DOL rewinds independent contractor guidance . . . again: What you should know

On February 26, 2026, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued a notice of proposed rulemaking that would again revise how workers are classified as employees or independent contractors under federal law. While the proposal doesn’t immediately change existing obligations, it represents a pivot in federal enforcement direction and a familiar swing in the regulatory pendulum.

Return to a familiar ‘economic reality’ test

If finalized, the proposed rule would rescind the Biden administration’s 2024 independent contractor rule and replace it with a framework largely modeled on the first Trump administration’s 2021 rule, which itself drew heavily from long-standing federal court precedent.

The analysis asks a simple question: Is the worker economically dependent on the business for work, akin to an employee, or is the worker truly in business for themselves, akin to an independent contractor? The proposed rule provides that “economic dependence in this context means the dependence that a typical employee has on an employer for work. . . . Economic dependence does not focus on the amount of income the worker earns, or whether the worker has other sources of income.”

Five distinct factors inform the “economic dependence” inquiry under the proposed rule. None is dispositive, although two are considered “core.”

Two core factors take center stage