NLRB Restores 2020 February 2020 Joint-Employer Regulation

On February 26, 2026, the National Labor Relations Board (the “NLRB” or “Board”) issued a final rule formally restoring the Board’s February 2020 joint-employer regulation under the National Labor Relations Act (“NLRA”). The final rule replaces the text of the Board’s vacated November 2023 joint-employer rule with the 2020 rule’s narrower standard—one that generally requires a business to both possess and actually exercise “substantial direct and immediate” control over another entity’s employees’ essential terms and conditions of employment to be deemed a joint employer.

Although many employers have effectively been operating under the 2020 standard since a federal court vacated the 2023 rule before it took effect, the Board’s action removes the vacated 2023 regulation from the Code of Federal Regulations (“CFR”) and re-codifies the 2020 rule as the operative regulatory framework. The Board characterized the update as “ministerial” and stated that it creates no separate economic effect. In practical terms, the “change” is that the CFR now again reflects the 2020 rule text, not that the governing standard has newly shifted in practice as of February 26, 2026. The Board also invoked the “good cause” exception to publish the rule without advance notice-and-comment.

This development matters for businesses that operate through staffing arrangements, subcontracting, vendor/service models, and franchise relationships, where joint-employer allegations can expand bargaining obligations and potential unfair labor practice exposure beyond the entity that directly employs the workforce. It can also influence who must participate in bargaining and who may be named in NLRB proceedings arising out of the same workplace.

The Board’s joint-employer standard has shifted multiple times in recent years. The 2020 rule itself was adopted to replace the Board’s earlier Browning-Ferris Industries framework, which had broadened joint-employer liability by considering indirect and reserved control. Understanding that history helps contextualize the current reinstatement and the ongoing regulatory back-and-forth.

What Happened in Early 2024 and Why It Matters

As we previously reported, the Board’s October 2023 final rule was initially set to take effect February 26, 2024, but it never became operative. On March 8, 2024, the U.S. District Court for the Eastern District of Texas vacated the 2023 joint-employer rule—just days before its anticipated effective date—after a challenge brought by the U.S. Chamber of Commerce and other business groups.

In broad strokes, the court concluded that the 2023 rule swept too far by allowing joint-employer status to attach without a meaningful showing of actual control consistent with common-law agency principles. The court also took issue with how the rule’s structure operated in practice—criticizing the rule’s “two-step” framing and reasoning that, as written, the test risked collapsing into a standard that could treat many routine contracting arrangements as joint employment.

As a result of that vacatur, the Board acknowledged in its February 2026 final rule that the 2023 rule “has never taken effect,” and that the 2020 regulation remained the operative rule for determining joint-employer status. The final rule therefore functions primarily as a clean-up of the CFR text to conform the regulatory codification to what has been applied in practice since the vacatur.

Why Joint-Employer Status Matters Under the NLRA

A joint-employer finding can have significant NLRA consequences. If two entities are found to be joint employers of the same group of workers, they may:

have collective bargaining obligations (including responding to bargaining demands and information requests);
face unfair labor practice exposure based on conduct affecting those workers; and
become entangled in representation-case strategy and remedies that would not apply to a non-employer.

Because the concept often arises in business-to-business relationships, joint-employer issues routinely surface during union campaigns, collective bargaining disputes, and unfair labor practice (“ULP”) litigation. For many organizations, the operational question is not whether they have “influence” over a contractor or franchisee, but whether their involvement crosses the line into control over the enumerated “essential” terms in § 103.40(b).

What the Reinstated 2020 Rule Requires

(1) The Focus Returns to Actual Substantial Direct and Immediate Control

Under the 2020 rule, an entity is a joint employer only if it possesses and actually exercises substantial direct and immediate control over at least one essential term and condition of employment in a manner that meaningfully affects the employment relationship. The regulation frames this as whether the entity “share[s] or codetermine[s]” the employees’ essential terms and conditions, and requires proof that the entity’s control “meaningfully affects matters relating to the employment relationship.”

The rule emphasizes that the control must be more than sporadic, isolated, or de minimis—it must have a “regular or continuous consequential effect on an essential term or condition of employment.”

(2) “Essential Terms and Conditions” Are Limited to Eight Categories

The reinstated 2020 rule limits “essential terms and conditions” to a defined list of eight categories (sometimes referred to as the “big 8”):

Wages: An entity exercises direct and immediate control over wages if it actually determines the wage rates, salary or other rate of pay that is paid to another employer’s individual employees or job classifications. An entity does not exercise direct and immediate control over wages by entering into a cost-plus contract (with or without a maximum reimbursable wage rate).
Benefits: An entity exercises direct and immediate control over benefits if it actually determines the fringe benefits to be provided or offered to another employer’s employees. This would include selecting the benefit plans (such as health insurance plans and pension plans) and/or level of benefits provided to another employer’s employees. An entity does not exercise direct and immediate control over benefits by permitting another employer, under an arm’s-length contract, to participate in its benefit plans.
Hours of Work: An entity exercises direct and immediate control over hours of work if it actually determines work schedules or the work hours, including overtime, of another employer’s employees. An entity does not exercise direct and immediate control over hours of work by establishing an enterprise’s operating hours or when it needs the services provided by another employer.
Hiring: An entity exercises direct and immediate control over hiring if it actually determines which particular employees will be hired and which employees will not. An entity does not exercise direct and immediate control over hiring by requesting changes in staffing levels to accomplish tasks or by setting minimal hiring standards such as those required by government regulation.
Discharge: An entity exercises direct and immediate control over discharge if it actually decides to terminate the employment of another employer’s employee. An entity does not exercise direct and immediate control over discharge by bringing misconduct or poor performance to the attention of another employer that makes the actual discharge decision, by expressing a negative opinion of another employer’s employee, by refusing to allow another employer’s employee to continue performing work under a contract, or by setting minimal standards of performance or conduct, such as those required by government regulation.
Discipline: An entity exercises direct and immediate control over discipline if it actually decides to suspend or otherwise discipline another employer’s employee. An entity does not exercise direct and immediate control over discipline by bringing misconduct or poor performance to the attention of another employer that makes the actual disciplinary decision, by expressing a negative opinion of another employer’s employee, or by refusing to allow another employer’s employee to access its premises or perform work under a contract.
Supervision: An entity exercises direct and immediate control over supervision by actually instructing another employer’s employees how to perform their work or by actually issuing employee performance appraisals. An entity does not exercise direct and immediate control over supervision when its 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: An entity exercises direct and immediate control over direction by assigning particular employees their individual work schedules, positions, and tasks. An entity does not exercise direct and immediate control over direction by setting schedules for completion of a project or by describing the work to be accomplished on a project.

This is materially narrower than the 2023 rule’s expanded list, which included, for example, assignment of duties, work rules/methods, and certain safety/health working conditions. As a practical matter, the 2020 rule’s definitions also offer “safe harbor”-style examples of common contracting practices that, standing alone, are not treated as direct and immediate control (e.g., cost-plus contracting; setting operating hours; requesting staffing level changes; refusing site access; setting project schedules or deliverables).

(3) Indirect Control and Reserved Authority Are Not Enough on Their Own

Unlike the vacated 2023 rule, the 2020 rule does not treat indirect or unexercised control as sufficient on its own. Instead, indirect control and contractually reserved but never exercised authority may be considered only to the extent they supplement and reinforce evidence of direct and immediate control over an essential term.

(4) Burden of Proof

The party asserting joint-employer status bears the burden of proof. The regulation also makes clear that joint-employer status is assessed under a “totality of the relevant facts” standard in the particular setting.

How This Differs From the Vacated 2023 Rule

The vacated 2023 rule, discussed in our blog here, would have expanded the circumstances in which an entity could be deemed a joint employer by giving greater weight to reserved and indirect control and by broadening the lens beyond a tight, eight-factor list. While both the vacated 2023 and reinstated 2020 joint-employer standards focused on an entity’s control over essential terms and conditions of employment, the reinstated 2020 rule moves the inquiry back toward the traditional focus on actual, direct control over the core terms of employment. In other words, the 2020 framework is designed to distinguish between (i) contract administration and performance oversight and (ii) participation in employment decision-making for the other entity’s employees. The March 2024 vacatur is the reason the broader 2023 framework never took effect—and the reason the Board is now reverting the CFR text back to the 2020 regulation.

Key Takeaways for Employers

Even under the narrower 2020 standard, joint-employer risk does not disappear. Businesses should consider:

Reconfirm who owns the “big 8” terms. Make sure the vendor/franchisee/staffing firm—not your managers—controls wages, benefits, hours, hiring, discharge, discipline, supervision, and direction.
Use escalation, not execution. When issues arise (performance, misconduct, staffing gaps), your team may report concerns and request outcomes, but avoid being the one who decides discipline, termination, pay changes, or schedules.
Train frontline leaders on what not to do. The quickest path to joint-employer allegations is day-to-day involvement that looks like supervision/direction of another entity’s workers.
Audit and reassess contract provisions. The current regulatory environment presents an opportunity to conduct a comprehensive review of vendor, staffing, franchise, and subcontractor agreements. While the 2020 rule treats reserved authority as generally insufficient standing alone, overly broad reserved-rights clauses, indemnification provisions, and operational control language can still become relevant if coupled with actual direct control in practice—and could prove problematic if the standard shifts again.
Expect ongoing litigation and regulatory attention. The reinstatement is subject to ongoing challenge, and the Board’s reliance on the ‘good cause’ exception to bypass notice-and-comment rulemaking may itself face legal scrutiny. Moreover, future changes in Board composition could prompt yet another rulemaking cycle. The Board’s joint-employer approach has historically shifted with administrations and court decisions, and employers should treat the current standard as potentially temporary. Employers using outsourced labor should monitor developments and build compliance frameworks flexible enough to adapt.
Consider a “who decides” protocol with business partners. For high-frequency issues (schedule changes, performance concerns, removal from site, pay rate changes), document which entity makes the employment decision and how your team should escalate concerns without stepping into decision-maker territory.
Recognize that state-law and multi-agency standards may be broader. The NLRA’s 2020 joint-employer standard does not govern joint-employer analyses under state wage and hour laws, workers’ compensation statutes, anti-discrimination laws, or other federal statutes such as the FLSA and Title VII. Similarly, the Department of Labor and the EEOC may apply different—and often broader—joint-employer tests. Employers should not assume that compliance with the NLRB’s 2020 rule insulates them from joint-employer findings by other agencies or under state law.
Document operational boundaries in real time. Beyond establishing a “who decides” protocol, employers should maintain contemporaneous documentation demonstrating that the putative joint employer did not make employment decisions with respect to another entity’s workers. If a joint-employer claim arises, the factual record of day-to-day operations will carry as much weight as the contractual allocation of responsibilities.
Give franchise systems special attention. Franchisors should carefully review brand-standards provisions, mandatory training programs, technology platforms (e.g., centralized scheduling software), and quality-control mechanisms to ensure they do not cross into “substantial direct and immediate control” over franchisee employees’ essential terms and conditions of employment. Franchise relationships remain a high-risk area for joint-employer allegations.
Assess technology and algorithmic management tools. The increasing use of centralized technology platforms, algorithmic scheduling, and shared data systems across business relationships can blur the lines of control. Even under the 2020 rule, if a putative joint employer’s software is effectively setting schedules, determining pay rates, or directing work for another entity’s employees, that functionality could constitute actual, direct control over essential terms.
Anticipate union organizing strategies. Although the narrower 2020 standard makes it more difficult for unions to bring upstream companies—such as franchisors, lead contractors, or user employers—to the bargaining table, unions may continue to pursue joint-employer theories aggressively in organizing campaigns and unfair labor practice proceedings. Employers should be prepared to respond to these arguments even under the narrower framework.

Bottom Line

The NLRB’s February 26, 2026, final rule formally reinstates the 2020 joint-employer standard, reinforcing that joint-employer status under the NLRA generally requires actual, substantial, direct, and immediate control over a narrowed set of core employment terms. While the change may be largely administrative given the prior court vacatur, it provides employers additional clarity that the narrower 2020 framework remains the governing regulatory standard—at least for now. Because joint-employer issues are intensely fact-specific, employers relying on franchise, vendor, staffing, or subcontractor labor should periodically review both their agreements and on-the-ground practices for alignment with § 103.40’s definitions.