Synopsis:

• The 2024 Rule (the “non-exhaustive” 6-factor analysis) on independent contractor vs. employee status is out, at least for now. The DOL is determining what to do with that Rule.
• Until further notice, the DOL is reverting to its prior approach: the traditional “economic realities” test (the multi-factor economic realities test).

See below for details.

On May 1, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued Field Assistance Bulletin (FAB) No. 2025-1, signaling a significant shift in how the Trump administration is likely to classify workers as either employees or independent contractors under the Fair Labor Standards Act (FLSA). The DOL announced in FAB 2025-1 that it has paused enforcement of a 2024 rule the Biden administration promulgated on independent contractor status, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, 89 Fed. Reg. 1638 (2024) (“2024 Rule”), and is reverting to the traditional “economic realities” test that has long prevailed.

Field Assistance Bulletin 2025-1: New Enforcement Guidance

FAB 2025-1 provides internal guidance to DOL investigators on FLSA enforcement involving independent contractor status. All FABs are available to the public and very useful for deciphering the agency’s position. Multiple lawsuits are pending in federal court challenging the legality of the 2024 Rule. In those cases, the DOL has announced it is reconsidering the 2024 Rule and even weighing whether to rescind it.

Given this uncertainty, FAB 2025-1 instructs that WHD investigators will no longer apply the 2024 Rule’s analysis when determining employee v. independent contractor status in FLSA investigations. Instead, until further notice, the DOL will revert to its prior approach: enforcing the FLSA using the principles outlined in Fact Sheet #13 (July 2008), as informed by Opinion Letter FLSA2019-6. In practical terms, this means DOL field staff will use the traditional multi-factor economic realities test (discussed below) rather than the 2024 Rule’s framework to assess whether a worker is an independent contractor or employee under the FLSA.

Notably, FAB 2025-1 clarifies that this shift is an interim enforcement policy. In other words, the 2024 Rule technically remains in effect for purposes of private litigation, and nothing in FAB 2025-1 changes any rights of employees or obligations of employers under the FLSA. The DOL is pausing its enforcement of the 2024 Rule while it is under review, but employers’ legal responsibilities under the FLSA remain the same. FAB 2025-1 also supersedes any prior WHD guidance on the topic.

The 2024 Rule

The 2024 Rule outlined six non-exhaustive factors to guide the independent contractor analysis: (1) the worker’s opportunity for profit or loss depending on managerial skill; (2) investments by the worker and potential employer; (3) permanence of the relationship; (4) nature and degree of control over the work; (5) whether the work is integral to the business; and (6) the worker’s skill and initiative. The 2024 Rule emphasized a “totality of the circumstances” approach—no one factor controlled the outcome. Employer advocacy groups believed the 2024 Rule made classifying workers as independent contractors more difficult and immediately challenged it in court.

Back to the Traditional Test: Fact Sheet #13 (2008) and Opinion Letter FLSA2019-6

In place of the 2024 Rule, the DOL will apply the prior “economic realities” test as described in Fact Sheet #13 (2008) and Opinion Letter FLSA2019-6. This framework focuses on whether the worker is economically dependent on the employer (and, thus, an employee) or in business for themselves (and, thus, an independent contractor). Key factors include: (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; and (7) the degree of independent business organization and operation. The WHD may consider additional factors; no single factor determines appropriate status; and labels or contracts do not override how the relationship actually functions in practice.

What This Means for Employers

The DOL’s decision to suspend enforcement of the 2024 Rule means WHD investigators will evaluate independent contractor status under the FLSA using the more familiar, broad “economic reality” test the DOL used for decades, which is widely viewed as more employer-friendly. Although no new legal duties are being imposed, employers should continue to carefully assess how workers actually function in the job — not just how the job is written in contracts, job descriptions, or titles. While the 2024 Rule technically remains in place, the DOL WHD is not enforcing it. For now, the DOL is returning to its traditional interpretation of employee v. independent contractor status under the FLSA, while awaiting the outcome of ongoing litigation and considering potential rule changes.