On February 27, 2026, the National Labor Relations Board (NLRB) published a final rule withdrawing its 2023 joint employer standard and formally restoring the prior rule governing joint employer status under the National Labor Relations Act (NLRA). The rule took effect immediately upon publication and reinstates the regulatory text originally promulgated in February 2020. 

How the Rule Came to Be Published 

The final rule follows a series of legal and procedural developments that prevented the 2023 joint employer standard from ever taking effect. In October 2023, the Board issued a rule intended to rescind and replace the 2020 joint employer rule. That 2023 rule was subsequently challenged in federal court, and on March 8, 2024, the U.S. District Court for the Eastern District of Texas vacated it in its entirety. As a result, the Board determined that the 2023 rule had no legal effect and that the 2020 rule remained the operative standard. 

To comply with the court’s order, the Board revised its regulations to remove the vacated 2023 text and replace it with the previously effective 2020 rule. The Board characterized this action as “ministerial in nature” and invoked the Administrative Procedure Act’s good cause exception to finalize the rule without notice and comment. Because the rule merely implements the court’s vacatur, the Board concluded that the action has no independent economic effect and was not subject to the Congressional Review Act. 

What Does it Mean 

Under the restored rule, an entity may be found to be a joint employer if it possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment as would warrant finding that the employer meaningfully affects matters relating to the employment relationship of another employer’s employees. Joint employer determinations must be based on the totality of the relevant facts in each particular employment setting, and the burden of proof rests with the party asserting joint employer status. 

The rule defines “essential terms and conditions of employment” to include wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. It further explains what constitutes “direct and immediate control” for each of these categories, emphasizing actual decisionmaking authority rather than indirect influence or contractual reservations that are never exercised. Indirect control and unexercised contractual authority may be considered only to the extent they supplement evidence of direct and immediate control. 

Key Takeaways for Employers 

• Direct control is the cornerstone of joint employer status. An entity must actually exercise substantial, direct, and immediate control over essential employment terms to be deemed a joint employer; indirect influence alone is insufficient. 

• Reserved authority, standing alone, is not enough. Contractual rights that are never exercised do not establish joint employer status unless they reinforce evidence of actual direct control. 

• Routine operational coordination remains permissible. Setting project timelines, operating hours, or performance expectations—without controlling how work is performed or employment decisions are made—does not constitute direct and immediate control. 

• The 2020 framework is now firmly reinstated. Employers should evaluate labor management relationships, vendor agreements, and franchise or staffing arrangements under the restored 2020 standard, as it is once again the operative rule for NLRA purposes.