As of May 1, 2025, the U.S. Department of Labor (DOL) has paused enforcement of the independent contractor rule from the Biden administration’s under the Fair Labor Standards Act (FLSA). This move does not rescind the rule finalized in March 2024 but signals a significant shift in how the DOL will approach worker classification for now.
If you have questions about your company’s classification practices or need to ensure you are meeting both federal and state requirements, the Business Law team at MBM Law is here to help you.
Understanding the Original 2024 Independent Contractor Rule
The 2024 rule introduced a stricter, six-factor “economic realities” test to determine who qualifies as an independent contractor. The intent was to prevent companies from misclassifying workers to avoid paying benefits or providing workplace protections. However, this rule quickly faced legal challenges from businesses and freelancers, leading to ongoing litigation. With the recent change in administration, most of that litigation is now on hold, and the DOL is reconsidering the rule.
The Independent Contractor Standards Now in Effect
- The DOL has announced it will no longer use the 2024 rule’s analysis when investigating whether a worker is an employee or independent contractor under federal wage laws.
- Instead, the DOL will enforce the FLSA using the previous guidance from Fact Sheet #13 (July 2008) and the reinstated Opinion Letter FLSA2019-6, which generally provide a more flexible, business-friendly standard.
- The 2024 rule technically remains in effect and could still be cited in private lawsuits, even though the DOL will not apply it in its own investigations.
Ensuring Compliance for Employers on Worker Classification
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Reduced Immediate Federal Risk
- For now, employers can rely on the earlier, more flexible standards when classifying workers, reducing the risk of DOL enforcement for misclassification under the 2024 rule.
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Ongoing Legal Uncertainty
- The legal landscape remains unsettled. The 2024 rule is under review and may be rescinded, replaced, or reinstated. Private parties may still use it in lawsuits, and state laws may impose their own, often stricter, standards.
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State and Local Rules Still Apply
- Employers must continue to comply with any state or local regulations on independent contractor classification, which may differ from federal guidance.
While the DOL’s pause offers some immediate relief, the worker classification landscape remains complex. The DOL’s pause on enforcement of the 2024 rule provides temporary relief and flexibility for businesses, but the situation remains fluid. MBM Law will continue to monitor developments and advise clients on best practices as the legal landscape evolves.
