Table of Contents
• What Changed with the NLRB’s New Rule?
• Why Does the Joint Employer Rule Matter for Workers?
• What This Means for Employees
• What Should Workers in These Arrangements Do?
• Contact an Employment Lawyer
On February 27, 2026, a significant change in federal labor law went into effect that impacts millions of Americans who work for staffing agencies, subcontractors, and franchises. The National Labor Relations Board (NLRB) officially reinstated a narrower “joint employer” standard, rolling back a more worker-friendly rule from 2023.
This legal shift makes it more difficult for workers to hold large, parent companies accountable for labor law violations, leaving many with recourse only against the smaller, direct employer. For employees in these layered work arrangements, this change has real-world consequences for their rights and their ability to organize.
What is a Joint Employer?
Under federal labor law, two or more companies can be considered “joint employers” if they both have sufficient control over a group of workers’ essential terms and conditions of employment. When joint employer status is established, it means:
•Both companies can be required to bargain with a union.
•Both companies can be held legally liable for unfair labor practices, such as retaliation or illegal firings.
•Workers have more than one entity responsible for ensuring their rights are protected.
This is critical in today’s economy, where many workers are officially employed by one company (like a staffing agency) but are supervised, directed, and economically controlled by another (the client company).
What Changed with the NLRB’s New Rule?
The NLRB has reverted to the 2020 standard, which sets a much higher bar for proving joint employment. Under this rule, a company is only considered a joint employer if it exercises “substantial, direct, and immediate control” over essential employment terms. These terms include:
•Wages and benefits
•Hours of work
•Hiring and firing
•Discipline
•Supervision and direction
Crucially, under this stricter standard, a company’s indirect influence or simply having the contractual right to control workers is not enough. The control must be actively and directly exercised to establish joint employment.
Why Does the Joint Employer Rule Matter for Workers?
This rule change makes it harder to hold larger, more powerful companies accountable. For example, a fast-food worker is technically employed by a specific franchise owner, but their wages, hours, and working conditions are often heavily influenced by the national corporate brand. Similarly, a warehouse worker may be employed by a small staffing agency, but their daily tasks are entirely directed by the major online retailer whose facility they work in.
Under the narrower 2020 rule, it is more difficult to legally connect the parent corporation or the client company to the workers. This can limit workers’ ability to:
•Hold the main company liable: If the smaller staffing agency or franchisee violates labor law, the larger, wealthier company may be shielded from responsibility.
•Effectively unionize: Workers may only be able to bargain with their direct, smaller employer, who often lacks the power to make significant changes that are dictated by the larger corporate entity.
What This Means for Employees
The reinstatement of the 2020 joint employer rule creates a tougher legal landscape for workers in franchised, subcontracted, or temporary staffing arrangements. It means that the parent company that ultimately profits from your labor may not be legally obligated to bargain with you or be held responsible for unfair labor practices committed by your direct employer.
This can leave workers with fewer resources and less leverage to improve their working conditions, as the smaller entity they work for may not have the financial independence to raise wages or change policies set by the parent company.
What Should Workers in These Arrangements Do?
If you work in a layered employment structure and believe multiple companies control your working conditions, it is important to understand that proving joint employment is still possible, though more difficult. The determination is highly fact-specific and depends on the reality of who exercises control in your day-to-day work, not just what is written in a contract.
Documenting instances of direct control by the larger company is critical. Note any time a manager from the parent or client company directly supervises your work, sets your schedule, provides instructions, or is involved in disciplinary decisions.
Contact an Employment Lawyer
The joint employer standard is a complex and frequently changing area of law. If you are a worker in a franchise or staffing arrangement and feel your rights have been violated, seeking legal guidance is essential. An experienced employment lawyer can help you understand how the current rule applies to your specific situation and determine the best path forward.
Contact us today to tell us about your case.
References
