The Labor Department has proposed a rule that would make it easier for companies to classify gig workers and freelancers as independent contractors under federal wage law, DLA Piper explains. The department unveiled the proposal on Feb. 26. It would rescind the Biden-era 2024 rule and bring back a framework close to the one used in 2021.
What would change
The 2024 rule used six factors. The new proposal puts the most weight on two core factors, including how much control a company has over the work, and gives more room to signs that a worker runs an independent business. The department estimates the number of independent contractors could grow by as much as 750,000, mostly through new workers and not by reclassifying existing ones, according to Bloomberg Law. The Small Business Administration’s advocacy office says the change would save small businesses about $2.31 billion over 10 years. The proposal would also apply the standard to the Family and Medical Leave Act and a farmworker protection law.
Where the two sides land
Labor Secretary Lori Chavez-DeRemer says the rule protects independent contractors. Critics argue it would strip workers of minimum wage and overtime protections by making misclassification easier. The comment period closed April 28, and SelfEmployed.com reported that analysts expected a final rule later in 2026.
What your state still controls
The proposal covers only federal law. States with their own tests, including California, New York and Massachusetts, keep them, so a worker who qualifies as a contractor federally can still be treated as an employee under state law. New Jersey adopted rules clarifying its ABC test that take effect Oct. 1, 2026.
Workers are also pushing back inside companies: About 300 Boston Dynamics employees signed a petition against a robot dog sale to ICE.
