structures—such as hospitality, construction, logistics, and franchising—may see greater operational flexibility.
However, businesses should still review their practices carefully. Even under the narrower rule, actual control over hiring, discipline, scheduling, or wages can still create joint-employer liability.
3. Contract Language Alone Is Not Enough
The NLRB continues to focus on real-world control, not just written agreements. Companies that effectively manage or supervise another company’s workforce could still trigger joint-employer status.
Impact on Union Members and Organized Labor
For unions and workers seeking collective bargaining rights, the reinstated rule may create additional challenges.
1. Harder to Bring Multiple Companies to the Bargaining Table
Under the narrower standard, workers must show that a company directly controls key employment terms before it can be required to negotiate.
In many modern workplaces—especially franchise systems or gig-economy arrangements—the entity that influences wages or policies may not exercise direct control over workers. This can make organizing efforts more complex.
2. Reduced Leverage in Labor Disputes
If a corporation is not considered a joint employer, workers may only be able to negotiate with their immediate employer, even if a larger company influences working conditions.
Some labor advocates argue that this limits workers’ ability to address issues within complex supply chains and franchised business models.
What Employees Can Do to Protect Their Rights
Although the joint-employer standard has narrowed, workers still have strong rights under federal labor law.
1. Understand Your Rights Under Federal Labor Law
Employees have the right to:
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Organize with coworkers
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Discuss wages and working conditions
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Join or support a union
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Engage in protected concerted activity
These rights remain protected under the National Labor Relations Act regardless of the joint-employer standard.
2. Document Workplace Control
If workers believe a larger company is influencing their employment conditions, documentation can be important. Evidence may include:
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Who sets schedules
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Who supervises work
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Who determines pay rates
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Who disciplines employees
Such evidence can help determine whether joint-employer status may apply in practice.
3. Seek Guidance from Labor Professionals
Employees facing workplace disputes should consider consulting:
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A labor attorney
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A union representative
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The NLRB regional office
These resources can help workers understand their rights and options.
Looking Ahead
The reinstatement of the 2020 joint-employer standard highlights how labor policy continues to evolve with changes in political leadership and judicial rulings.
For businesses, the rule provides greater clarity and reduced risk in multi-employer arrangements. For workers and unions, however, it may make it more difficult to hold larger corporations accountable for workplace conditions when those companies operate through contractors or franchise structures.
As labor regulations continue to shift, both employers and employees should stay informed about how these policies affect workplace rights and responsibilities.
