The Department of Labor (DOL) on February 27, 2026, published a proposed rule that would revise how employers determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA) and certain related federal laws. The proposal would rescind the agency’s 2024 final rule and replace it with a framework similar to the standard adopted in 2021 during the first Trump administration.

Under the proposed rule, the test for determining worker classification would place greater emphasis on two core factors: the nature and degree of control exercised over the work, and the worker’s opportunity for profit or loss based on initiative or investment. If both core factors point to the same classification, that outcome is likely to prevail. Additional considerations—the level of skill required, the permanence of the working relationship, and whether the work is part of an integrated unit of production—may still be considered but would carry less weight than the core factors. The proposal is a shift away from the 2024 rule’s “totality of the circumstances” approach, which treated a non-exhaustive list of factors equally in determining worker classification. The agency believes the new rule will offer greater flexibility and clearer guidance for organizations that use independent contractors, while potentially reducing misclassification risk and related litigation.

The proposed rule is subject to a 60‑day public comment period, with comments due by April 28. If this rule has implications for you and you would like to discuss further or weigh in on the issue, please reach out to Amanda Mead.