Joint employer liability for staffing agencies: where NLRB and DOL stand

For staffing agencies, "joint employer" status determines whether a client company can be pulled into the same wage-and-hour claim, unfair labor practice charge or bargaining obligation as the agency that placed the worker. As of September 2026, the National Labor Relations Board applies its 2020 standard, which asks whether a company has substantial direct and immediate control over essential terms of employment; its stricter 2023 rule was vacated by a federal court in March 2024 and formally withdrawn by the Board in February 2026. The Department of Labor, separately, has a proposed rule on the table for wage-and-hour joint employment that had not been finalized as of this writing. Neither test turns on what the staffing contract says; both look at what actually happens on the job site.

This page is about the two federal frameworks staffing agencies run into most, what they currently say, and the contract and practice details that change a client's exposure. It assumes you already have the license your state requires to operate as an agency in the first place.

The short answer for staffing agencies

A client is more likely to be found a joint employer, under either federal test, the more it does beyond paying the agency's invoice: setting the worker's schedule directly, disciplining or terminating the worker without going through the agency, directing the specific work in detail day to day, or controlling pay rates. A client that limits itself to defining the scope of work, providing space and equipment, and routing performance issues back through the agency sits closer to the line that keeps it out.

What "joint employer" status changes

If a client is found to be a joint employer under the National Labor Relations Act, it can be required to bargain with a union representing the placed workers and can be named in an unfair labor practice charge over the agency's conduct. If a client is found to be a joint employer under the Fair Labor Standards Act, it can be held liable, jointly with the agency, for unpaid overtime or minimum wage even where the agency was the one that ran payroll. Staffing agencies feel the effect of both: a joint-employer finding against a client can invite scrutiny of the agency's own practices in the same proceeding, and clients that fear the exposure sometimes push contract terms back onto the agency that shift risk without changing actual day-to-day control.

An illustrative example, invented for clarity and not a real case: a staffing agency places a warehouse worker with a client, and the agency's contract says the client has "no supervisory authority." In practice, the client's on-site manager sets the worker's shift each week, corrects the worker's performance directly, and tells the agency after the fact when the worker is no longer needed on the account. If a wage claim or unfair labor practice charge is filed, an investigator applying either the NLRB's or DOL's test looks at what the on-site manager actually did, not at the sentence in the contract, and the client's day-to-day conduct is what decides the outcome.

NLRB: from 2020, to 2023, to where things stand now

The NLRB's own page, The Standard for Determining Joint-Employer Status, and its news story on the vacatur, lay out this sequence. The 2020 standard is the one that applies to NLRA matters today, and it is narrower than the 2023 rule would have been: it looks for control that is substantial, direct and immediate, not indirect influence or a contractual right to intervene that a client never actually uses. A separate legal challenge to the 2020 rule, brought by the Service Employees International Union, was reported as still pending before the D.C. Circuit as of the searches behind this page; check the NLRB's site directly for the current posture of that case before relying on this summary.

DOL: the wage-and-hour side

The Fair Labor Standards Act question, whether a client is jointly liable for a staffing worker's wages, runs on a separate track from the NLRB. The Department of Labor's 2020 joint-employer rule was rescinded in 2021, and since then the Department has not had a standing regulation on the question, leaving courts to apply their own multi-factor tests. On April 22, 2026, DOL published a notice of proposed rulemaking, Joint Employer Status Under the FLSA, FMLA, and MSPA, proposing a four-factor test that asks whether the potential joint employer hires or fires the worker, supervises or controls the work schedule or conditions of employment, determines pay, and maintains employment records, and that expressly treats both reserved and indirect control as relevant. The comment period closed June 22, 2026. As of September 2026 this is a proposed rule, not yet final; check DOL's own page for whether it has been finalized before assuming it governs a specific arrangement.

The factors both frameworks actually look at

Despite the different legal bases, the NLRB's 2020 standard and DOL's proposed four-factor test both point at the same underlying question: who actually directs the work. The factors that recur across both, and across the multi-factor tests courts used in the years DOL had no rule, are worth treating as a single working list for a staffing agency reviewing its own contracts:

• Hiring and firing. Who makes the final call on placing and removing a specific worker.
• Supervision and discipline. Who directs daily work, corrects performance issues and manages conduct.
• Scheduling. Who sets hours, shifts and time off.
• Pay. Who determines the rate and who actually issues payment.
• Employment records. Who keeps time, payroll and personnel records.
• Tools, space and duration. Who provides the equipment and work location, and how long the placement runs, both weigh into a court's overall assessment even where no single factor is decisive.

Contract clauses that shift risk, and clauses that do not

A staffing agreement that simply states "Client is not the employer of the worker" does not settle the question under either framework; both tests look past the label to actual conduct. What the contract can do is make the practical division of control explicit and then match it in practice:

• Route all discipline, performance issues and termination decisions for placed workers through the agency, in writing, and actually follow that process rather than letting client managers handle it directly.
• Have the agency set pay rates and run payroll, with the client paying an invoice for time worked rather than setting the worker's rate.
• Have the agency, not the client, keep the personnel file, time records and any warnings.
• Limit the client's day-to-day role to assigning tasks within the scope of work and reporting performance concerns to the agency, rather than supervising the worker as it would supervise its own staff.
• Review these clauses against what site managers actually do, since a court weighs conduct over paperwork; a contract that says one thing while managers do another does not reduce exposure.
• Put indemnification and insurance terms in writing for both directions, so it is clear which party covers a wage claim or unfair labor practice charge arising from the other party's conduct, and confirm the agency's own coverage actually names staffing placements.

A checklist for staffing agency contracts and practice

• Confirm which entity issues pay, sets the rate, and keeps employment records for each placement.
• Confirm discipline and termination for placed workers route through the agency in writing, and audit whether that actually happens.
• Check whether the client's day-to-day supervision looks like managing its own employees or like directing a contracted scope of work.
• Track the current status of both the NLRB's standard and DOL's proposed rule at least once a year, since both have changed multiple times since 2020.
• Do not assume a state's own joint-employer or staffing-specific statute matches the federal position; check state law separately for each state you place workers in.
• Keep the placement agreement itself current with whichever standard is in effect, rather than reusing a template written under an earlier rule.

This page covers only the federal labor and wage-and-hour frameworks. It does not cover state joint-employer or staffing-agency statutes, workers' compensation allocation between agency and client, or the separate question of independent-contractor classification, which is covered from the onboarding side in contractor onboarding checklist for staffing agencies.