March 18, 2026 — The National Labor Relations Board (NLRB) has issued a final rule that withdraws the never-implemented 2023 joint employer rule and formally reinstates the narrower 2020 standard, restoring a more predictable framework for determining when two entities may be considered joint employers under the National Labor Relations Act (NLRA). The rule became effective upon publication in the Federal Register on February 27, 2026.

The reinstated standard requires proof that a putative joint employer possessed and actually exercised “substantial direct and immediate control” over at least one essential term or condition of employment. This marks a significant shift away from the 2023 rule, which would have expanded joint-employer liability based on indirect or unexercised contractual authority.

Quick Highlights

• 2020 Standard Reinstated: The NLRB has withdrawn the 2023 rule—vacated by the U.S. District Court for the Eastern District of Texas for being unlawfully broad and “arbitrary and capricious”—and reinstated the 2020 joint-employer rule.

• Direct Control Required: Joint-employer status now, as before, turns on whether an entity actually exercises substantial, direct, and immediate control over essential employment terms.

  • Control must have a regular or continuous consequential effect.
  • Sporadic, isolated, or de minimis control is insufficient.
  • Indirect control or unexercised contractual authority may be considered only if it supplements evidence of direct control—never as a standalone basis.
• Narrowed List of Essential Terms: The rule limits “essential terms and conditions of employment” to wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.
• No Notice-and-Comment: The Board issued the rule without a new comment period, citing the 2023 rule’s vacatur by the Texas court and the Board’s voluntary dismissal of its appeal.

The reinstated 2020 rule provides greater predictability and narrower liability, particularly for:

• Hospitality operators using management companies, staffing agencies, or franchise models;
• Hotels and resorts coordinating with third-party service providers (e.g., housekeeping, security, food & beverage);
• Property owners and asset managers overseeing contractors;
• Franchisors concerned about brand standard enforcement; and
• Businesses using subcontractors or temporary labor.

However, the 2020 rule continues to face ongoing legal challenges, and employers should monitor developments closely.

Stokes Wagner will continue to monitor updates and will provide additional updates as they become available. If you have any questions, do not hesitate to contact a Stokes Wagner attorney.

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THIS DOCUMENT PROVIDES A GENERAL SUMMARY AND IS FOR INFORMATIONAL/EDUCATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE COMPREHENSIVE, NOR DOES IT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT WITH COUNSEL BEFORE TAKING OR REFRAINING FROM TAKING ANY ACTION.