Independent contractor rule is moving forward

The US Department of Labor (DOL) is gearing up to update its rules for classifying workers as employees or independent contractors.

Yesterday, the agency submitted a proposed rule to the White House for review. This marks the fourth step in the nine-step federal regulatory process.

The scope of the proposed rule appears to have expanded as well. When the rule was first added to the DOL’s regulatory agenda last fall, it was titled Employee or Independent Contractor Classification Under the Fair Labor Standards Act. Now that it’s at the White House, the title also includes the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act.

Earlier, the DOL said it plans to repeal the current FLSA independent contractor rule enacted in 2024 under the Biden administration and consider “how it will proceed with respect to independent contractor classification.”

One possibility is that the DOL will restore the independent contractor rule that the Trump administration put forward in 2020, or some variation thereof.

In the meantime, the DOL has stopped enforcing the Biden-era rule; instead, it directed its personnel to apply a more business-friendly 2008 fact sheet and 2019 opinion letter when investigating misclassification cases.

In preparation for a new rule, employers may wish to revisit the 2020 rule to see if any workers currently classified as employees might be reclassified as independent contractors under a more relaxed FLSA standard. Of course, employers also should consider any relevant independent contractor tests under common law, the federal tax code, other federal laws and miscellaneous state laws.