NLRB Reinstates Narrower Joint-Employer Standard First Implemented During President Trump’s First Term

Summary

On February 25, 2026, the National Labor Relations Board (“NLRB” or “Board”) issued a final rule for determining joint-employer status (“2026 Rule”) under the National Labor Relations Act (“NLRA”), formally rescinding the 2023 joint-employer rule (“2023 Rule”) that had been struck down by a court. The 2026 Rule reinstates the 2020 standard for determining joint-employer status and narrows the circumstances in which two or more employers may be found to be joint employers under the NLRA. Under the 2026 Rule, entities may be considered joint employers only if they possess and exercise “substantial direct and immediate control over one or more essential terms or conditions” of employment, such as wages, benefits, hours of work, hiring, discharge, discipline, supervision, or direction.[1]

The Latest in a Line of Changes to the Joint-Employer Standard

The issuance of the 2026 Rule marks the latest development in the NLRB’s shifting joint-employer standards.

In 2020, the Board adopted a rule requiring “substantial direct and immediate control” over one or more “essential terms or conditions of employment” to establish joint liability (“2020 Rule”). Our post on the 2020 Rule can be found here.

In 2022, the Board proposed replacing that standard with a test under which entities could be deemed joint employers based on “authority to control (whether directly, indirectly, or both), or . . . exercise the power to control (whether directly, indirectly, or both) one or more of the employees’ essential terms and conditions of employment.”[2] It also proposed replacing the defined list of essential terms or conditions of employment with a non-exhaustive list. Our post on that proposal can be found here. This approach required only evidence of indirect control and expanded what constitutes essential terms or conditions of employment. In October 2023, the NLRB published the proposed rule as the 2023 Rule.[3]

In March 2024, the U.S. Distrct Court for the Eastern District of Texas issued an order vacating the 2023 Rule.[4] Since then, the NLRB has continued to apply the tighter standard from 2020.

The 2026 Rule

Under the 2026 Rule, an entity is considered a joint employer only if it possesses and exercises “substantial direct and immediate control” over one or more of those essential terms.[5] That control should be “direct and immediate” and have a “regular or continuous consequential effect” on the employees’ essential terms and conditions.[6]

The 2026 Rule also narrows the definition of “essential term and conditions.” The 2026 Rule returns to a defined list of essential terms and conditions for employment: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.[7] By contrast, the list of factors in the 2023 Rule was non-exhaustive and included other factors such as other compensation, scheduling, workplace health and safety, and work assignment.

Other factors can be probative of joint-employer status, but only to the extent that the factor “supplements and reinforces evidence” of the entity’s possession or exercise of direct and immediate control over the employee.[8] These factors are: evidence of the entity’s indirect control over essential terms and conditions of employment of another employer’s employees, any authority over the essential terms and conditions of employment of another employer’s employees contractually reserved but not exercised by the entity, and the entity’s control over things other than the essential terms and conditions of employment.[9]

No Notice and Comment Period Required

The NLRB characterized the rulemaking as ministerial, explaining that it merely implemented the Court’s order vacating the 2023 Rule and therefore required no notice and comment period.[10] The NLRB found good cause to make repeal and replacement of the 2023 Rule effective immediately.[11]