DOL Yo-Yo Continues: The Independent Contractor Rule

By Al Vreeland - Lehr Middlebrooks Vreeland & Thompson, P.C.

March 5, 2026

The Trump Department of Labor has not-so-slowly worked to unwind many of the workplace initiatives of the Biden administration. Most recently, DOL proposed a “new” rule for determining which workers are “employees” and which are “independent contractors.”  This “new” rule – which would replace the rule issued by the Biden DOL in 2024 – largely tracks the “old” rule announced in 2021 during Trump’s first term.

The proposed rule is issued under the Fair Labor Standards Act and Family and Medical Leave Act to establish a test for which workers are covered by Acts’ requirements (minimum wage, overtime and family leave). The Biden rule emphasized the economic realities of the work relationship and identified six factors to consider (none more important than the others).  Many employers viewed the 2024 test as both too uncertain in application and too restrictive in scope.

The 2026 proposed rule focuses on two primary factors: control of the work to be performed and entrepreneurial opportunity for profit or loss. 

That is, can the worker control their own schedule and workload, select clients and projects and work for multiple clients?  The more freedom in this regard, the more likely they will be considered independent contractors.

Likewise, can the worker affect their own profit or loss (as opposed to being paid a straight hourly rate)?  If they can make decisions about how to manage the project and can make investments which could increase their profit, they are more likely to be considered independent.

The new rule also identifies several secondary factors to consider.  Does the worker have special skills or experience which they can market to other clients? Is the work project-based with a definite endpoint or is it continuous? Finally, is the worker integrated into a work process with the employer’s other employees?

Because the 2016 proposed rule is very similar to the 2011 rule, we expect that it will become final with only limited changes. And although the rule is issued under the FLSA and FMLA, we expect other agencies, including many state agencies, to use it as a guidepost.

www.lehrmiddlebrooks.com