July 3, 2025

Administration Turns Back the Clock on Interpretation of Federal Independent Contractor Standards

In a Field Assistance Bulletin issued to U.S. Department of Labor (DOL) staff on May 1, 2025, the agency revised its guidance on analyzing whether a worker is an employee or an independent contractor when enforcing the Fair Labor Standards Act (FLSA). Enforcement staff were directed to reject the existing federal analysis rule finalized in 2024 and assess independent contractor classification issues following the DOL Fact Sheet #13 from July 2008. Staff were also directed to Opinion Letter FLSA2019-6 for additional guidance on related issues.

Assessments under the 2024 DOL independent contractor rule are more likely to result in a determination that the worker is an employee. The return to the earlier analysis standards is expected to result in more determinations that the worker is an independent contractor.

The assessment standards to be used by DOL staff, effective May 1, 2025, will consider the totality of the following circumstances:

How closely are the services rendered integral to the principal’s business?

How permanent is the relationship intended to be?

What is the worker’s investment in facilities and equipment?

What is the nature and degree of control by the principal over the worker?

What are the worker’s opportunities for profit and loss?

What is the degree of initiative, judgment, or foresight required for the economic success of the worker in open market competition with others?

What is the degree of independent business organization and operation required of the worker?

The updated assessment guidance for DOL staff will likely provide more flexibility under the FLSA for companies to use independent contractors. However guidance only applies to assessments of the worker-principal relationship by DOL staff. It is possible for companies to satisfy the DOL’s independent contractor standards pursuant to the guidance but still incur misclassification liability under other circumstances. For example:

  • The 2024 federal rule regarding independent contractor determinations has not been rescinded and is still applicable to private actions.
  • States have their own laws and regulations regarding the classification of independent contractors. The states use various standards to determine whether a worker is an employee or independent contractor for purposes of unemployment compensation eligibility, worker’s compensation coverage, and other mandatory employee benefits and employer obligations.

For more information, including links to the 2008 fact sheet and 2019 opinion letter, see the Field Assistance Bulletin https://www.dol.gov/sites/dolgov/files/WHD/fab/fab2025-1.pdf.