The Department of Labor (DOL) has signaled its intention to rescind the 2024 worker classification rule, which uses a six-part economic realities test to determine whether a worker is an employee or an independent contractor. The announcement came via the Trump Administration’s unified agenda.

DOL cited five separate legal challenges to the current independent contractor rule and said its intention to rescind the rule and issue a new one will “reduce unnecessary burdens on employers and employees.” The announcement follows DOL’s May 1, 2025, statement that the agency will no longer enforce the 2024 rule. For now, DOL says, the agency will enforce the Fair Labor Standards Act (FLSA) in accordance with its July 2008 Fact Sheet #13 and its reinstated Opinion Letter FLSA2019-6.

Generally, DOL’s current enforcement position involves analyses derived from Supreme Court cases on the issue of employment versus independent contractor status, DOL says in Fact Sheet #13. It notes that the court says there is no single rule or test for determining whether a worker is an employee or an independent contractor, but that the total activity or situation controls. Among the significant factors the court (and current DOL enforcement) will consider are the extent to which the services rendered are an integral part of the principal’s business; the permanency of the relationship; the amount the worker has invested in facilities and equipment; the nature and degree of control by the principal; the worker’s opportunity for profit and loss; the amount of initiative, judgment, or foresight in open market competition with others required for the worker’s success; and the degree of independent business organization and operation.

Prospects: It may take some time before DOL releases a proposed new rule, especially if the government shutdown is prolonged and/or if budget cuts to DOL are significant. Currently, the agency seems generally content with enforcement based on an almost 20-year-old rule that in many respects resembles the economic realities test in the rule it plans to rescind. Thus, a new proposed rule may not be an immediate priority for DOL.

 NAIFA Staff Contact: Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org.