Alert

Feb 27, 2026

Department of Labor Proposes New Independent Contractor Rule Under the FLSA

On February 27, 2026, the Department of Labor (DOL) issued a Notice of Proposed Rulemaking that proposes to rescind the 2024 Independent Contractor Rule and largely reinstate the 2021 framework, with some modifications, to govern worker classification under the Fair Labor Standards Act. This proposed rule will also apply the same analysis uniformly to the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act.

The proposal reaffirms that independent contractors are not employees and emphasizes the importance of understanding the economic reality of a worker's situation. The ultimate inquiry is whether a worker is economically dependent on an employer for work or is in business for themselves. To help determine this, the DOL has highlighted two "core" factors that will be given greater weight: the nature and degree of control over the work, and the worker's opportunity for profit or loss based on their initiative or investment.

In addition to these core factors, there are other less-probative factors that may be considered, such as skill, permanence, and whether the work is part of an integrated unit of production. It's important to note that actual practice will control over contractual labels.

The DOL states that this change is intended to improve clarity, align with Supreme Court precedent, reduce misclassification and litigation risk, and provide a single, predictable federal standard across the three statutes. Comments on this proposal are due 60 days after its publication in the Federal Register.