DOL Issues Proposed Worker Classification Rule

On February 27, 2026, the U.S. Department of Labor (DOL) issued a proposed rule under the Fair Labor Standards Act (FLSA) that would revise how worker classification is determined for employees versus independent contractors. The proposal would rescind the 2024 rule and return to a framework more similar to the 2021 rule, with certain modifications.

The proposed rule continues to apply the economic reality test but places greater emphasis on two core factors: the nature and degree of control over the work and the worker’s opportunity for profit or loss. Additional factors, such as skill level, permanence of the working relationship and whether the work is part of an integrated production unit, would still be considered but given less weight.

If finalized, the rule would shift federal guidance away from the broader totality-of-the-circumstances approach used in 2024 and toward a more structured analysis centered on control and financial opportunity in determining worker classification.