The Department of Labor (DOL) issued a new rule in March 2024 (the “2024 Rule”) tightening independent contractor (IC) classification under the FLSA, making it harder for businesses to classify workers as ICs by focusing on economic dependence using six factors, but…(sigh)… then in May 2025, the DOL issued a Field Assistance Bulletin (FAB 2025-1) signaling a shift back to a more flexible, longstanding “economic realities” test (like Fact Sheet 13) while the 2024 rule’s legal challenges are resolved, effectively pausing its strict enforcement in favor of broader, older guidance, meaning workers are more likely to be deemed employees.
The 2024 Rule (Now on Hold)
- Goal: To prevent misclassification, making it tougher to be an independent contractor.
- Test: A six-factor “economic realities” test, emphasizing worker dependence on the employer.
- Factors Included: Integral part of the business, worker’s skill/initiative, investment, permanence, control, and profit/loss opportunity.
The Current Approach (Since May 2025)
- Shift: The DOL is deferring to its older guidance, like Fact Sheet #13 and Opinion Letter FLSA2019-6, while the 2024 rule faces lawsuits.
- Test: A flexible, “totality of the circumstances” approach focusing on whether the worker is in business for themselves or economically dependent.
- Factors (similar to 2024): Control, investment, opportunity for profit/loss, integral nature of work, skill, permanence, but with more flexibility.
Key Takeaway
- The DOL’s enforcement now leans towards finding employee status for more workers, applying broader factors and older guidance, reducing the clarity businesses sought with the 2024 rule.
For Businesses
- Expect increased scrutiny and audits.
- Use the DOL’s older guidance (Fact Sheet #13, 2019 Opinion Letter) for compliance.
Resources
https://www.wagehourblog.com/dol-shelves-independent-contractor-rule
