Independent Contractor Misclassification and Compliance News: September 2025

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we bring you the latest news stories from around the web.

U.S. Department of Labor Unveils Its Regulatory Agenda, Including Review of Independent Contractor Rule and Joint Employer Status

Earlier this month, the U.S. Department of Labor announced the regulations it intends to review and/or modify. The DOL said it was planning to review “nearly 150 proposals under the U.S. Department of Labor’s jurisdiction.” Their stated goals are “to protect workers, support business growth, and ultimately put American workers and businesses first.”

Two areas identified by the DOL that are of particular importance to companies engaging independent contractors are the independent contractor rule and the determination of when companies are considered joint employers under the Fair Labor Standards Act.

Proposals addressing independent contractors and joint employers were among the DOL’s highest priorities. The areas are:

• Joint Employer Status under the Fair Labor Standards Act: The department will examine the circumstances under which a business can be held liable as a joint employer.

• Employee or Independent Contractor Classification Under the FLSA: The department will review the circumstances under which a worker should be classified as an employee or independent contractor for the purpose of federal wage and hour requirements.

Joint Employer Status

The circumstances under which a business can be held liable as a joint employer are particularly significant for companies engaging independent contractors. If a business is considered a joint employer, it may be held liable for wages, benefits, and other employment law requirements for workers of the independent contractor—even though those workers may be employees or contractors of the independent contractor.

For example, the Equal Employment Opportunity Commission considers the client of a staffing firm to be the joint employer of the staffing firm’s employees because the client exercises control over the terms and conditions of employment. Organizations can expect the DOL to make it less likely for a business to be considered a joint employer.

Employee or Independent Contractor Classification

The DOL will also examine the circumstances under which a worker is classified as an employee or independent contractor under the FLSA. In the final days of the Trump Administration, the DOL issued a rule setting forth its interpretation of when a worker would be considered an employee or independent contractor (the “2021 Rule”). Under the Biden Administration, the DOL rescinded that rule and promulgated a new one in 2024 (the “2024 Rule”).

Both rules agree that the appropriate test is the Economic Realities test, which states that workers are independent contractors, as distinguished from “employees” under the Act—if they are, as a matter of economic reality, in business for themselves.

To determine this, the 2021 Rule focuses on two primary factors, while the 2024 Rule considers six factors and the totality of the circumstances. In most cases, the 2021 Rule and the 2024 Rule will result in the same determination, although most commentators consider the 2021 Rule more favorable for businesses.

Organizations should expect the DOL to adopt a rule that makes it more likely for workers to be considered independent contractors. However, both rules are the DOL’s interpretation of the FLSA, and courts may or may not defer to that interpretation. Courts have been interpreting the FLSA for decades and may not give significant deference to either rule, which would limit the potential benefits of any rule change.

For more information, check out our resources page on misclassification and compliance. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.