• The DOL recently published a proposed rule revising the test for determining whether workers are employees or independent contractors under the Fair Labor Standards Act.
• The proposed rule would rescind a 2024 final rule, which used a “totality of the circumstances” framework.
• The public can submit comments on the proposed rule from February 27, 2026, until April 28, 2026.

The proposed rule, “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act,” could have significant legal and economic ramifications for companies, especially in industries that tend to rely more heavily on independent contractors, such as construction, home health, transportation, warehousing, ridesharing, agriculture, and food delivery. Unlike employees, who are covered under the FLSA, independent contractors are not entitled to a minimum wage, overtime pay, unemployment insurance, and worker’s compensation.

While the new proposed rule may not substantially affect litigation, as it remains to be seen whether and to what extent courts would actually follow and apply it in litigation, it does significantly reduce the risk profile at the DOL level. The DOL proposes that the analysis also apply to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), both of which incorporate the FLSA’s scope of employment.

If the proposed rule is...

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