Q: Can an entity be liable to an employee even if it is not their employer?
A: Yes, a company can be held liable under the joint-employer rule even if the company does not employ the individual. Consequences for this designation can be significant. The National Labor Relations Board (NLRB) publishes rules for determining a joint employer under the National Labor Relations Act (NLRA). Under the NLRA, an entity can have joint liability with an employer for unfair labor practices, union bargaining obligations, and even being bound by collective bargaining agreements between the employer and employee.1
History
The current rule established by the NRLB went into effect on February 27, 2026. It formally reinstates the direct control joint employer test previously implemented under the first Trump Administration in 2020. The 2020 rule established the entity-friendly standard in the direct control joint employer test, replacing the 2015 standard under Browning-Ferris Industries of California, Inc., 362 NLRB No. 186. However, employers have long been subjected to a ping-pong match that appears to change the standard with each administration.
After three years of implementing the 2020 rule, the NRLB in the Biden Administration revoked it and issued a broader rule in 2023 that expanded potential liability and obligations to entities. The rule proposed that an entity could be deemed an employer if the entities “share or codetermine” one or more of the employees’ essential terms and...
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