On May 1, 2025, the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) issued a Field Assistance Bulletin stepping back from a restrictive independent contractor rule issued under the Biden administration — a move that should be welcomed by manufacturers and franchisors who depend on workforce models including independent contractors. Although the 2024 rule remains on the books, the DOL has issued an enforcement guidance signaling a shift back toward a more business-friendly framework.
Specifically, the DOL position in the 2024 Fact Sheet and the 2024 regulations (“2024 Rule”) stated that the “economic realities” of the worker’s relationship with the purported employer would determine whether that worker was an employee or an independent contractor. Specifically, in the 2024 Rule, the DOL’s enforcement position was that, if the worker was economically dependent on the employer for work, then worker would be considered an employee. If the worker was truly in business for themselves, then the worker would be an independent contractor. Under this rule, business were required to examine the totality of the working relationship to determine the worker’s status. This 2024 Rule went through numerous, detailed examples that left little doubt that the intention was to make it more difficult to classify a worker as an independent contractor. Once the worker was deemed an employee, that worker was entitled to minimum wage, overtime, and other protections under the...
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