A test, not a headline

On February 26, 2026, the Department of Labor announced a proposed rule to rescind the 2024 independent-contractor rule and replace it with a narrower standard (DOL; Mayer Brown). The proposal was published in the Federal Register on February 27, and the 60-day comment period closed at the end of April 28, 2026.

The change does not reclassify anyone by itself. What it changes is the test — the legal standard the Department uses to decide who counts as an employee. That test sits underneath a large share of US labor law, which is why a quiet rulemaking matters.

What the classification test does

Most federal labor protections — minimum wage, overtime, recordkeeping — apply only to employees. They do not apply to independent contractors. So the threshold question in any wage-and-hour case is which category a worker falls into.

For the Fair Labor Standards Act, that question is answered by the economic-realities test: a multi-factor analysis of whether a worker is, as a matter of economic reality, dependent on the hiring business for work, or genuinely in business for themselves. Courts have long used a similar set of factors — control over the work, the worker’s opportunity for profit or loss, investment, skill, the permanence of the relationship, and how integral the work is to the business.

The factors are not new. What shifts between administrations is how the factors are weighed — and that weighting determines outcomes in close cases.

The 2024 rule and the 2021 rule

Two recent rules set the standard in opposite directions.

• The 2021 rule (issued under the first Trump administration) named two “core factors” — the nature and degree of control over the work, and the worker’s opportunity for profit or loss — and gave them the greatest weight. Three other factors (skill, permanence, and integration) carried less. Elevating the core factors generally made it easier to classify a worker as a contractor.
• The 2024 rule (issued under the Biden administration, effective March 11, 2024) replaced that framework with a six-factor “totality-of-the-circumstances” analysis in which no factor is given primary weight (Congressional Research Service; McGuireWoods). By treating every factor as relevant and none as decisive, the 2024 rule generally made contractor classification harder to sustain.

What the rescission would change

The proposed rule would rescind the 2024 rule and revert toward the 2021 approach. It reinstates control and opportunity for profit or loss as the two core factors carrying the greatest weight, with skill, permanence, and integration as lesser “guideposts” (Perkins Coie). The Department’s stated rationale is that the 2024 rule lacked clarity, used redundant factors, and risked discouraging legitimate independent-contractor arrangements.

Two points are worth keeping straight:

• This is a proposed rule, not a final one. The comment period closed April 28, 2026. The Department must review the comments and issue a final rule before anything formally changes, and a final rule could itself be challenged in court.
• Enforcement already shifted before the rulemaking. The Department announced in May 2025 that it would no longer apply the 2024 rule in its own enforcement investigations. The 2024 rule technically remains in effect for private litigation, but DOL has not been enforcing it.

The practical effect of returning to a core-factors test is to lower the bar for contractor classification. The narrower the route to “employee” status, the more workers fall outside the FLSA’s minimum-wage and overtime guarantees — and outside the recordkeeping rules that make those guarantees enforceable.

The litigation backdrop

The 2024 rule has been challenged in five separate lawsuits. All five remain stayed — paused by the courts — based on the Department’s representation that it intended to reconsider the rule (Jackson Lewis). The rescission proceeding and the stayed litigation are now interlocked: if the Department finalizes a rule rescinding the 2024 standard, the lawsuits challenging that standard may become moot, and courts could dismiss them without ruling on the merits.

That outcome would resolve the rule through agency action rather than judicial decision — leaving the question of how to weigh the classification factors where it has been for a decade, swinging with each administration.

Why it matters beyond the FLSA

The FLSA test is only one of several worker-classification tests in US law. The IRS uses a common-law control test for tax purposes; many states use the stricter ABC test for state employment law; the National Labor Relations Act has its own standard for organizing rights. A change to the FLSA rule does not move those other tests.

But the FLSA test governs the federal minimum-wage and overtime floor, and it shapes how aggressively the Department investigates misclassification. Loosening it tilts the close cases — and close cases are exactly where misclassification disputes live.

What to ask your representatives

• Do they support the 2024 economic-realities standard, or the narrower core-factors approach the proposed rule would restore?
• Will they press the Department of Labor to explain how the rescission affects the five stayed lawsuits and whether it would leave those challenges unresolved on the merits?
• Do they support writing a single worker-classification standard into statute, so the test no longer changes with each administration?
• How will they monitor DOL misclassification enforcement, given that the Department stopped applying the 2024 rule in May 2025?