The U.S. Department of Labor is nearing completion of a new rule governing when workers are considered employees or independent contractors, continuing years of shifting federal policy across the Trump and Biden administrations. The White House Office of Information and Regulatory Affairs recently completed its review of the final rule addressing worker classification under the Fair Labor Standards Act (FLSA), Family and Medical Leave Act (FMLA), and Migrant and Seasonal Agricultural Worker Protection Act.
Barring significant changes from the proposal, the final rule is expected to establish a standard similar to one adopted during the first Trump administration. The approach would streamline worker classification by focusing primarily on two factors: the degree of control over the work and the worker’s opportunity for profit or loss. Other considerations, including skill, permanence of the relationship, and whether the work is integrated into the business, would remain relevant, particularly when the two primary factors do not point toward the same result.
The proposal represents another significant shift in a worker-classification standard that has changed repeatedly in recent years. In January 2021, the first Trump administration issued an independent contractor rule emphasizing control and entrepreneurial opportunity as two “core factors.” The Biden administration withdrew that rule shortly after taking office, arguing that it placed too much weight on those factors and departed from the traditional economic-realities analysis. In 2024, the Biden administration finalized a replacement rule establishing a six-factor test in which no factor carried predetermined weight. The rule took effect in March 2024 and generally made the standard for classifying workers as independent contractors more stringent.
The second Trump administration proposed reversing that policy in February 2026, returning to an approach similar to the 2021 framework. The new rule also comes amid significant changes in how courts review federal regulations. In its 2024 decision in Loper Bright Enterprises v. Raimondo, the Supreme Court overturned the longstanding Chevron doctrine, holding that courts may not defer to an agency’s interpretation of federal law simply because a statute is ambiguous. While Loper Bright did not address independent contractor classification directly, it gives courts a greater role in independently determining whether regulations such as DOL’s worker-classification rules are consistent with federal law.
Once published in the Federal Register, the final rule is expected to take effect approximately 60 days later. Argentum will review the final rule and continue updating members on its implications for senior living employers.