[Federal Register Volume 91, Number 39 (Friday, February 27, 2026)]
[Rules and Regulations]
[Pages 9707-9709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-03955]
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NATIONAL LABOR RELATIONS BOARD
29 CFR Part 103
RIN 3142-AA21
Withdrawal of 2023 Standard for Determining Joint Employer Status
AGENCY: National Labor Relations Board.
ACTION: Final rule.
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SUMMARY: On October 27, 2023, the Board published a final rule (2023
Rule) that rescinded and replaced a prior rule regarding the standard
for determining joint employer status under the National Labor
Relations Act. On March 8, 2024, the U.S. District Court for the
Eastern District of Texas issued an order vacating the 2023 Rule. The
Board is therefore revising its rules and regulations to replace the
vacated regulatory text with the previous version of its rules that
remain in effect due to the vacatur.
DATES: This rule is effective February 27, 2026.
FOR FURTHER INFORMATION CONTACT: Roxanne L. Rothschild, Executive
Secretary, National Labor Relations Board, 1015 Half St. SE,
Washington, DC 20570-0001, (202) 273-1940 (this is not a toll-free
number) or 1-844-762-NLRB (6572) (this is a toll-free number). Hearing
impaired callers who wish to speak to an NLRB representative should
contact T-Mobile Relay Conference Captioning by visiting its website at
https://www.tmobileaccess.com/federal, and submitting a form asking its
Communications Assistant to call our toll free number at 1-844-762-NLRB
(6572).
SUPPLEMENTARY INFORMATION: On October 27, 2023, the National Labor
Relations Board published a final rule intended to rescind and replace
a 2020 rule governing joint employer status under the National Labor
Relations Act. (88 FR 73946, Oct. 27, 2023). The 2023 Rule, titled
``Standard for Determining Joint Employer Status,'' established a new
standard for determining whether two employers, as defined in the Act,
are joint employers of particular employees within the meaning of the
Act.
On November 19, 2023, a challenge to the 2023 Rule was filed in the
U.S. District Court for the Eastern District of Texas. Chamber of
Commerce v. NLRB, No. 6:23-CV-00553 (E.D. Tex.). On March 8, 2024, the
district court vacated the rule. 723 F.Supp. 3d 498, 519 (E.D. Tex.
2024). As the 2023 Rule has never taken effect, the prior rule titled
``Joint Employer Status Under the National Labor Relations Act,'' which
was promulgated on February 26, 2020 (2020 Rule), remains the operative
rule for determining joint employer status. 85 FR 11184 (Feb. 26,
2020), codified at 29 CFR 103.40. In accordance with the district
court's order, the Board hereby revises 29 CFR subpart D to replace the
text of the vacated 2023 Rule with the text of the 2020 Rule, which
remains in effect.\1\
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\1\ In accordance with the district court's vacatur of the 2023
Rule, Member Prouty joins in replacing the 2023 Rule with the 2020
Rule. However, he notes that was not a member of the Board when the
2020 Rule was promulgated and, for the reasons set forth in the
preamble to the 2023 Rule, he does not believe that the 2020 Rule
sets forth the proper standard for determining when an entity is a
joint employer.
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Procedural and Other Matters
Section 553 of the Administrative Procedure Act provides that when
an agency for good cause finds that notice and public comment
procedures are impracticable, unnecessary, or contrary to the public
interest, the agency may issue a rule without providing notice and an
opportunity for public comment.\2\ The Board has determined that there
is good cause for making today's amendment to the 2023 Rule final
without prior proposal and opportunity for comment. Because of the
Court order vacating the 2023 Rule, the Board's action is ministerial
in nature. Accordingly, the Board for good cause finds that a notice
and comment period is unnecessary.\3\
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\2\ 5 U.S.C. 553(b)(B).
\3\ This finding also satisfies the requirements of 5 U.S.C.
808(2) (if a Federal agency finds that notice and public comment are
``impracticable, unnecessary or contrary to the public interest,'' a
rule ``shall take effect at such time as the Federal agency
promulgating the rule determines''), allowing the withdrawal to
become effective notwithstanding the requirement of 5 U.S.C. 801. No
analysis is required under the Regulatory Flexibility Act. See 5
U.S.C. 601(2) (for purposes of Regulatory Flexibility analysis, the
term ``rule'' means any rule for which the agency publishes a
general notice of the proposed rulemaking).
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The Administrative Procedure Act also generally requires that an
agency publish an adopted rule in the Federal Register 30 days before
it becomes effective.\4\ This requirement, however, does not apply if
the agency finds good cause for making this action to amend the 2023
Rule effective sooner. For the reasons discussed above, the Board finds
that there is good cause to make repeal and replacement of the rule
effective immediately.
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\4\ 5 U.S.C. 553(d).
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The Board considers the costs and benefits of its rules and
regulations. As discussed above, the 2023 Rule was vacated by the
district court and the
[[Page 9708]]
action the Board takes today merely implements the Court's decision.
Our action is ministerial and therefore will have no separate economic
effect.
Finally, the Congressional Review Act \5\ generally provides that
before certain actions make take effect, the agency promulgating the
action must submit a report, which includes a copy of the action, to
each House of Congress and to the Comptroller General of the United
States. Because this action only implements the Court vacatur, and the
agency has made a good cause finding that notice and comment is
unnecessary, it is not subject to the Congressional Review Act.
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\5\ 5 U.S.C. 801.
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Final Rule
This rule is published as a final rule.
List of Subjects in 29 CFR Part 103
Jurisdictional standards, Election procedures, Appropriate
bargaining units, Joint employers, Remedial orders.
For the reasons set forth in the preamble, the National Labor
Relations Board amends 29 CFR part 103 as follows:
PART 103--OTHER RULES
0
1. The authority citation for part 103 continues to read as follows:
Authority: 29 U.S.C. 156, in accordance with the procedure set
forth in 5 U.S.C. 553.
0
2. Revise Sec. 103.40, to read as follows:
Sec. 103.40 Joint employers.
(a) An employer, as defined by section 2(2) of the National Labor
Relations Act (the Act), may be considered a joint employer of a
separate employer's employees only if the two employers share or
codetermine the employees' essential terms and conditions of
employment. To establish that an entity shares or codetermines the
essential terms and conditions of another employer's employees, the
entity must possess and exercise such substantial direct and immediate
control over one or more essential terms or conditions of their
employment as would warrant finding that the entity meaningfully
affects matters relating to the employment relationship with those
employees. Evidence of the entity's indirect control over essential
terms and conditions of employment of another employer's employees, the
entity's contractually reserved but never exercised authority over the
essential terms and conditions of employment of another employer's
employees, or the entity's control over mandatory subjects of
bargaining other than the essential terms and conditions of employment
is probative of joint-employer status, but only to the extent it
supplements and reinforces evidence of the entity's possession or
exercise of direct and immediate control over a particular essential
term and condition of employment. Joint-employer status must be
determined on the totality of the relevant facts in each particular
employment setting. The party asserting that an entity is a joint
employer has the burden of proof.
(b) Essential terms and conditions of employment means wages,
benefits, hours of work, hiring, discharge, discipline, supervision,
and direction.
(c) Direct and immediate control means each respective essential
employment term or condition in paragraphs (c)(1) through (8) of this
section:
(1) Wages. An entity exercises direct and immediate control over
wages if it actually determines the wage rates, salary or other rate of
pay that is paid to another employer's individual employees or job
classifications. An entity does not exercise direct and immediate
control over wages by entering into a cost-plus contract (with or
without a maximum reimbursable wage rate).
(2) Benefits. An entity exercises direct and immediate control over
benefits if it actually determines the fringe benefits to be provided
or offered to another employer's employees. This would include
selecting the benefit plans (such as health insurance plans and pension
plans) and/or level of benefits provided to another employer's
employees. An entity does not exercise direct and immediate control
over benefits by permitting another employer, under an arm's-length
contract, to participate in its benefit plans.
(3) Hours of work. An entity exercises direct and immediate control
over hours of work if it actually determines work schedules or the work
hours, including overtime, of another employer's employees. An entity
does not exercise direct and immediate control over hours of work by
establishing an enterprise's operating hours or when it needs the
services provided by another employer.
(4) Hiring. An entity exercises direct and immediate control over
hiring if it actually determines which particular employees will be
hired and which employees will not. An entity does not exercise direct
and immediate control over hiring by requesting changes in staffing
levels to accomplish tasks or by setting minimal hiring standards such
as those required by government regulation.
(5) Discharge. An entity exercises direct and immediate control
over discharge if it actually decides to terminate the employment of
another employer's employee. An entity does not exercise direct and
immediate control over discharge by bringing misconduct or poor
performance to the attention of another employer that makes the actual
discharge decision, by expressing a negative opinion of another
employer's employee, by refusing to allow another employer's employee
to continue performing work under a contract, or by setting minimal
standards of performance or conduct, such as those required by
government regulation.
(6) Discipline. An entity exercises direct and immediate control
over discipline if it actually decides to suspend or otherwise
discipline another employer's employee. An entity does not exercise
direct and immediate control over discipline by bringing misconduct or
poor performance to the attention of another employer that makes the
actual disciplinary decision, by expressing a negative opinion of
another employer's employee, or by refusing to allow another employer's
employee to access its premises or perform work under a contract.
(7) Supervision. An entity exercises direct and immediate control
over supervision by actually instructing another employer's employees
how to perform their work or by actually issuing employee performance
appraisals. An entity does not exercise direct and immediate control
over supervision when its instructions are limited and routine and
consist primarily of telling another employer's employees what work to
perform, or where and when to perform the work, but not how to perform
it.
(8) Direction. An entity exercises direct and immediate control
over direction by assigning particular employees their individual work
schedules, positions, and tasks. An entity does not exercise direct and
immediate control over direction by setting schedules for completion of
a project or by describing the work to be accomplished on a project.
(d) Substantial direct and immediate control means direct and
immediate control that has a regular or continuous consequential effect
on an essential term or condition of employment of another employer's
employees. Such control is not ``substantial'' if only exercised on a
sporadic, isolated, or de minimis basis.
(e) Indirect control means indirect control over essential terms
and conditions of employment of another employer's employees but not
control or
[[Page 9709]]
influence over setting the objectives, basic ground rules, or
expectations for another entity's performance under a contract.
(f) Contractually reserved authority over essential terms and
conditions of employment means the authority that an entity reserves to
itself, under the terms of a contract with another employer, over the
essential terms and conditions of employment of that other employer's
employees, but that has never been exercised.
Dated: February 25, 2026.
Roxanne L. Rothschild,
Executive Secretary.
[FR Doc. 2026-03955 Filed 2-26-26; 8:45 am]
BILLING CODE 7545-01-P