Team Management News: The Joint Employer Rule Is Moving Again

Two federal agencies moved on joint employer status this year, in the same direction, within about eight weeks of each other. If you franchise, use a staffing agency, or subcontract any part of your labor, this is the question of who legally counts as the employer of someone you do not sign the paychecks for. It has flipped roughly every presidential administration since 2015, and it has flipped again.

Here is where it actually stands as of August 2026.

Two Agencies, Two Moves

The National Labor Relations Board issued a final rule reinstating the 2020 joint employer standard, published in the Federal Register on February 27, 2026, without a notice and comment period. That step formally withdrew the broader 2023 rule that a federal court had already struck down, so it was less a policy swing than the agency catching its paperwork up to reality.

The NLRB version narrows "essential terms and conditions of employment" to a defined list: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction. In practice, a business is unlikely to be treated as a joint employer unless it directly controls those things for another company's workers.

Then on April 22, 2026, the Labor Department's Wage and Hour Division announced a proposed rule setting a single national standard for joint employer status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. It was published April 23 under docket WHD-2026-0067, RIN 1235-AA48, and the comment period ran to June 22, 2026.

The DOL proposal is still a proposal. Comments closed in June, and no final rule has issued.

The Four Factors

For vertical joint employment, the arrangement where a worker is employed by one entity in a chain that includes another, DOL proposes a four-factor balancing test. Does the potential joint employer:

Hire or fire the worker
Supervise and control the worker's schedule or conditions of employment to a substantial degree
Determine the worker's rate and method of pay
Maintain the worker's employment records

No single factor decides it. If all four point the same way, DOL says there is a "substantial likelihood" that joint employment either does or does not exist, which is agency language for "we are not going to promise you anything, but you can read the room."

Worth flagging honestly: employer-side commentary has mostly read the proposal as narrowing and clarifying liability, while some analyses have emphasized that the proposal also weighs broader economic dependence and is therefore less of a clean win than the headlines suggest. Both readings are floating around. Until a final rule lands, do not build anything load-bearing on either one.

Indirect Control Is the Interesting Part

The most operationally useful piece of the proposal is how it treats indirect control.

Indirect control can count, but under the proposal it counts only where the potential joint employer issues mandatory directives. It does not count where the other employer voluntarily follows a request, a suggestion, or a recommendation. Reserved contractual authority, the classic "franchisor may require" clause that nobody has ever actually invoked, may be considered, but control that was actually exercised carries substantially more weight.

DOL has also stated that common franchise practices do not automatically create joint employer liability. That sentence is going to be quoted in a lot of franchise disclosure documents.

Translated into a Tuesday: a brand standard that says the dining room must be clean and the fryer oil changed daily is a standard. A corporate system that assigns individual named employees to individual shifts at a franchisee's location, sets their pay, and holds their personnel file is something else. The line is not about how detailed your standards are. It is about who is making employment decisions about a specific human being.

What to Do While This Is Pending

The temptation with a pending rule is to do nothing until it is final. Reasonable, except the questions the rule asks are questions you should be able to answer regardless of which way it comes out.

Know who actually maintains employment records at each location. If a franchisor's system stores franchisee personnel files, that is factor four, sitting there in plain sight. This is worth checking rather than assuming.
Look at who sets schedules in practice, not on paper. The proposal cares about exercised control more than reserved control. If a regional director is functionally approving individual schedules at units they do not own, the contract language saying they cannot is not going to be the persuasive document.
Separate standards from directives in how you write things. "Locations must meet the opening standard" and "assign Marcus to open on Thursdays" are different categories of instruction, and the second one is the one that creates exposure. Write your operational requirements as outcomes and let the operator staff them.
Recheck your staffing agency arrangements. Joint employer questions with agencies are usually about who supervises and controls conditions of employment day to day, and the honest answer at most worksites is "the person on site," which is you.
Do not tear up your contracts yet. This is a proposed rule, joint employer standards have reversed repeatedly, and litigation is a near certainty whatever the final text says. Adjust your practices toward clarity, not toward whichever standard happens to be in force this quarter.

That last point deserves a little sympathy for everyone involved. A business that restructured its franchise agreements in 2015, again in 2020, again in 2023, and is now being asked to consider doing it again in 2026 could be forgiven for waiting this one out.

The Bottom Line

The NLRB has already restored the narrower standard. DOL's version is written, commented on, and waiting. Both point toward the same practical test: joint employer status follows real control over hiring, firing, pay, scheduling, and records, not the existence of brand standards. Get clear on who is actually doing those five things at each of your locations, and you are prepared for whichever version becomes final.

How MyTeamTasks Helps

Standards and directives are easier to keep separate when they live in different places. A checklist builder lets a brand publish the operational standard, what has to be done and to what quality, while the individual task assignment stays with the operator who employs the person doing it. Real-time monitoring across locations gives you completion visibility without pulling scheduling decisions up to the brand, and photo-proof completion documents the outcome rather than the person.