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On February 26th, 2026, the National Labor Relations Board (NLRB) officially reinstated its 2020 Joint Employer standard. Specifically, to do so, the agency needed to formally withdraw a 2023 Joint Employer standard. That final rule was to go into effect on February 26th, 2024. However, a ruling by a U.S. state court pushed the effective date to March 11th, 2024. Before that March 11 date, though, the U.S. District Court for the Eastern District of Texas ruled that the 2023 Joint Employer standard was “defined overbroadly.” Following this ruling, the original 2020 Joint Employer rule remained in effect, unofficially. However, the 2023 Joint Employer standard was never formally vacated. Previously, in February 2025, the NLRB eliminated more than a dozen agency labor law policies.
Background and Earlier Rescission of the 2020 Joint Employer Rule
Established in March 2020, the NLRB’s 2020 Joint Employer standard provided updated guidance for determining joint employer status in specific situations. Notably, the rule applied when an employee performed work for their employer that simultaneously benefited another individual or entity. Additionally, the rule included guidance on identifying factors that would not be relevant when determining joint employer status. The 2020 final rule stated that a putative joint employer must “possess and exercise . . . substantial direct and immediate control” over essential terms and conditions of employment.
In 2021, the NLRB was reorganized after the Joseph R. Biden administration took office. Accordingly, the majority of the newly formed NLRB held that the 2020 Joint Employer rule failed to consider any U.S. Department of Labor (DOL) guidance issued before 2017. The NLRB noted that the rule’s stipulations had no foundation in common law. Given that, the NLRB rescinded the 2020 final rule.
Overview of the 2023 Joint Employer Standard
In adopting the 2023 Joint Employer final rule, the NLRB stated that the new rule would more faithfully ground the Joint Employer standard in established common law principles. In particular, the final rule considered a possible joint employer’s authority to control essential terms and conditions of employment:
- whether or not it exercises that control; and
- regardless of whether such control is direct or indirect.
Overall, the rule established that an entity may be a joint employer of a group of employees if each entity meets two criteria. Firstly, the entity has an employment relationship with the employees. Secondly, they share or codetermine one or more of the employees’ essential terms and conditions of employment. These terms and conditions of employment include the following:
- wages, benefits, and other compensation;
- work hours and scheduling;
- ability to assign duties;
- responsibility to supervise duties;
- work rules and directions governing the manner, means, and methods to perform duties, as well as discipline;
- the ability to hire and discharge employees; and
- control of working conditions related to workplace safety hazards.
Reasons for Vacating the 2023 Joint Employer Rule
As has been noted, the U.S. District Court for the Eastern District of Texas struck down what was known as the “2023 Joint Employer final rule.” According to Littler, by vacating the 2023 Joint Employer final rule, the district court:
- declared the 2023 regulations to be contrary to established law, as they went beyond the bounds of the common-law definition of employment; and
- claimed the 2023 rule rescinded the original 2020 “arbitrarily and capriciously” under the Administrative Procedure Act (APA).
Additionally, the court held that the 2023 Joint Employer final rule was unlawfully broad because it would have allowed the NLRB to make joint employer findings based solely on whether employer control was direct or indirect.
Employer Takeaways
In conclusion, as mentioned previously, the 2023 Joint Employer standard was vacated basically in name only; it was never made official. Littler states that “…the official Code of Federal Regulations had not yet been updated to reflect the return of the previous standard. This left the Board without a formal, codified rule on the books.” Now, by formally codifying the 2020 Joint Employer rule, the NLRB has closed any gaps in the law.
As touched upon earlier, the official switchover to the previous final rule restores the “direct and immediate control” standard. Under this standard, employers are considered a joint employer only if they exercise “substantial direct and immediate control” over the essential terms and conditions of another company’s employees. Businesses may need to update workplace policies to officially reflect the latest Joint Employer standard. Additionally, any employers with questions about the latest NLRB developments should consult their appropriate legal counsel.
