WASHINGTON — The U.S. Department of Labor has proposed rescinding the Biden administration’s 2024 independent contractor classification rule and replacing it with a streamlined analysis modeled on a 2021 framework — a shift welcomed by many in the construction industry.
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Announced by the department’s Wage and Hour Division, the proposal would reinstate a clearer “economic reality” test to determine whether a worker qualifies as an independent contractor or must be classified as an employee under the Fair Labor Standards Act (FLSA).
The agency has opened a 60-day public comment period through April 28, 2026.
Under the proposed rule, classification decisions would center on whether a worker is economically dependent on an employer or is truly operating an independent business.
"The tens of millions of Americans who work as independent contractors are helping drive the Golden Age of the American economy," said Secretary of Labor Lori Chavez-DeRemer. "The department's proposed rule seeks to protect these workers' entrepreneurial spirit and simplify compliance for American job creators navigating a modern workplace, all while maintaining robust protections for employees under the Fair Labor Standards Act."
The framework would prioritize two “core factors”:
Additional considerations would include the level of skill required, the permanence of the working relationship and whether the work is part of an integrated production unit. Importantly, regulators said actual working conditions would carry greater weight than theoretical contractual terms.
The proposal would also align definitions under the FLSA with enforcement of the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act.
Wage and Hour Division Administrator Andrew Rogers emphasized that the rule is rooted in established judicial precedent.
"The department believes that streamlined regulations in line with Congress's intent when it passed the Fair Labor Standards Act would improve compliance, reduce misclassification, and reduce costly litigation in an economic environment that needs flexibility and innovation."
Construction and roofing groups quickly voiced support, arguing the 2024 rule created confusion and legal uncertainty.
The Associated Builders and Contractors (ABC), which had challenged the 2024 rule in federal court along with its Southeast Texas chapter and the Coalition for Workforce Innovation, praised the department’s action.
"ABC strongly supports the DOL's proposed rule to rescind the Biden-era 2024 independent contractor final rule and replace it with a commonsense proposal similar to the ABC-supported 2021 final rule," said Kristen Swearingen, ABC’s vice president of government affairs.
She contended the 2024 regulation’s multifactor balancing test left employers uncertain about compliance obligations, increasing litigation without delivering clarity for businesses or workers.
Trent Cotney, a partner at Adams and Reese who advises roofing and construction companies, said the proposal could restore predictability.
"The 2024 rule created significant uncertainty, and a move toward a clearer standard would provide much-needed predictability for businesses that rely on legitimate independent contractor relationships," he said.
However, Cotney cautioned employers not to act prematurely.
"Nothing changes immediately. The current rule remains in effect unless and until a final rule is issued. Contractors should continue complying with existing law while monitoring the rulemaking process closely."
Advocates for flexible work arrangements also weighed in, particularly those focused on women’s economic participation.
"On the precipice of Women's History Month, the Trump administration is delivering a big win for women by protecting flexible work in America," said Patrice Onwuka, director of Independent Women's Center for Economic Opportunity.
She argued that stricter classification standards could have limited flexible contracting arrangements that many women rely on to balance income generation with caregiving responsibilities.
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Onwuka pointed to California’s experience with independent contractor restrictions as a warning.
"We look forward to amplifying the voices of those in support of this rule and working with the Department of Labor to see this rule enacted."
If finalized, the proposed rule would represent a significant policy shift in federal worker classification standards, with major implications for construction, roofing, logistics and gig-economy sectors.
For now, the 2024 rule remains in place. Employers, trade associations and worker advocacy groups are expected to submit comments before the April deadline, setting the stage for what could become another pivotal chapter in the ongoing debate over worker classification and labor flexibility in the U.S. economy.
Originally reported by Tanja Kern, Senior Strategic Content Editor, Art Aisner in Roofing Contractor.
