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The US Department of Labor (“DOL”) has proposed a new Rule titled “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act” (the “Proposed Rule”). If adopted, this rule would rescind the 2024 regulations outlining how to decide whether a worker is an employee or independent contractor.
The current rule, which has not been enforced since May 2025, established a six-factor, totality-of-the-circumstances framework for assessing whether a worker is an independent contractor or an employee. The Proposed Rule, which is similar to the framework issued during the first Trump administration, would instead look to the worker’s “economic reality.” The Proposed Rule establishes several factors to be reviewed in making the determination of whether the worker is economically dependent upon the business including two core factors:
- The nature and degree of control over work; and
- The individual’s opportunity for profit or loss.
Additional, non-core factors, to be examined under the Proposed Rule include:
- The amount of skill required for the work;
- The degree of permanence of the working relationship between the individual and the business;
- Whether the work is part of an integrated unit of production; and
- Additional factors that may be relevant to determine whether an individual is an employee or independent contractor for purposes of the FLSA, but only if the factors in some way indicate whether the individual is in business for him- or herself, as opposed to being economically dependent on the potential employer for work.
A worker who is economically dependent on an employer would generally be considered an employee. A worker who is “in business for him or herself” and not economically dependent would generally qualify as an independent contractor. The public comment period on the Proposed Rule will last from February 27, 2026 through April 28, 2026. We will continue to monitor developments as the rulemaking process proceeds.
As a reminder, employers should be cognizant that different rules for determining whether a worker is an employee or independent contractor may exist under applicable state law.
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