Federal Regulatory
NLRB Reinstates 2020 Joint Employer Standard
March 19, 2026
The National Labor Relations Board (NLRB) has formally withdrawn its broader 2023 joint employer rule and reinstated the narrower 2020 joint employer standard effective February 27, 2026. This reinstatement requires entities to demonstrate substantial direct and immediate control over essential employment terms to establish joint employer status. The change provides greater predictability and reduces potential liability for multi-entity business models, including those in hospitality, franchising, and staffing sectors.
- Procurement professionals should note that this narrower standard may affect contract structuring and risk assessments related to labor relations and joint employer liability.
- Contractors operating across multiple entities or franchises can expect reduced exposure to joint employer claims, impacting workforce management and subcontracting strategies.
- Organizations should review their employment and contracting arrangements to align with the reinstated standard and mitigate legal risks.
- This development signals a more stable regulatory environment for labor relations, which may influence future procurement policies and compliance requirements.
The 2023 rule was vacated by a federal court before taking effect for being unlawfully broad and arbitrary.
— U.S. District Court for the Eastern District of Texas
Agencies
National Labor Relations Board, U.S. District Court for the Eastern District of Texas