New DOL independent contractor rule arrives at Trump White House

Summary

The U.S. Department of Labor has forwarded a proposed update to its independent-contractor classification rule to the White House Office of Management and Budget. The move signals the agency is revisiting how it decides whether workers are employees or independent contractors under the Fair Labor Standards Act. Although the OMB notice gives no details or publication date, the DOL may revive the prior “economic reality” test that emphasises worker control and profit-or-loss opportunity — a standard the agency adopted late in the Trump administration and which was later rescinded by the Biden DOL.

Background: the DOL’s 2021 rule focused on two core factors (control and profit/loss) plus three less-probative factors (skill level, permanence of the relationship, and integration into the employer’s production). The Biden-era rule moved to a broader “totality of the circumstances” test and took effect in March 2024, but after the 2025 change in administration the DOL stopped enforcing that rule and placed independent-contractor regulations back on its regulatory agenda. A recent DOL opinion letter also referenced the “economic reality” concept when finding certain virtual-marketplace service providers likely to be independent contractors.

Key Points

DOL submitted a proposed independent-contractor rule to the White House OMB; specifics and timing remain undisclosed.
The agency may return to the 2021 “economic reality” test, emphasising worker control and opportunity for profit or loss.
A prior Biden-era rule used a multi-factor, totality-of-the-circumstances approach and went into effect in March 2024 but was not enforced after the 2025 administration change.
This development continues a multi-year policy seesaw between administrations that materially affects gig-worker classification and employer obligations under the FLSA.
Employers, HR teams and legal advisers should watch for the proposed rule’s publication — it could change compliance, payroll, benefits and contracting practices.

Why should I read this?

Quick heads-up: if you hire contractors or use gig platforms, this could change how you classify people and what you have to pay or provide. The DOL’s next rule might flip the test back to the “economic reality” approach — that matters for payroll, benefits and legal risk. Worth keeping an eye on so you’re not caught off guard.