Independent Contractor Rule No Longer Being Enforced by DOL

As of May 1, 2025, the Department of Labor (DOL) announced it will no longer enforce the 2024 rule used to determine whether a worker is classified as an employee or an independent contractor under the Fair Labor Standards Act (FLSA).

Instead, federal investigators will revert to older guidance—specifically Fact Sheet 13 (2008) and Opinion Letter FLSA2025-2 (formerly FLSA2019-6)—which centers on the “economic realities test.” This seven-factor test includes key considerations such as the level of control over the worker, investment in equipment, and the degree of independence in business operations.

Under the economic realities test, there are six factors used to determine a worker’s status: They are:

• Opportunity for profit or loss depending on managerial skill,

• Investments by the worker and the employer,

• Permanence of the work relationship,

• Nature and degree of control,

• Whether the work performed is integral to the employer’s business, and

• Skill and initiative.

While the 2024 rule technically remains in effect, it’s not currently being enforced, and may be rescinded altogether as the new administration reviews its approach.

⚠️ Why it matters: Misclassifying workers can result in costly FLSA violations related to overtime and minimum wage.

This situation is developing. We will continue to monitor DOL updates and provide timely guidance as more information becomes available.