On February 25, 2026, The National Labor Relations Board (“NLRB”) published a final rule withdrawing its 2023 regulation titled “Standard for Determining Joint Employer Status” and formally readopting the 2020 joint employer standard into the Code of Federal Regulations at 29 C.F.R. § 103.40. The agency’s action effectively removed the expanded regulatory framework adopted during the Biden administration and signaled a return to a narrower standard for determining joint employer status under the National Labor Relations Act (“NLRA”).

The 2023 regulation broadened joint employer liability by allowing a finding of joint employment where an entity exercised either direct or indirect control over key terms and conditions of employment or retained reserved authority to do so. Under that approach, contractual rights, operational oversight, and brand standards could be sufficient to support joint employer status even in the absence of day-to-day management of employees. The rule was widely criticized by employer groups for creating uncertainty in franchising and staffing models and increasing the risk that entities with limited operational involvement could be drawn into collective bargaining obligations and unfair labor practice liability.

With the withdrawal of that rule, the NLRB has returned to a framework that places greater emphasis on actual, direct, and substantial control over essential employment terms. Under the restored approach, joint employer status is less likely to be found based solely on contractual rights or generalized oversight mechanisms. Instead, liability is more closely tied to whether an entity meaningfully participates in decisions involving hiring, firing, discipline, supervision, or wage-setting on a day-to-day basis.

For employers, this shift is particularly significant in franchise and staffing arrangements. Franchisors that maintain brand consistency standards and operational guidelines, without directly controlling employment decisions, are less likely to be classified as joint employers under the current approach. Similarly, companies that utilize staffing agencies may see reduced exposure where the staffing entity retains primary responsibility for employment decisions and workforce management.

However, the withdrawal of the 2023 regulation does not eliminate joint employer risks. Entities that exercise direct operational control over employees, or that effectively share responsibility for core employment decisions, may still be found to be joint employers under longstanding NLRA principles. The analysis remains highly fact-specific, and the degree of control exercised in practice continues to be the central inquiry.