Dive Brief:
- The U.S. Department of Labor advanced a proposal Wednesday to update its independent contractor classification standard under the Fair Labor Standards Act, according to a notice posted by the White House Office of Management and Budget.
- DOL had initially revealed plans to revisit the regulations in August, when it published a long list of regulatory updates. At the time, the agency pegged the timeline of a proposed independent contractor rule to September 2025 but provided no additional details.
- Wednesday’s update shows that the White House received the proposed rule but provided no further information on the rule’s contents or when it might be published. However, DOL may return to the “economic reality” test it articulated in a final rule it issued shortly before the end of the first Trump administration.
Dive Insight:
The news marks a key signal for employment law watchers in a long-contested policy area. DOL’s independent contractor regulations — also known as its “gig worker” regulations — set forth the criteria by which the agency determines whether a worker is considered an employee or an independent contractor.
Successive administrations have overseen a political see-saw on the issue. In 2021, just before the end of President Donald Trump’s first term, DOL issued a final rule adopting the economic reality test, which examined two “core factors” in order to determine classification:
- The nature of and degree of a worker’s control over their work.
- The worker’s opportunity for profit or loss based on initiative, investment or both.
The same rule also identified a list of three other factors to be examined that would be “less probative” than the two factors but nonetheless considered in DOL’s analysis:
- The amount of skill required for the work.
- The degree of permanence of the working relationship between the potential employer and worker.
- Whether the work is part of an integrated unit of production.
DOL’s 2021 rule was short-lived, however, as the incoming Biden administration delayed and eventually rescinded it. The Biden-era DOL then issued its own rule, which would have utilized a multi-factor, “totality-of-the-circumstances analysis” of many of the same factors as the 2021 rule but without placing particular emphasis on any one factor.
The Biden-era rule took effect in March 2024 despite a series of legal challenges. After Trump returned to the Oval Office in 2025, DOL ordered staff not to enforce the 2024 rule and said it was considering rescinding the rule. Just months later, the agency announced that it would revisit independent contractor regulations as part of its Spring 2025 regulatory agenda.
Though details on the upcoming proposal are scant, DOL did touch upon independent contractor status in a May opinion letter. In the letter, it said that a group of service providers for a virtual marketplace company would likely be considered independent contractors under the FLSA. The agency’s analysis made repeated reference to the concept of “economic reality.”