The U.S. Department of Labor announced a proposed rule to help clarify when a worker is an employee and when the worker may be classified as an independent contractor under the Fair Labor Standards Act and related federal laws.

The topic of worker classification has been discussed much over the last few years with the rise of the gig economy, creating ambiguity over whether several occupations would qualify workers as employees – who are entitled to certain benefits like workers’ comp – or independent contractors, who are not entitled to such benefits.

The proposed rule would rescind the DOL’s 2024 final rule addressing the classification of independent contractors and replace it with an analysis for employee classification similar to the one adopted by the Department in 2021. Consistent with Supreme Court and federal circuit court precedent, the proposed rule would make it easier to properly differentiate between employees with the protections under the Fair Labor Standards Act and those workers who work as independent contractors.

The proposed rule would also apply the department’s streamlined analysis to the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act, both of which use the FLSA’s statutory definition of “employ.”

The analysis in the department’s proposed rule would:

• Apply an “economic reality” test to determine whether a worker is in business for himself or herself as an independent contractor or is an employee economically dependent on an employer for work
• Identify and explain two “core factors” to help determine if a worker is economically dependent on an employer for work or in business for him- or herself:
  • The nature and degree of control over the work
  • The worker’s opportunity for profit or loss based on initiative and/or investment
• Identify other factors to help determine a worker’s status as an employee or independent contractor, including the amount of skill required for the work, degree of permanence of the working relationship, and whether the work is part of an integrated unit of production
• Advise that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible
• Provide eight fact-specific examples applying the factors to real-life circumstances

The department encourages all interested parties to submit comments on the proposed rule, which has a 60-day comment period that closes at 11:59 p.m. ET on April 28, 2026.

Comments can be made through the Federal eRulemaking portal at https://www.regulations.gov/, or via mail made out to: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200, Constitution Avenue, N.W. Washington, DC 20210.