DOL Issues Guidance on Independent Contractor Misclassification Enforcement

The U.S. Department of Labor’s Wage and Hour Division recently issued a field assistance bulletin providing guidance on how to determine employee or independent contractor status when enforcing the Fair Labor Standards Act.

WHD will no longer apply the 2024 rule’s analysis when determining employee versus independent contractor status in FLSA investigations. 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.

According to DOL, the guidance does not change existing regulations (i.e., the 2024 rule) but reflects how the department is allocating enforcement resources during the review of the 2024 rule. Note that state-level rules also remain unchanged.

Under the 2024 rule, employers are required to use the following factors in the assessment of whether a worker is an employee under the FLSA or an independent contractor in business for themself:

1. Opportunity for profit or loss depending on managerial skill,
2. Investments by the worker and the employer,
3. Permanence of the work relationship,
4. Nature and degree of control,
5. Whether the work performed is integral to the employer’s business, and
6. Skill and initiative.

The 2008 rule, considered to be more flexible for employers, uses the more traditional economic realities test, where the following factors are considered:

1. The extent to which the services rendered are an integral part of the principal’s business.
2. The permanency of the relationship.
3. The amount of the alleged contractor’s investment in facilities and equipment.
4. The nature and degree of control by the principal.
5. The alleged contractor’s opportunities for profit and loss.
6. The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
7. The degree of independent business organization and operation.

You can access the DOL’s new release on this issue here.