On February 26, 2026, the U.S. Department of Labor (DOL) released a Notice of Proposed Rulemaking (NPRM) proposing revisions to how workers are classified as employees or independent contractors under the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). The proposal seeks to reinstate the DOL’s 2021 independent contractor test issued during the prior Trump administration and rescind the 2024 rule adopted under the Biden administration, which applied a broader six-factor balancing framework without any dominant factor.

The DOL is currently accepting public comments on the proposal, with the comment period open through April 28, 2026. If finalized, the reinstated standard could affect businesses across many industries as freelance and gig-economy work continues to grow in California and as the state remains highly dependent on seasonal labor.

DOL’s Proposal

• Adopts the “economic reality” test to determine whether a worker is in business for themselves (independent contractor) or economically dependent on an employer (employee).
• Highlights two core factors that federal courts primarily need to consider: (1) the nature and degree of the worker’s control over the work and (2) the worker’s opportunity to profit or loss based on initiative and/or investment.
• Identifies three additional factors when the core factors do not clearly indicate classification: (1) skill level required for...

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