On February 26, 2026, the U.S. Department of Labor (“DOL”) announced a proposed rule that would rescind the 2024 Biden-era independent contractor regulation (the “2024 Rule”) and replace it with a revised “economic reality” framework (“Proposed Rule”). If finalized, the Proposed Rule would mark a significant shift in federal worker classification standards and likely make it easier for employers to classify certain workers as independent contractors under federal law.
Notably, the Proposed Rule would apply not only to the Fair Labor Standards Act (“FLSA”), but also to the Family and Medical Leave Act (“FMLA”) and the Migrant and Seasonal Agricultural Worker Protection Act (“MSAWPA”)—both of which use the FLSA’s definition of “employee.”
When announcing the Proposed Rule, the DOL expressed concern that the 2024 Rule departed from longstanding judicial precedent and created uncertainty for workers and employers alike. According to the DOL, the Proposed Rule will provide a more predictable and administrable standard for worker classification.
The 2024 Rule
On January 10, 2024, the DOL deployed a six-factor test to determine whether employees should be classified as independent contractors or employees. The six factors considered are:
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