The Department of Labor (DOL) is once again revisiting its approach to distinguishing between employees and independent contractors under the Fair Labor Standards Act (FLSA). On May 1, 2025, the DOL issued a new Field Assistance Bulletin (FAB) indicating a shift in enforcement, even though the 2024 rule technically remains in effect.
The 2024 rule established a multi-factor “economic reality” test to classify workers. However, with this latest bulletin, the DOL is, for now, stepping back from that rule.
Instead, the DOL is signaling a return to the earlier guidance outlined in Fact Sheet #13 (from July 2008), which considers factors such as:
- Whether the work is central to the business
- The length and nature of the relationship
- The level of control over the worker’s day-to-day activities
- The worker’s investment in tools or equipment
- The risk of profit or loss
- Business initiative and independence
For employers, the classification question remains uncertain. Misclassification can result in significant penalties, making it crucial to re-evaluate how your workers are categorized, particularly if your team includes contractors or freelance help.
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