The U.S. Department of Labor (DOL) has instructed its Wage and Hour Division field staff not to enforce the Biden administration’s 2024 independent contractor rule under the Fair Labor Standards Act (FLSA), according to a bulletin issued Thursday.

Instead, agency staff are directed to rely on earlier guidance — specifically, a 2008 fact sheet and a 2019 opinion letter — when handling cases that do not involve payments for back wages or civil monetary penalties, either to individuals or to the DOL itself.

The DOL emphasized that it is still weighing whether to officially rescind the Biden-era rule, which remains mired in ongoing litigation. “Until further action is taken, the 2024 Rule remains in effect for purposes of private litigation and nothing in this FAB changes the rights of employees or responsibilities of employers under the FLSA,” the department stated.

Background and Context

The Biden administration’s independent contractor rule, which took effect in March 2024, sought to strengthen federal wage-and-hour protections for workers the administration believed were improperly classified as independent contractors rather than employees. Under this rule, the DOL implemented a “totality-of-the-circumstances” framework to evaluate worker classification, laying out six nonexhaustive factors to consider:

• A worker’s opportunity for profit or loss.
• Investments made by the worker and employer.
• The degree of permanence in the working relationship.
• The nature and degree of control over how the work is performed.
• Whether the work performed is integral to the employer’s business.
• The worker’s use of skill and initiative.

This approach replaced the Trump-era DOL’s 2020 rule, which emphasized an “economic reality” test focusing more heavily on two key factors: a worker’s control over their work and their opportunity for profit or loss, alongside three additional guideposts.

Despite taking effect in early 2024, the Biden-era rule has faced multiple legal challenges from business groups arguing it creates uncertainty and increases compliance burdens. Although several of these lawsuits were dismissed by federal judges in the months after the rule’s launch, at least one case is still on appeal at the 5th U.S. Circuit Court of Appeals, though that case has been put on hold for now.

Regulatory Back-and-Forth

The enforcement pause underscores a broader regulatory “see-saw” that has played out across multiple presidential administrations. As the Biden administration worked to expand worker protections, the Trump administration had previously favored a narrower definition of employment relationships, aiming to provide businesses more clarity and flexibility regarding independent contractor designations.

The documents now cited by the DOL — the 2008 fact sheet and the 2019 opinion letter — maintain an economic reality analysis similar to that of the earlier Trump-era framework. Notably, the 2019 opinion letter, which clarified that service providers on virtual marketplace platforms were independent contractors, was rescinded under the Biden administration but now resurfaces under the current DOL directive.

What Happens Next?

While the DOL has hit pause on enforcement, the Biden-era rule technically remains in effect — meaning private litigation under the FLSA can still reference it. “Until further action is taken, the 2024 Rule remains in effect for purposes of private litigation and nothing in this FAB changes the rights of employees or responsibilities of employers under the FLSA,” the DOL reiterated.

For now, businesses and workers alike are left navigating a regulatory landscape shaped by shifting political priorities and active court cases. Employers should remain vigilant, as the potential for the DOL to rescind or revise the 2024 rule remains open, and private lawsuits over worker classification are likely to continue.

Originally reported by Ryan Golden in Construction Dive.