A constant challenge for many employers is whether all workers must be treated as employees, or whether some may be treated as independent contractors. Workers who qualify as independent contractors are not subject to many of the employment laws that apply to employees, such as wage and hour laws requiring overtime pay. They also are not subject to tax withholding and typically receive a 1099 instead of a W-2.
The rules governing who is, and who is not, an independent contractor are frequently changing. Employers must tread carefully when deciding to classify a worker as an independent contractor.
Department of Labor Abandons 2024 Rule for Classifying Workers
In 2024, the U.S. Department of Labor (DOL) under the Biden Administration issued a final rule that redefined which workers should be classified as “employees” and which workers qualify as “independent contractors” under the Fair Labor Standards Act (FLSA), the federal law that mandates the payment of minimum wage and overtime.
However, in a field assistance bulletin issued on May 1, 2025, the DOL’s Wage and Hour Division, under the new Trump Administration, announced it will no longer apply the 2024 rule. Instead, the division will rely on the independent contractor standard established in 2008.
Under the FLSA, employees are entitled to minimum wage and overtime pay for any hours worked over 40 in a workweek, unless exempt. Independent contractors, by comparison, typically have more autonomy, including the...
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