DOL Proposes New Worker Classification Rule: What Employers Should Do Now
Employers should closely review their worker classification practices and monitor upcoming regulatory changes. The U.S. Department of Labor (DOL) has proposed a new rule regarding the status of individuals as employees or independent contractors under various federal laws. This proposed rule would rescind and replace the existing regulation, which had identified six factors as guidelines for conducting a “totality-of-the-circumstances” analysis to classify workers.
The proposed rule “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act” would apply an “economic reality” test to determine whether an individual qualifies as an employee or an independent contractor under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act. This test examines whether a worker is economically dependent on a potential employer or is in business for themselves.
According to the proposed rule, the test contains two primary factors:
- The nature and degree of control over one’s work
- The worker’s opportunity for profit and loss
Additional, less probative factors may include:
- The skill required to complete the work
- The permanence of the working relationship between the worker and the potential employer
- Whether the work is part of an integrated unit of production
The proposed rule offers several examples to illustrate how these factors may be analyzed. The public comment period is ongoing until April 28, 2026. In the meantime, employers should closely monitor rulemaking developments, review their current worker classification frameworks in light of the proposed rule and prepare to initiate any necessary changes. For questions regarding how this may affect your business, please contact Lisa M. Scidurlo, Michael G. Tierce or the Stevens & Lee attorney with whom you regularly work.
