Wage and Hour Division proposes to bring back the 2021 independent contractor test for federal wage, family leave and farmworker laws
As of our last check on November 2, 2026, this is a proposal, not a requirement. Comments closed April 28, 2026.
We check the Federal Register daily for later actions. We check federal court opinions for rulings on published rules weekly, on Mondays. A ruling can take time to reach us, so not finding one here does not mean there is none.
In short
- What changed
- The Department of Labor's Wage and Hour Division (WHD) proposes to replace the 2024 employee or independent contractor test in 29 Code of Federal Regulations (CFR) part 795 with the 2021 test, with a few changes. Under that test, control over the work and the worker's opportunity for profit or loss are core factors that usually carry the most weight. The same test would also apply under the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
- Who's affected
- Any business that engages independent contractors or decides how to classify workers under the Fair Labor Standards Act (FLSA), FMLA or MSPA. This includes agricultural employers, agricultural associations and farm labor contractors.
- What to do
- This proposal creates no new duties for employers, and nothing changes until a final rule is issued. You can comment by April 28, 2026. For now, WHD says it enforces under Field Assistance Bulletin No. 2025-1, and the 2024 rule remains in effect for private lawsuits.
What changed
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From the sourceSUMMARY
The Department is proposing to rescind the analysis for determining employee or independent contractor status under the Fair Labor Standards Act (FLSA) ... and replace it with the analysis that it published and adopted in a prior final rule dated January 7, 2021, with a few modifications.
The Wage and Hour Division (WHD) proposes to rescind the 2024 test for employee or independent contractor status under the Fair Labor Standards Act (FLSA) and replace it with the test from the January 7, 2021 rule, with a few modifications.
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From the sourceSUMMARY
the Department proposes to apply this analysis to the Family and Medical Leave Act (FMLA) and Migrant and Seasonal Agricultural Worker Protection Act (MSPA), both of which incorporate the FLSA's scope of employment.
The proposal would apply the same test under the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
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From the sourceProposed 29 CFR 795.105(c)
Given these two core factors' greater probative value, if they both point towards the same classification, whether employee or independent contractor, there is a substantial likelihood that is the individual's accurate classification.
Two core factors, the nature and degree of control over the work and the individual's opportunity for profit or loss, would usually carry the most weight. When both point the same way, that is likely the correct classification.
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From the sourceSupplementary Information, III.E
skill, permanence, and whether the work is part of an integrated unit of production--serve as additional guideposts but are less probative in the analysis
Three other factors (skill, permanence, and whether the work is part of an integrated unit of production) would be additional guideposts that carry less weight.
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From the sourceSupplementary Information, III.F.2
this factor would consider the individual worker's investment only and not the relative investments of both the individual and the potential employer.
Only the worker's own investment would count under the profit or loss factor. The worker's investment would no longer be compared with the hiring business's investment.
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From the sourceProposed 29 CFR 795.105(d)(1)(i)
Requiring the individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) does not constitute control that makes the individual more or less likely to be an employee under the Act.
Several requirements would not count as control that points toward employee status: requiring a worker to meet legal obligations, safety standards, insurance, agreed deadlines or quality standards.
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From the sourceProposed 29 CFR 795.110
the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible.
What the parties actually do would matter more than what a contract theoretically allows.
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From the sourceProposed 29 CFR 795.105(b)
Economic dependence does not focus on the amount of income the worker earns, or whether the worker has other sources of income.
New text would say that economic dependence is not about how much the worker earns or whether the worker has other income.
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From the sourceSupplementary Information, III.J
the Department is proposing to revise 29 CFR 500.20(h)(4) to remove the six economic reality factors (as well as references to the factors and several case citations) and replace them with a cross-reference
Also: Supplementary Information, III.J
the Department is proposing to delete the sentence in 29 CFR 825.105(a) advising that
The MSPA regulation's own six factors would be replaced with a cross-reference to the FLSA test. The FMLA regulations would also point to that test, and the sentence saying that mere knowledge of work creates an employment relationship would be deleted.
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From the sourceSupplementary Information, I.F
WHD will no longer apply the 2024 Rule's analysis when determining employee versus independent contractor status in FLSA investigations.
Also: Supplementary Information, I.F
the 2024 Rule remains in effect for purposes of private litigation
Today, WHD does not apply the 2024 rule's test in its investigations. Under Field Assistance Bulletin No. 2025-1, it uses the 2008 Fact Sheet #13 analysis. The 2024 rule still applies in private lawsuits.
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From the sourceSupplementary Information, III.K. Severability
then the 2024 Rule and its regulations would nonetheless be rescinded for all the reasons set forth by the Department in this rulemaking.
The Department intends the rescission of the 2024 rule to stand even if the new test is later struck down.
Who is affected
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Our analysisProposed 29 CFR 795.105(b)
An individual is an independent contractor, as distinguished from an ``employee'' under the Act, if the individual is, as a matter of economic reality, in business for him- or herself.
Businesses that engage independent contractors, or that must decide whether a worker is an employee under the FLSA, are the main audience for the proposed test.
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From the sourceSupplementary Information, II.E
risks confusing agricultural employers, agricultural associations, and farm labor contractors which might be subject to both the FLSA and MSPA
Agricultural employers, agricultural associations and farm labor contractors would see the MSPA classification test conformed to the FLSA test.
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From the sourceFootnote 196
state laws that establish stricter standards based on the state's own law and definitions.
Stricter state laws on worker classification still apply, and the Department notes that the FLSA does not override them.
What it means in practice
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From the sourceSupplementary Information, VI.C
It does not create any new reporting or recordkeeping requirements for businesses.
The Department says the proposal creates no new reporting or recordkeeping requirements, and it estimates about one hour per establishment to review a final rule.
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From the sourceProposed 29 CFR 795.100
The interpretations stated in this part may be relied upon in accordance with section 10 of the Portal-to-Portal Act, 29 U.S.C. 251-262
Employers could rely on the part 795 interpretations for the good faith defense in the Portal-to-Portal Act, even if the interpretations are later changed or struck down.
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From the sourceSupplementary Information, V.B
the Department expects that any reclassification of workers classified as employees into independent contractors attributable to this rulemaking would be minimal
The Department expects little reclassification of current employees as independent contractors.
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Our analysisSupplementary Information, V.B
This rule would provide the greatest legal certainty to employers classifying a worker as an independent contractor if the worker substantially controls the work and has a meaningful opportunity for profit or loss based on initiative or investment
If the proposal is finalized, contractor arrangements where the worker controls the work and has a real chance of profit or loss would carry more legal certainty. Documenting those facts as they happen in practice would matter most.
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From the sourceFootnote 121
workers who are employees under the facts and law [may not] waive the FLSA's protections by classifying themselves as independent contractors.
The Department repeats that workers who are employees under the facts and law cannot waive FLSA protections by calling themselves independent contractors.
What to do
Required
This is a proposed rule, so it creates no requirement for employers. Comments are due April 28, 2026. Any duties would come only from a final rule.
Worth considering
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Our suggestionADDRESSES
Submit comments through the Federal eRulemaking Portal at https://www.regulations.gov.
Also: Supplementary Information, III.E
the Department could provide guidance that the control factor should be considered first, followed--if necessary--by the opportunity for profit or loss factor and the three other factors.
Consider submitting comments, identified by Regulation Identifier Number (RIN) 1235-AA46, through regulations.gov before the deadline, especially on the core factor approach and the alternative that would consider control first.
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Our suggestionProposed 29 CFR 795.105(d)(1)(i)
exercises substantial control over key aspects of the performance of the work, such as by setting his or her own schedule, by selecting his or her projects
Consider reviewing current independent contractor relationships for evidence of who controls scheduling, projects and work for others, and whether the worker can affect earnings through initiative or investment, as these would be the core factors.
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Our suggestionSupplementary Information, III.J
the Department is proposing to revise 29 CFR 500.20(h)(4) to remove the six economic reality factors (as well as references to the factors and several case citations) and replace them with a cross-reference
Agricultural employers and farm labor contractors may want to note that MSPA classification would follow the FLSA test if the proposal is finalized.
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Our suggestionFootnote 196
state laws that establish stricter standards based on the state's own law and definitions.
Consider checking state classification rules as well, since stricter state tests continue to apply.
Open questions
The source leaves these open. We'll update this record if a later document answers them.
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Would a final rule use the alternative in which a worker the business controls is automatically an employee, without weighing the other factors?
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Would a final rule list specific facts, such as other sources of income or the size of the hiring business, as not relevant to classification?
History
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Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act Source (opens in a new tab)