New Guidance Regarding Independent Contractor Status: What's new? Not Much.
Last week (on May 1, 2025), I received a “WHD News” email from the Department of Labor (DOL”) Wage and Hour Division (“WHD”). The subject line read “FLSA Independent Contractor Misclassification Guidance.” Expectantly, I opened the email thinking it might be an announcement of the Trump Administration’s new take on the independent contractor rule.
Was it the new rule? Nope. Was it even big news? Not really. Was it news at all? I guess kinda.
As we who spend time pondering the ins and outs of wage and hour law know, the regulation that defines whether a given worker is an employee or an independent contractor has been quite the hot topic. It got hot because of the ever-increasing role that gig workers play in the economy. If a worker is properly classified as an independent contractor, then they’re not entitled to the minimum wage and overtime requirements of the Fair Labor Standards Act that apply to employees. Otherwise, they’re employees covered by the FLSA.
For decades, DOL has scrutinized classifications using a test that considers whether, as a matter of economic reality, employees are dependent on a given company or organization to earn a living as an employee versus someone who is, basically, in business for themselves. The analysis historically has focused on six factors:
(1) The nature and degree of the employer’s control;
(2) The degree of permanence of the worker’s relationship with the employer;
(3) The amount the worker (versus the employer) has invested in facilities and tools of the trade;
(4) The amount of skill, initiative, or judgment required for the worker to compete in the market for providing their services;
(5) The worker’s opportunity for profit or loss; and
(6) The extent of integration of the worker’s services into the potential employer’s business.
A seventh factor sometimes is in the mix that looks at the extent to which the worker has his or her own business organization and operation.
Historically, these factors were looked at as equally important in determining whether, all things considered, the worker is dependent on an employer or if they truly are independent. However, in its waning days, the first Trump Administration issued a new rule that placed a thumb on the scale by focusing on two “core factors,” namely—opportunity for profit or loss and the degree of control. If these factors, by themselves, weighed in favor of either status, then the rule generally presumed the outcome on those factors alone. Although other factors (e.g., the person’s degree of investment, the permanence of the relationship, or whether the individual’s work was part of an integrated unit of production) would be considered, they were “highly unlikely” to lead to a different end result.
The incoming Biden Administration quickly put the kibosh on the Trump formulation and eventually issued its own rule that, in a previous blog, I described as a “new old rule” that restored the long-standing six (or seven) factor test that doesn’t favor any factor over the others. The Biden Administration rule remains on the books, although it likely is on the way out to be replaced by a Trump 2.0 version that I expect may resemble what it issued in January 2021.
This brings me back to last week’s “news.” I thought that, maybe, this was an announcement of a new rule. But it wasn’t. In fact, it’s nothing new at all. Essentially, DOL announced a “new” Field Assistance Bulletin that provides guidance to the Wage and Hour Division’s field personnel “regarding the analysis to apply when determining employee or independent contractor status for purposes of enforcing the FLSA.” The guidance states that “WHD will no longer apply” the Biden Administration rule. Instead, it directs WHD staff to the 2008 version of DOL’s Fact Sheet #13 and Wage and Hour Opinion Letter FLSA2019-6 (i.e., a now newly-restored opinion letter that opined that gig workers who hired themselves out for projects via an app that served as a platform for the workers to connect with people who were looking for services were independent contractors).
In truth, the gulf between the Biden rule and the 2008 Fact Sheet is so narrow as to be virtually invisible. The factors are almost identical. They have equal weight. And the ultimate conclusion is fact specific. The true difference can be found in what’s not written. To my mind, the message that’s being sent to WHD field staff is that there’s a new sherriff in town that will give much greater deference to a business’s self determination regarding their workers’ classification.
While that may be the case, I wouldn’t advise businesses they can push the limits of the test. I think they should keep doing what they’re doing as if nothing has changed—it’s the same old smell test that’s been around for decades. That said, we will remain on the lookout for a new rule.