Federal Independent Contractor Rule Enforcement Changes

For now, the Department of Labor (DOL) has announced it will change its enforcement of the 2024 Fair Labor Standards Act (FLSA) independent contractor rule. The 2024 rule rescinded a 2021 rule under the previous presidential administration (President Trump’s first term) and relies on the use of a “totality-of-the-circumstances” analysis to determine economic independence.

In field enforcement guidance released on May 1, the DOL’s Wage and Hour Division (WHD) states, “WHD will enforce the FLSA in accordance with Fact Sheet #13 (July 2008)*, and as further informed by Opinion Letter FLSA2019-6 with respect to any matters for which no payment has been made, directly to individuals or to DOL, for back wages and/or civil money penalties as of May 1, 2025. The Department reserves its right to exercise its enforcement authority in specific matters explicitly deemed appropriate by the Administrator, or designee, as an appropriate allocation of resources.” “This guidance does not change existing regulations but reflects how the department is allocating enforcement resources during the review of the 2024 rule.”

More information can be found in the DOL’s press release.

While the enforcement of the federal rules for the DOL independent contractor (IC) classification rule is in flux, it is important for employers to understand that the 2024 rule is still in place. “Until further action is taken, the 2024 Rule remains in effect for purposes of private litigation and nothing in this FAB [Field Assistance Bulletin] changes the rights of employees or responsibilities of employers under the FLSA, see Fact Sheet #13 (March 2024).*”

Employers are also reminded that the DOL’s IC rule is not the only IC rule. At the federal level, the Internal Revenue Service (IRS) has separate definitions and requirements. Local laws may also apply, creating additional considerations and requirements. For example, in Wisconsin, there are workers’ compensation, unemployment insurance, and Wisconsin Fair Employment Act tests. Additional state laws also define who is an employee, including Chapter 103 Employment Regulations Wis. Stat. § 103.001(5) and Chapter 104 Minimum Wage Law Wis. Stat. § 104.01(2)(a).

If you need assistance in determining if someone is an employee or an independent contractor, contact us today.