Transportation Executive Summary: U.S. DOL Updates Guidance on Independent Contractor Classification
On May 1, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) issued a field assistance bulletin (FAB) providing updated guidance on determining whether an individual is an employee or independent contractor.[1] This stands in contrast to the 2024 Rule titled “Employee or Independent Contractor Classification Under the Fair Labor Standards Act” which took effect in March 2024.[2] We reported on the 2024 rule here. The FAB states that, as of May 1, 2025, the WHD will not enforce the 2024 Rule when conducting employee versus independent contractor Fair Labor Standards Act (FLSA) investigations. Instead, WHD will rely on Fact Sheet #13 (July 2008) for guidance.[3]
The updated FAB comes amid multiple lawsuits challenging the legality of the 2024 Rule.[iv] The DOL and WHD have issued the updated FAB in hopes to provide businesses and workers with clarity on the rules as the 2024 Rule remains under judicial review.[v]
Due to ongoing legal challenges, the DOL is currently rethinking the 2024 Rule, including the possibility of rescinding it.[vi] Consequently, WHD is currently in the process of reviewing and creating updated guidelines for employee versus independent contractor investigations under the FLSA.[vii]
The FAB designates Fact Sheet #13 (July 2008) as the current guidance for WHD staff when conducting FLSA investigations.[viii] For classification in virtual marketplace platforms, the FAB directs its staff to Opinion Letter FLSA2019-6.[ix]
Fact Sheet #13 (July 2008), like the 2024 Rule, uses “economic reality” factors to determine whether a worker is an employee or independent contractor under the FLSA.[x] The significant factors include:
- The extent to which the services rendered are an integral part of the principal’s business.
- The permanency of the relationship.
- The amount of the alleged contractor’s investment in facilities and equipment
- The nature and degree of control by the principal.
- The alleged contractor’s opportunities for profit and loss.
- The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
- The degree of independent business organization and operation.[xi]
Factors that are irrelevant include where the work was performed, the lack of a formal employment agreement, licensing by the worker, and method of payment.[xii] Notably, six of the seven factors listed above align with factors found in the 2024 Rule with the seventh factor, degree of independent business organization, being the only stark difference.
While the WHD will use Fact Sheet #13 (July 2008) for investigations under the FLSA, the 2024 Rule remains the governing law for private litigation.[xiii] As the 2024 Rule is under review, we will continue to closely track this issue.
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Contact John F. Fatino for more information about trucking and transportation matters at 515-288-6041.
[1] News Release, U.S. Department of Labor Wage and Hour Division, U.S. Department of Labor Issues Guidance on Independent Contractor Misclassification Enforcement (May 1, 2025) (on file with author).
[2] Id.
[3] U.S. Department of Labor Wage and Hour Division, Field Assistance Bulletin No. 2025-1 (May 1, 2025).
[iv] News Release, U.S. Department of Labor Wage and Hour Division, U.S. Department of Labor Issues Guidance on Independent Contractor Misclassification Enforcement (May 1, 2025) (on file with author).
[v] Id.
[vi] U.S. Department of Labor Wage and Hour Division, Field Assistance Bulletin No. 2025-1 (May 1, 2025).
[vii] Id.
[viii] Id.
[ix] Id.
[x] U.S. Department of Labor Wage and Hour Division, Fact Sheet #13: Employment Relationship Under the Fair Labor Standards Act (FLSA) (July 2008).
[xi] Id.
[xii] Id.
[xiii] U.S. Department of Labor Wage and Hour Division, Field Assistance Bulletin No. 2025-1 (May 1, 2025).