02/27/2026
Misclassifying employees as independent contractors can be costly for employers and deny workers their rights. The U.S. Department of Labor’s Wage and Hour Division has proposed a rule under the Fair Labor Standards Act to clarify worker status, aligning with federal court precedent. The proposed rule uses the "economic reality" test, considering factors such as:
- Worker control over the work
- Opportunity for profit or loss potential based on initiative and investment
- Skill required for the work
- Permanence of the working relationship
- Integration of the worker into the production process
The rule emphasizes actual practices over theoretical possibilities and includes eight examples showing how these factors apply in specific situations.
We encourage you to share your comments and feedback on the proposal by 11:59 pm ET on April 28, 2026.