Independent contractor or ‘independent-ish’? Arizona agencies are comparing notes

Arizona employers that rely on independent contractors may want to take a closer look at those relationships. On May 20, 2026, Governor Katie Hobbs signed Executive Order 2026-01, “Protecting Paychecks for Hard-Working Arizonans.” While the order doesn’t create a new worker classification test or give workers a new private right to sue, it does direct several state agencies to coordinate more closely on worker classification enforcement.

What the order does

Under the order, the Arizona Department of Economic Security (DES), Department of Revenue (DOR), Industrial Commission of Arizona (ICA), and Registrar of Contractors (ROC) must share certain nonconfidential information and cooperate when classification issues arise. In other words, a concern that starts with unemployment insurance, tax reporting, workers’ compensation, or contractor licensing may not stay neatly in one lane.

That matters because misclassification can create exposure in several areas at once, including unpaid wages or overtime, unemployment insurance contributions, workers’ compensation coverage, tax withholding, penalties, interest, and licensing consequences. The order’s interagency focus is limited to Arizona agencies, but federal enforcement risk remains separate and should be evaluated under the applicable federal tests.