New DOL Rule Pending (again): Employee vs. Contractor

In January, 2024, the Biden DOL published a new “final rule” governing the determination of employee vs. independent contractor status. That rule made it more difficult for individuals to be employed as independent contractors, in deference to the labor unions. Consequently, on February 26, 2026, the Trump DOL announced a new Notice of Proposed Rulemaking (NPRM) that replaces the not-so-final 2024 rule with a prescribed analysis to be used in determining contractor vs. employee status. This rule, according to the current DOL, “is more consistent with the FLSA as interpreted by longstanding judicial precedent.” Misclassification of workers as independent contractors can deprive those individuals of legislated protections (see “Case #2,” below). Conversely, having to classify legitimate independent contractors as employees “ties the hands” of both the company and the contractor regarding working conditions, schedules, etc. The new rule is designed to strike an optimal balance between them.