05/08/2025

DOL Easing Up on Independent Contractor Misclassification Enforcement

For businesses, this appears to be a 'big win'

Businesses that rely on freelancers or the “gig economy” have cause for optimism now that the Department of Labor (DOL) just announced it will no longer enforce a Biden-era final rule that made it harder to classify workers as independent contractors. While the DOL has not yet rescinded the 2024 rule, the agency said that it continues to work toward returning to a simpler standard for determining whether a worker is an employee or an independent contractor under federal wage and hour rules. In the meantime, the 2024 rule, which is currently under challenge in federal courts, remains in effect for private litigation purposes. Here are a few key points you need to know about this latest development.

Quick Background

• What's this about? During President Donald Trump’s first term, the DOL established a more lenient independent contractor standard that made it easier for businesses to classify workers as independent contractors. Last year, the Biden administration issued a final rule rescinding that standard and reinstating a more complex analysis for determining whether a worker is an independent contractor or an employee who is entitled to minimum wage, overtime pay, and other protections under the Fair Labor Standards Act (FLSA). Read more about the 2024 final rule here.

• Then what happened? Business groups immediately challenged the 2024 final rule in court (and five lawsuits are still playing out). However, once Trump returned to the White House, the DOL sought to put that litigation on hold while it reconsiders the Biden-era independent contractor standard, including whether to rescind it altogether as this administration has with many of its predecessor's actions.

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