DOL Will Reconsider Independent Contractor Rule

The U.S. Department of Labor (DOL) recently indicated its intention to reconsider the independent contractor test adopted during the Biden Administration. This is good news for employers. 

In January 2024, the DOL adopted a new test for determining whether a worker is an independent contractor under the Fair Labor Standards Act (FLSA). While the factors in this “economic realities” test were not necessarily new, the DOL clearly intended to apply the factors in a very narrow fashion, making it difficult to satisfy the definition of independent contractor for any workers. Several lawsuits were filed challenging the new rule, both on procedural and substantive grounds. Now, the DOL is in the process of asking the courts considering these legal challenges to dismiss the lawsuits because it intends to reconsider, and potentially rescind, the rule. 

Despite this potential for a favorable change to the test, the DOL’s current narrow independent contractor rule remains in effect, and employers should wait for it to be rescinded or changed before taking any action. We will update you on this issue. In the meantime, if you have questions about independent contractors, please contact a KZA attorney. 

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.