DOL proposes new rule on independent contractor status

On February 27, 2026, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) published a proposed rule addressing the issue of employer versus independent contractor status under the federal Fair Labor Standards Act (FLSA). By extension, the rule would also set the standard under the federal Family and Medical Leave Act (FMLA) because its definition of employee is directly tied to the FLSA. The same would be true for the federal Migrant and Seasonal Agricultural Worker Protection Act.

Examining proposed rule

The analysis in the department’s proposed rule has the following key components:

·     It describes an “economic reality” test balancing whether the individual is in business for himself/herself or, instead, whether the person is economically dependent on an employer for the work.

·     It identifies and explains the primary “core factors” to determine if the economic realities indicate independent contractor or employee status, including the nature and degree of control over the work and the worker’s opportunity for profit or loss based on initiative, business acumen, and/or investment. Under the proposed rule, these core factors are the most probative.