Employees generally enjoy more legal protections than independent contractors in many contexts, including under the Fair Labor Standards Act. A 2024 Department of Labor regulation (29 CFR part 795), issued under the Biden administration, leaned slightly more towards finding that individuals were employees for purposes of the FLSA than a regulation adopted just before President Biden took office in January 2021. In May 2025, the DOL announced that it would no longer enforce the 2024 Rule, and on February 27, the Wage and Hour Division of the Department of Labor formally proposed to replace the Biden administration independent contractor test with the previous test, with a few modifications.

The 2024 regulation used a six-factor test to make the determination, including such things as investments by the employee in the relationship, its degree of permanence, the worker’s skill, and the extent to which the employee’s work is integral to the employer’s business. And it did not give more weight to any one factor over another.

The current proposal, based on the 2021 regulation, focuses almost entirely on whether an individual is “economically dependent” on an employer for work (indicating employee status) or “in business for him- or herself” (indicating independent contractor status). It emphasizes two “core” factors – the individual’s control over the work, and the individual’s opportunity for profit or loss – as being of primary importance. The “economic dependence” factor does not focus on the amount of compensation an individual earns from an employer, but on the ordinary dependence that an employee has on his or her employer.

The new regulation allows consideration of some of the factors in the 2024 regulation, but does not give them as much weight. The new regulation also extends this new test to the Family and Medical Leave Act (“FMLA”) and Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”).

Comments on the new proposed regulation are due by April 28.

Stokes Wagner will continue to monitor updates and will provide additional updates as they become available. If you have any questions, do not hesitate to contact a Stokes Wagner attorney.

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