Editor's Note
What Is a Joint Employer?
Some employees have more than one legal employer. This happens when more than one entity controls what the employee does, or is contractually responsible, or both. It comes up for NLRB charges, wage and hour issues, workers' compensation, and discrimination claims.
For example, when businesses hire workers through staffing agencies, the worker is often technically an employee of the staffing agency, who sometimes provides benefits and workers' compensation coverage. But the organization they work for is the one that directs the worker's day to day work and has control over what they actually do.
If the worker is injured on the job, courts will often find that both the staffing agency and the organization are joint employers, especially if one has workers' compensation coverage and the other doesn't. The public policy is to make sure workers are protected from harm.
Similarly, if the employee was supposed to be paid by the staffing agency and isn't, the organization where the employee works may also be liable. If they already paid the staffing agency, they can usually get it back. But we don't make workers wait for that dispute to resolve.
It's only fair to hold both companies liable when there is a contract that says they agreed to both be liable or when, as a practical matter, they both are responsible for the situation that gave rise to the problem. And that is why there are joint employers.
Here's more on joint employers in the context of unfair labor practices by the NLRB.
- Heather Bussing
Our story begins like this: Your business is notified of a National Labor Relations Board (“NLRB”) Unfair Labor Practice Charge (the “Charge”). You’re about to email your lawyer when—here’s the twist—you learn your company is one of two named in the Charge. You might be considered a joint employer.
When can this happen, what does it mean, and what should you expect?
Simply put, a joint employer shares responsibility for employees who may be directly employed by another company. In fact, § 2(2) of the National Labor Relations Act (“NLRA”) defines “employer” to include “any person acting as an agent of an employer, directly or indirectly…”
Accordingly, the NLRB will impose joint and several liability upon joint employers for unfair labor practices. Joint employers must also participate in collective bargaining over the terms and conditions of employment, and employees may lawfully direct picketing efforts toward joint employers.
A cursory Internet search will pull up ample articles describing the NLRB’s “2023 Rule” regarding joint employer status. However, in Chamber of Com. of U.S. v. Natl. Lab. Rel. Bd., No. 6:23-CV-00553, 2024 WL 1203056, (E.D. Tex. Mar. 18, 2024), the U.S. District Court for the Eastern District of Texas struck down the 2023 Rule and restored the NLRB’S “2020 Rule.”
The 2023 Rule considered whether the alleged joint employers had “direct or indirect” control over “essential terms and conditions of employment.”[1] In contrast, the 2020 Rule set forth a higher bar, which required a finding of “substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.”[2]
Per the NLRB,[3] “essential terms and conditions of employment,” include:
- Wages, benefits, and other compensation;
- Hours of work and scheduling
- The assignment of duties;
- The supervision of the performance of duties;
- Work rules and directions;
- The tenure of employment, including hiring and discharge; and
- Working conditions related to employee health and safety.
Franchisors, franchisees, client companies, staffing agencies, general contractors and subcontractors are common examples of typical joint employers. However, as noted, the analysis is more than merely categorical.
The “direct or indirect” language within the 2023 Rule may have captured a wider swath of businesses, but the 2020 Rule – which is currently governing – is more stringent.
For example, in Wilcox v. Allstate Corp., No. 11 C 814, 2012 WL 6569729 (N.D. Ill. Dec. 17, 2012), the U.S. District Court for the Northern District of Illinois explained that “[a] joint employer relationship may exist between a temporary services agency and its client only where the ‘two employers exert significant control over the same employees.”
In Wilcox, the plaintiff employee filed suit against her alleged former employers – the defendant insurer and its contractor. The defendant insurer initially employed the plaintiff, but she began working for the defendant’s contractor three years after her employment with the insurer ended. Thereafter, the defendant contractor assigned plaintiff to provide services at the defendant insurer. Nevertheless:
- Plaintiff did not interview with anyone at the defendant insurer prior to her assignment;
- Plaintiff did not recall reviewing or signing any of the defendant insurer’s employment policies;
- Plaintiff reported to/received training and feedback from the defendant contractor’s managers;
- Plaintiff directed any questions to the defendant contractor’s managers – including questions about scheduling; and
- In addition to her daily rate of pay, plaintiff received per diem payments from the defendant contractor.
Thus, the Wilcox Court determined that only the defendant contractor exerted significant control over plaintiff for the duration of her assignment to the defendant insurer. Therefore, no joint employ relationship existed. In other words, joint employer status cannot be based solely on indirect influence or a contractual reservation of a right to control that has never been exercised.
Takeaways:
- If your business has a staffing relationship with another entity, it is important to be aware of whether you constitute a joint employer. Joint employer status can expose your business to joint and several liability under the NLRA and create collective bargaining obligations.
- The NLRB’s 2020 Rule currently controls joint employer analysis. As a result, a business is a joint employer if it exercises “substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.”
[1] See The Standard for Determining Joint-Employer Status – Final Rule published 10/27/2023,” National Labor Relations Board, https://www.nlrb.gov/about-nlrb/what-we-do/the-standard-for-determining-joint-employer-status-final-rule (last visited June 16, 2025).
[2] See id.; NLRB Issues Joint-Employer Final Rule, National Labor Relations Board, https://www.nlrb.gov/news-outreach/news-story/nlrb-issues-joint-employer-final-rule (February 25, 2020).
[3] See supra footnote 1.
