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 manufacturers and franchisors should welcome to the extent they depend on business models including independent contractors. (More Foley on this issue can be found here and here and here). Although the 2024 rule remains on the books, the DOL’s 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 a worker’s status—employee or independent contractor. Under the 2024 Rule, if a worker was economically dependent on the employer for work, the worker was an employee. Conversely, if the worker was truly in business for him/herself, then the worker was an independent contractor.
The factors described are significantly more lenient than the 2024 Biden-era rule. This signals a return to a more predictable and flexible standard allowing for more workers to be considered as independent contractors.
Effective May 1, DOL investigators will evaluate independent contractor status under traditional “economic realities” principles. This means weighing several...
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