On Feb. 26, 2026, the U.S. Department of Labor (DOL) announced a proposed rule that would rescind the department’s 2024 final independent contractor rule and replace it with an analysis for employee classification under the Fair Labor Standards Act (FLSA) similar to the one adopted by the DOL in 2021. The proposed rule was published in the Federal Register on Feb. 27, 2026.
Background – In general, labor laws and related tax laws do not apply to independent contractors. Under the FLSA, employees are entitled to minimum wage, overtime pay, and other benefits. Independent contractors are not entitled to these protections and benefits. Employers who misclassify employees may be liable for expensive fines and litigation if a worker should have been classified as an employee and did not receive a benefit or protection they were entitled to by law.
- DOL Announces Proposed Independent Contractor Rule
- DOL’s Questions and Answers on Proposed Independent Contractor Rule
Contact us with any questions or for help with your employee (W-2) vs independent contractor (1099) determinations.