The National Labor Relation Board’s (“NLRB”) joint-employer standard has swung back and forth for nearly a decade, with the newly-appointed Trump NLRB most recently releasing a final rule reinstating the 2020 joint employer standard. For private California employers – especially those using staffing agencies, subcontractors, franchise models, or management agreements – the rule determines who can be included in a bargaining unit and who may be liable under a collective bargaining agreement (CBA).
Here’s where things stand and why it matters.
The Back-and-Forth History
Pre-2015: The NLRB required substantial, direct, and immediate control over essential employment terms to find joint-employer status.
2015 – Browning-Ferris Expansion: The Board broadened the test to include indirect control or even reserved (but unexercised) authority, dramatically increasing joint-employer exposure.
2020 Rule: The Board formally adopted a narrower, employer-friendly rule requiring substantial direct and immediate control over essential terms such as wages, discipline, hiring, and supervision.
2023 Rule (Now Blocked): A new Board majority finalized a regulation expanding joint-employer status again—allowing indirect or reserved control over essential terms to suffice. In conjunction with a lawsuit filed by the United States Chamber of Commerce and other business groups, a federal court in Texas vacated the 2023 Rule in March 2024, reinstating the 2020 standard.
2026 Rule: Consistent with the court ruling, the NLRB formally vacated the 2023 Rule and re-adopted the 2020 Rule.
Bottom Line: The 2020 rule currently governs, but the issue remains politically and legally unsettled.
The Current Standard (For Now)
Under the operative 2020 regulation, two companies are joint employers only if they share or codetermine essential employment terms through substantial direct and immediate control.
Indirect influence or contractual reservations, standing alone, are generally insufficient under the current rule.
What Could Change
This area is highly volatile. The standard could shift again through:
- Appellate court decisions
- A reissued or revised Board rule
- Congressional legislation
- A differently composed NLRB
Employers should assume that the NLRB’s joint-employer law will remain unstable for the foreseeable future.
Why This Is a Big Deal for California Employers
California businesses face risk from multiple angles and those risks increase dramatically when the NLRB is using a broad joint employer standard for:
1. Collective Bargaining Obligations
A joint-employer finding can require your company to bargain with a union representing another entity’s employees.
2. Unfair Labor Practice Liability
You may be jointly liable for unfair labor practice charges, even if your company did not directly commit the conduct.
3. Pension and Benefit Plan Exposure
This is often overlooked. If joint-employer status attaches in a unionized setting:
- You may become bound to a CBA you did not negotiate.
- You may owe contributions to multiemployer pension or health funds.
- You could face withdrawal liability under ERISA if the relationship ends.
- Contribution audits and delinquency claims may follow.
For employers operating in industries with Taft-Hartley/multiemployer pension funds – construction, healthcare, logistics, hospitality – this exposure can be substantial and retroactive.
4. Franchise and Staffing Models
Routine brand controls, compliance provisions, or safety standards can become evidence in a broader joint-employer test under future Board standards.
5. California’s Layered Standards
Federal NLRA analysis is only one piece. California wage-hour and Labor Code doctrines apply different (and broader) joint-employment theories.
Practical Takeaways
The 2020 rule remains in effect, which substantially helps to limit the risk of a joint employer finding in many situations. Nevertheless, prudent employers should:
- Audit contracts with staffing firms and contractors
- Review franchise agreements and practices with franchisees
- Limit unnecessary operational control over third-party employees
- Assess exposure to union benefit fund contributions and withdrawal liability
- Plan for a rapid shift in federal labor policy that is likely to influence the joint employer standard, if a new administration comes in during 2028
Potential joint-employer status triggers strategic labor and financial risk considerations. For private California employers, the question is not simply “Who do we employ?” but “Who might the NLRB say we employ?”
