The US Department of Labor (DOL) will no longer enforce regulations issued by the Biden administration last year that made it more difficult to classify workers as independent contractors under the Fair Labor Standards Act (FLSA).
Instead, a new enforcement policy directs DOL personnel to apply a more employer-friendly 2008 fact sheet and 2019 opinion letter when investigating misclassification cases.
“This approach provides greater clarity for businesses and workers navigating modern work arrangements while legal and regulatory questions are resolved,” the DOL said.
Business groups, freelancer workers and others have filed multiple lawsuits seeking to overturn the 2024 independent contractor rule.
The DOL has asked the courts to temporarily pause these cases to allow the agency’s new leadership time to reconsider and potentially rescind the Biden-era rule. At least one federal appellate court has granted the DOL’s request to put its case on hold, but cautioned that the pause “is not indefinite in duration and is subject to reconsideration at any time.”
If the DOL repeals the 2024 rule, it could restore a more employer-friendly independent contractor rule that the Trump administration promulgated in 2020, or it could simply leave a regulatory hole, in which case a body of case law known as the economic realities test would likely be used to determine worker classification under the FLSA.
Employers may wish to revisit these tests to see if any workers currently classified as employees might be reclassified as independent contractors under a more relaxed FLSA standard; of course, employers simultaneously should consider any relevant independent contractor tests under common law, the federal tax code, other federal laws and miscellaneous state laws.
