DOL proposes new independent contractor rule, reversing Biden admin’s 2024 rule

On February 26, 2026, the Department of Labor (DOL) published a proposed rule seeking to clarify the distinction between employee and independent contractor status under the Fair Labor Standards Act (FLSA). The new rule is yet another shift in approach from the DOL regarding how to analyze independent contractor classification. As a result, employers may need to consider auditing their independent contractor classifications again.

Proposed rule’s framework

The proposed rule rescinds the more detailed 2024 final rule in favor of a more streamlined approach, looking at the “economic totality” of the worker, as was endorsed by the first Trump administration. The proposed rule includes the following framework:

The first factor is an “economic reality” test the proposed rule uses to determine whether workers are in business for themselves as independent contractors or are employees economically dependent on an employer for work. Generally, this factor remains the foundation of the independent contractor analysis and isn’t a significant departure from the 2024 final rule.

The DOL encourages considering factors like the amount of skill required for the work, the degree of permanence of the working relationship, and whether the work is part of an integrated unit of production.