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 conditions of employment.²

The 2023 rule, however, was short-lived before it was thrown into uncertainty. On March 8, 2024, prior to the rule becoming effective, the U.S. District Court for the Eastern District of Texas struck down the Biden Administration’s 2023 rule.³ The Court stated the rule did not distinguish an employer from a contractual partner. The NLRB declined to appeal the Court’s decision. 

New Rule Narrows the Joint Employer Analysis
Following a newly-minted NLRB seated under the Trump Administration, the Board published the new rule in the Federal Register—Withdrawal of 2023 Standard for Determining Joint Employer Status, 91 Fed. Reg. 9707 (Feb. 27, 2026).⁴ Under this “new” 2026 rule, an entity can only be found to be a joint employer if it possesses or exercises “substantial direct and immediate control over one or more essential terms or conditions of their employment as would warrant finding that the entity meaningly affects matters relating to the employment relationship with those employees.”⁵ The essential terms and conditions of employment are defined by the rule as:

1. Wages, which includes determining wage rates, salary, or any other rate of pay
2. Benefits, which includes determining fringe benefits offered to another employer’s employees, such as health insurance or pension plans
3. Hours of work, which includes determining work schedules or work hours, including any parameters relating to overtime, of another employer’s employees
4. Hiring, which includes determining whether or not a particular employee is hired, but not by requesting changes in staffing levels or setting minimal hiring standards
5. Discharge, which includes deciding to terminate the employment of another employer’s employee but does not include notifying employer of misconduct, poor performance, or removing another employer’s employee to continue performing work under a contract
6. Discipline, which includes deciding to suspend or otherwise discipline another employer’s employee but does not include notifying employer of misconduct, poor performance, or removing another employer’s employee to continue performing work under a contract
7. Supervision, which includes instructing another employer’s employees how to perform their work or issuing employee performance views but does not include primarily telling another employer’s employees what work to perform, or where and when to perform it
8. Direction, which includes assigning particular employees work schedules, positions, and tasks but does not include setting schedules for the completion of a project or describing the work that must be accomplished on a project

Of particular note is the entity-friendly inclusion that the control must be “substantial.” Control is not substantial if exercised on a “sporadic, isolated or de minimis basis."⁶

NLRB’s Implementation of the Rule
The Board has already begun implementing the new rule. In South Sound Inpatient Physicians, PLLC and Joint Employer Peacehealth, 19-RC-338479; 374 NLRB No. 101 (Bellingham, WA, April 30, 2026), the Board determined that PeaceHealth was not a joint employer under the new standard and reversed the Regional Director’s findings. The Board found that PeaceHealth management's participation in the hospitalist's interview, and its requirement that South Sound credential the hospitalist as a condition of employment, were insufficient to establish direct and immediate control over hiring. The Board further found that the credentialing requirements did not extend beyond setting forth minimum hiring standards. The Board also concluded that with respect to supervision, PeaceHealth’s involvement in the hospitalist’s work did not extend beyond “telling another employer’s employees what work to perform…but not how to perform it.” As to wages, the Board found any restraint on South Sound’s parameters as to what to pay employees was more of an economic reality. Finally, the Board found with respect to benefits that PeaceHealth only required that the hospitalists have malpractice insurance. It did not have a role in selecting the plan, carrier, or level of coverage. This ruling shows that the NLRB’s new rule significantly limits application of joint employer obligations even if an entity exercises some control over another entity’s employee. 

Tips for Employers to Stay Up-to-Date
Although the new rule is more entity friendly, entities must take steps to stay up-to-date to avoid establishing joint employer relationships with other employer’s employees, such as:

• Review all contracts to determine whether any provisions may be considered a joint-employer relationship under the current test.
• Train management and supervisors on current test to avoid inadvertent direct control over non-employees that may not be clear or reflected in contracts.
• Maintain communications with counsel to keep up-to-date on inevitable changes to the joint employer test and other labor developments. 

It is always best practice to consult with legal counsel to ensure the unique facts and circumstances and applicable law are considered. Wilson Elser’s national Employment and Labor Team is available for further guidance on the joint-employer rule and other employment considerations.

This article is for informational purposes only and should not be used in place of seeking legal guidance, nor does it constitute legal advice or the creation of an attorney-client relationship. 
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^{1 This new test directly impacts considerations under the NLRA. It does not impact joint employer tests under other laws such as Federal Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonable Agricultural Worker Protection Act. However, the Department of Labor issued a proposed rule on April 23, 2026 with a comment period through June 22, 2026 to update the current rule that was first implemented in 2021. See https://www.federalregister.gov/documents/2026/04/23/2026-07959/joint-employer-status-under-the-fair-labor-standards-act-family-and-medical-leave-act-and-migrant.} 

^{2 The Standard for Determining Joint-Employer Status – Final Rule published 10/27/2023, https://www.nlrb.gov/about-nlrb/what-we-do/the-standard-for-determining-joint-employer-status-final-rule.}

^{3 Chamber of Commerce v. NLRB, 723 F. Supp. 3d 498, 519 (E.D. Tex. 2024).} 

^{4 Withdrawal of 2023 Standard for Determining Joint Employer Status,https://www.federalregister.gov/documents/2026/02/27/2026-03955/withdrawal-of-2023-standard-for-determining-joint-employer-status}

^5 Id.

^6 Id.