U.S. DOL proposes to rescind Biden-era 2024 independent contractor rule
On February 26, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) announced a proposed rule that would rescind the Biden-era 2024 independent contractor rule and replace it with a rule that’s similar to the one the DOL adopted in 2021 during President Trump’s first term.
The public may submit comments on the proposed rule when it’s posted on the Federal Register on February 27. There will be a 60-day comment period that closes at 11:59 p.m. ET on April 28, 2026.
Why the proposed change?
The DOL states that the proposed rule is “consistent with Supreme Court and federal circuit court precedent.”
“The rule we are proposing today is not only based on long-standing legal principles used in federal courts across the country but also is aimed at ensuring that workers and employers know how to apply those principles predictably,” said WHD Administrator Andrew Rogers in a press release. “The department believes that streamlined regulations in line with Congress’s intent when it passed the Fair Labor Standards Act would improve compliance, reduce misclassification, and reduce costly litigation in an economic environment that needs flexibility and innovation.”
The proposed rule would also apply the DOL’s streamlined analysis to the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act, both of which use the Fair Labor Standard’s Act’s (FLSA) statutory definition of “employ.”
How do the new standards differ from the Biden-era standards?
If passed into law, the 2026 proposed rule would:
- Apply an “economic reality” test to determine whether a worker is in business for himself or herself as an independent contractor or is an employee economically dependent on an employer for work.
- Identify and explain two “core factors” to help determine if a worker is economically dependent on an employer for work or in business for him- or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
- Identify other factors to help determine a worker’s status as an employee or independent contractor, including the amount of skill required for the work, degree of permanence of the working relationship, and whether the work is part of an integrated unit of production.
- Advise that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
- Provide eight fact-specific examples applying the factors to real-life circumstances.
The 2026 proposed rule is similar to the 2021 version which was finalized (but never took effect) at the end of President Trump’s first term, in that it leans heavily into the concept of an “economic reality” test, which analyzes if a person is financially dependent on an employer. If they are, then they’re an employee. The 2021 version also zeroed in on “core factors,” and a person’s opportunity for profit or loss, and the degree of control they have over their work.
The 2024 version under President Biden (which is currently still in effect today) focuses more on the “totality of the circumstances” when classifying workers. It looks at the whole picture and allows all factors to be weighed equally, with no predetermined weight assigned to a particular factor or set of factors. Instead, it uses a 6-part multifactor approach to classifying workers. These six factors include:
- Opportunity for profit or loss depending on managerial skill.
- Investments by the worker and the potential employer.
- Degree of permanence of the work relationship.
- Nature and degree of control.
- Extent to which the work performed is an integral part of the potential employer’s business.
- Worker’s skill and initiative.
Don’t these rules seem similar?
While the details of these rules might seem similar on the surface, the current 2024 rule makes it harder for employers to classify workers as independent contractors, which means companies must hire workers as employees, making them eligible for minimum wage, overtime pay, and other benefits that come with regular employment.
The crux of the 2021 and 2026 rules is that they allow a little more wiggle room for companies to classify workers as independent contractors, and, therefore, avoid having to comply with certain employment laws, like paying minimum wage.
Didn’t the DOL already rescind this rule?
Not officially, but in May 2025, the DOL issued a Field Assistance Bulletin to provide guidance to WHD field staff, and indirectly employers, about how to determine if someone should be classified as an employee or an independent contractor for purposes of FLSA compliance.
In a press release from May, the DOL said they were reviewing the 2024 independent contractor rule that went into effect during President Biden’s term.
Field staff were instructed not to apply the 2024 rule when investigating and enforcing FLSA employment matters. Instead, staff was to look back to the 2008 independent contractor rule, focusing on “economic realities” similar to the 2021 and 2026 versions.
What should businesses be doing in light of this new guidance?
For now, businesses should still follow the guidance from the 2024 Biden-era independent contractor rule, because that’s still in effect.
Employers should ensure they’re complying with all federal, state, and local employment laws, especially when it comes to properly classifying workers as either employees or independent contractors. Also, workers may not voluntarily waive their employee status and choose to be classified as independent contractors.
Even if the WHD field staff isn’t using the 2024 version, it’s still technically the law of the land. Nothing’s changed with the existing regulations relating to employee classification (or misclassification) but has more to do with how the WHD is allocating enforcement resources during the review of the 2024 rule. The 2024 rule will still be the basis of any private litigation.
No posting change expected
This rule isn’t expected to bring a mandatory change to the Employee Rights Under the Fair Labor Standards Act posting. The posting does mention independent contractors, but doesn’t include a detailed definition. Previous changes to the independent contractor rule haven’t brought about a mandatory FLSA posting change.
In addition, the proposed rule doesn’t mention a posting change and doesn’t include the cost of a posting change in the rule’s cost analysis.
Key to remember: The U.S. DOL announced plans to rescind the Biden-era federal independent contractor rule from 2024 through a formal rulemaking process.























































