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The Employer Handbook Blog
New DOL Guidance Hits Pause and Rewind on Independent Contractor Crackdown
The Department of Labor just blinked. Again. In its latest move, the agency announced that it’s stepping back from its own 2024 independent contractor rule and reverting to older, more flexible standards. That’s not just a procedural shift—it’s a clear signal that the DOL may be moving away from stricter employee classification altogether.
TL;DR: The U.S. Department of Labor’s Wage and Hour Division (WHD) has issued Field Assistance Bulletin 2025-1, signaling a pause in enforcement of the 2024 rule on independent contractor classification. Until further notice, WHD investigations will rely instead on preexisting guidance: Fact Sheet 13 (2008) and Opinion Letter FLSA2019-6, the latter of which analyzes classification in the context of gig economy platforms. While the 2024 Rule technically remains in effect for private litigation, the DOL is stepping back—for now.
The News:
On May 1, 2025, WHD issued Field Assistance Bulletin No. 2025-1. The key takeaway? WHD investigators are no longer using the 2024 independent contractor rule when evaluating classification under the Fair Labor Standards Act (FLSA). Instead, the agency is reverting—at least for enforcement purposes—to the multi-factor “economic reality” test outlined in Fact Sheet 13 and expanded upon in Opinion Letter FLSA2019-6.
This shift, according to the DOL, is temporary while it considers whether to revise or rescind the 2024 Rule. In the meantime, enforcement is going retro.
What Does This Mean for Employers?
- The 2024 Rule isn’t dead—but it’s dormant at DOL. While still in effect for private lawsuits, the 2024 Rule won’t be used by WHD in active investigations unless or until further guidance is issued.
- WHD is back to using the 2008 “economic realities” test. That test, drawn from longstanding Supreme Court precedent, considers multiple factors to determine whether a worker is economically dependent on a business:
- Degree of control;
- Permanency of the relationship;
- Investment in tools/equipment;
- Worker’s skill and initiative;
- Opportunity for profit or loss;
- Whether services are integral to the business;
- Degree of independent business operation.
- Gig platforms: still safe (for now). Opinion Letter FLSA2019-6 explains that workers on virtual platforms—like delivery or home-service apps—may still qualify as independent contractors if they retain autonomy, bear business risk, and aren’t economically dependent on the platform.
- No retroactive penalties—unless WHD already acted. FAB 2025-1 applies only to matters where no payment (back wages or penalties) has yet been made to workers or the agency.
- Be mindful of state law differences. While the DOL may be loosening its enforcement stance, states like California maintain much stricter standards. California’s ABC test, for instance, presumes employee status unless the employer can satisfy all three prongs. Employers must ensure compliance with both federal and state law.
What Should Employers Do Now?
- Review your classifications. If you’ve restructured roles under the 2024 Rule, reassess whether those changes still comply under the 2008 “economic realities” test.
- Gig economy businesses: stay alert. If your business model is similar to the one described in FLSA2019-6, you may have more flexibility under federal law—for now.
- Expect more changes. The DOL is actively reconsidering its rulemaking. Further revisions, rescission, or an entirely new approach may be on the horizon.
- Stay compliant with state laws. Even if federal enforcement relaxes, state laws like California’s ABC test continue to impose strict requirements. Make sure your classifications satisfy both federal and state standards.
Bottom Line:
The DOL didn’t just pause enforcement of the 2024 Rule—it reached back to prior, more flexible guidance and made it the current standard for WHD investigations. That’s not just a procedural detour; it’s a clear shift in direction. Employers may enjoy a temporary reprieve, but this story is far from over.
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