WASHINGTON — The National Labor Relations Board on Thursday issued a final rule withdrawing its Biden-era joint employer regulation and formally reverting to the standard it adopted in 2020 during President Donald Trump’s first term.
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The board said the 2023 joint employer rule — finalized under President Joe Biden — never took effect after a federal judge vacated it, finding it “contrary to law” and “arbitrary and capricious” in litigation brought by business groups. As a result, the NLRB stated that the 2020 rule “was and remains the operative rule” governing joint employer determinations under the National Labor Relations Act.
The withdrawal is effective immediately.
“Our action is ministerial and therefore will have no separate economic effect,” the board wrote.
The agency also said it had good cause to issue the rule without prior notice and public comment, citing the need to formally remove a regulation that had already been struck down in court.
The joint employer standard has shifted repeatedly over the past decade, reflecting stark policy differences between presidential administrations and their appointed boards.
Under the now-withdrawn 2023 rule, two or more entities would be considered joint employers if they shared or codetermined essential terms and conditions of employment. That standard allowed for findings based on either direct or indirect control over workplace terms.
The board first embraced that broader interpretation in its 2015 decision involving Browning-Ferris Industries. The ruling expanded joint employer liability beyond direct control, prompting backlash from business groups and a subsequent regulatory reversal during the Trump administration.
In contrast, the 2020 rule limited joint employer status to entities that both possess and exercise “substantial direct and immediate control” over essential employment terms. Those terms were specifically defined to include wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.
Thursday’s final rule preserves that language, clarifying that “substantial” direct and immediate control must have a regular or continuous effect on employment conditions — not merely a “sporadic, isolated or de minimis” impact.
Unlike the 2023 regulation, the 2020 framework treats indirect control as relevant only if it supplements and reinforces evidence of direct and immediate control.
“Joint-employer status must be determined on the totality of the relevant facts in each particular employment setting,” NLRB said. “The party asserting that an entity is a joint employer has the burden of proof.”
The decision drew criticism from Sen. Patty Murray, D-Wash., who said in an email that the 2020 rule gives “the biggest corporations cover to deny workers their ability to band together for better wages and working conditions and leaving millions of workers in the lurch, vulnerable to egregious violations of their rights.”
The move adds another chapter to the board’s long-running oscillation on joint employer doctrine — a shift that has significant implications for franchising, staffing arrangements, construction subcontracting and other business models involving layered employment relationships.
For employers, the reinstated 2020 rule narrows the circumstances under which they may be required to bargain collectively or face liability for unfair labor practices involving workers technically employed by another entity. Businesses in industries such as construction, hospitality, logistics and franchise operations have closely tracked the standard’s evolution due to potential exposure to shared liability.
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Labor advocates, however, argue that a narrower joint employer test allows large corporations to distance themselves from workplace conditions controlled through intermediaries, including subcontractors and staffing agencies.
Earlier this week, the NLRB also reaffirmed its 2015 Browning-Ferris decision at the direction of a federal court. However, the board emphasized that the ruling “has no application to cases arising after the effective date of the Board’s 2020 joint employer rule.”
With Thursday’s action, the board cements the 2020 framework as the governing standard — at least until another administration or court intervenes — underscoring how federal labor policy continues to shift alongside political leadership.
Originally reported by Ryan Golden, Senior Reporter in Construction Dive.
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