DOL Proposes New Independent Contractor Test

The U.S. Department of Labor (DOL) has issued a new proposed rule on determining whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). The 2026 proposed rule will replace the 2024 rule issued during President Biden’s term which was challenged and eventually abandoned by the DOL under the Trump Administration. 

The DOL’s new proposed independent contractor test returns to the type of test adopted during President Trump’s first term. The focus of the analysis will be determining whether the worker is economically dependent on the employer or is operating an independent business. The core factors to consider, which will be given the most weight, are:

• the nature and degree of the worker’s control over the work, including the ability to set the schedule, select projects, and work for others, including competitors; and 
• the worker’s opportunity for profit or loss based on his/her initiative and/or investment. 

Other facts which will be relevant to the analysis, particularly when the two core factors conflict, are:

• the amount of skill required for the work;
• the degree of permanence of the working relationship; and 
• whether the work is part of an integrated unit of production.

This new proposed rule is good news for employers and independent contractors as the 2024 rule was very hard to satisfy. The DOL will take public comment on the proposed rule for a 60-day period, ending April 28. We will keep you posted on developments. 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.