On February 26, 2026, the National Labor Relations Board formally reinstated its 2020 joint-employer standard. This action officially withdraws a Biden-era 2023 rule and restores a narrower framework for determining when two businesses share legal responsibility for the same group of workers. By returning to the 2020 standard, the Board is aiming to settle period of legal uncertainty that has loomed over the business community for years.

Closing the Regulatory Gap

The Board’s action traces back to a legal defeat. In 2020, the Board adopted a rule setting out its joint-employment standard. Among other things, that standard found joint employment only when two businesses exercised direct and substantial control over the same worker. The Board retreated from that position in 2023, adopting a new rule that allowed joint employment based only on “indirect” or “reserved” control. But in March 2024, the U.S. District Court for the Eastern District of Texas struck down the 2023 rule. The court ruled that the 2023 rule was “arbitrary and capricious” because the word “employee” under the National Labor Relations Act is defined by the common law, and the 2023 rule’s expansive standard contradicted long-standing common-law standards.

That ruling created a technical “regulatory gap.” The Biden-era rule was vacated, but the official Code of Federal Regulations had not yet been updated to reflect the return of the previous standard. This left the Board without a formal, codified rule on...

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