Some exclusions from coverage can be found in the NLRA itself, while others result from the exercise of discretion by the NLRB. Thus, whenever an employer receives a petition seeking union election or an unfair labor practice (ULP) charge alleging that the employer has violated the Act, it should first ask if the NLRB has jurisdiction. The minimum number of employees required for the Board’s jurisdiction is two; however, the employer must meet the Board’s threshold test for engagement in interstate commerce.

Joint Employer and Other Employment Relationships

On occasion, an issue will arise as to whether two or more entities should be treated as joint employers of a workforce under the NLRA.

The Board’s joint-employer analysis has significant implications for employers, as it determines when one entity jointly employs another firm’s workers. Among other results, a joint employer finding makes both entities liable for each other’s unfair labor practices.

In 2015, the Board expanded the scope of whether an entity is deemed a joint employer under the NLRA (known as the Browning-Ferris standard).1 Prior to this decision, an entity could be held a joint employer under the NLRA only if it exercised “direct and immediate” control over employment terms and conditions in more than a limited and routine manner. In 2015, the Board relaxed that standard to extend joint-employer status even to entities possessing an ability to control employment terms and conditions indirectly (e.g., by using an intermediary), and even if the entity never actually exercised that ability.

In February 2020, the NLRB announced that it was replacing the standard with a new rule. Under this rule, an employer may be considered a joint employer of another employer’s employees only if the two employers share or codetermine the employee’s essential terms and conditions of employment, such as wages, benefits, work hours, hiring, firing, discipline, supervision and direction. To be a joint employer, a business must possess and exercise “substantial direct and immediate control” over one or more essential terms and conditions such that the business meaningfully affects matters relating to the employment relationship. A contractual right to control over these terms and conditions is probative evidence of joint-employer status, but only to the extent it reinforces evidence of direct and immediate control. Under the 2020 rule, the mere reservation of the right to control does not support a conclusion that two entities are a joint employer.

On September 6, 2022, the Board submitted a proposed rule to return to the Browning-Ferris standard, and on October 26, 2023, it issued its final rule for determining joint-employer status under the Act, returning to a modified version of Browning-Ferris. Under the new standard, an entity may be considered a joint employer if it shares or codetermines one or more of the other entity’s employee’s essential terms and conditions of employment. The new test also holds that indirect or reserved, unexercised control can establish joint employment.

The final rule was set to take effect on March 11, 2024, however, on March 9, 2024, a federal district court in Texas issued an order vacating the rule. The court found that the rule was outside the bounds of common law and thus, unlawful. On May 7, 2024, the Board expressed its intent to appeal the court’s order to the Fifth Circuit, but on July 19, 2024 the Board voluntarily dismissed its appeal and stated it would “like the opportunity to further consider the issues identified in the district court’s opinion.”

• On February 27, 2026, the NLRB officially rescinded the 2023 rule and reinstated the joint-employer test first published in 2020, which has been in effect since the court order invalidated the 2023 rule.

• Employers that contract for labor or have other non-traditional worker relationships may want to assess the risk of joint-employer liability with suppliers, vendors, contractors, franchisees, service providers or others. Consult legal counsel to review existing contracts for labor or services and determine what efforts may be made to limit exposure. There is not one cure-all solution that will work for all employers.

Although each situation will be unique and require a thoughtful analysis of the facts, relationships with third parties and business needs, steps can be taken to reduce the risk of a joint employer determination. To that end, employers should consider working with legal counsel to determine if the following steps can help protect their business:

• Review and modify service agreements with third parties (in consultation with legal counsel);
• Ensure that third parties establish separate terms and conditions of employment, employment policies and employee handbooks;
• Distinguish the work performed by your employees from the work performed by the other entities’ employees;
• Where possible, establish payment structures for service providers not based on wage rates and hours of work rendered by non-employees; and
• Consider broad indemnification agreements with third parties.

1. Browning-Ferris Industries of California, Inc., 362 NRLB 1599 (2015) ( BFI ),