Earlier today (Feb. 26, 2026), the Department of Labor (DOL)’s Wage and Hour Division unveiled a proposed rule outlining the framework for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). Notably, the proposed rule also encompasses the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Worker Protection Act (MSPA), which share the same statutory definition of “employ.”
The rule, entitled Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act and Migrant and Seasonal Agricultural Worker Protection Act proposes to rescind and replace a rule finalized by the Biden Administration in 2024 that shares a similar name.
The new version of the rule applies a general “economic reality” test to determine whether workers work primarily for themselves or for an employer. Two guiding or “core” factors are presented to help make this determination:
- the nature and degree of control over the work and
- the worker’s opportunity for profit or loss based on initiative and/or investment.
According to the DOL, other factors may also be considered in the analysis, if necessary, including the amount of skill required for the work, the degree of permanence of the working relationship and whether the work is part of an integrated unit of production.
The DOL justified its new version of the rule by stating that it provides more clarity than the 2024 rule, which articulated a six-factor test for determining worker status. Under that test, no single factor carried more weight than any other. The DOL noted that the new version of the rule places greater emphasis on the core factors so as to provide more certainty to workers and businesses about likely classification. If both core factors point to the same classification for the worker, the DOL believes there is a substantial likelihood that the classification is accurate.
While distinct from the 2024 rule, the new version resembles a proposal made during the final days of President Trump’s first Administration. However, that proposal was quickly withdrawn after President Biden assumed office, paving the way for the 2024 rule instead.
The DOL will officially publish the new rule in the Federal Register on Feb. 27, 2026. Interested parties wishing to submit public comments have until April 28, 2026 to do so.
For more information on how this rule might impact your business or workforce classification practices, please contact any member of Porter Wirght’s Labor & Employment group.