Joint employment used to be a niche issue for staffing firms and their clients. It stopped being niche about ten years ago, and it has been a moving target ever since. The central question is simple: if Company A hires a worker and places them at Company B, which company is responsible for minimum wage, overtime, harassment prevention, and collective bargaining? The answer is "maybe both," and the analysis changes depending on the law, the agency, and who's in the White House.
What Makes Two Companies Joint Employers The core factor in every joint employer test is control. Does the second company control or have the ability to control essential terms of employment? Essential terms typically include wages, hours, hiring, firing, discipline, supervision, and direction of work. The more of those a company controls, the closer it gets to joint employer status.
Early joint employment tests required actual, direct control. The company had to be pulling the levers, not just holding them. Later tests expanded to include reserved or indirect control: if the company could exercise control, even through an intermediary, it could be a joint employer. Each swing of that pendulum reshapes franchise, staffing, and subcontracting arrangements.
How the NLRB and DOL Tests Differ in 2026 The National Labor Relations Board and the Department of Labor apply different joint employer tests. The NLRB focuses on labor relations: who controls the conditions relevant to collective bargaining? The DOL focuses on wage and hour compliance: who's responsible for minimum wage, overtime, and recordkeeping?
A company can be a joint employer under one test and not the other. A franchisor might not be liable for a franchisee's overtime violations but could be required to bargain with a franchisee's unionized workers. The practical implication is that joint employment analysis is law-specific. A general counsel can't answer "are we a joint employer?" without asking "for what purpose?"
When Does a Staffing Arrangement Create Joint Employment? Staffing arrangements create joint employment when the client company directly supervises the worker, sets the worker's schedule, approves time off, or has the authority to fire the worker from the assignment. If the staffing agency handles all of that and the client just specifies what needs to get done, joint employment is less likely.
Franchise, Subcontract, and Gig Exposure Under Joint Employment Franchisors worry about joint employment because franchise agreements typically require standardization: operating procedures, training, brand standards. If those requirements cross into controlling how the franchisee manages employees, the franchisor becomes a joint employer of the franchisee's staff.
Subcontractors face similar exposure. A general contractor that directs the work of a subcontractor's employees, sets their hours, or makes hiring decisions can become a joint employer for wage and hour purposes. Gig platforms have their own version of the analysis, often focused on whether the platform's control over drivers or workers is enough to make the workers employees, joint or otherwise.
Managing Joint Employer Risk Across the Organization Companies that use staffing agencies, contractors, or franchisees manage joint employer risk the same way: document who controls what, limit the client or franchisor's direct involvement in day-to-day employment decisions, and audit the contracts for language that reserves too much control. The Fair Labor Standards Act is the federal backbone for wage and hour joint employment, while the NLRB handles the labor relations side.
For HR teams, the practical test is whether you'd be comfortable defending the relationship in front of a contractor misclassification claim. If the paperwork says one thing and the actual working relationship says another, the actual relationship controls. Audit both.
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