Independent Contractor Misclassification and Compliance News December 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.

The final month of 2025 is a good time to reflect on the top stories and developments from this year. The new administration’s action (or inaction) on the independent contractor rule is the top development, followed by some significant settlements in misclassification cases.

U.S. Department of Labor abandons 2024 Biden independent contractor rule and promises to reexamine worker classification standards

The U.S. Department of Labor (DOL) announced in May that it would not enforce the Employee or Independent Contractor Classification Under the Fair Labor Standards Act rule, which was promulgated by the Biden administration and became effective in 2024 (the “2024 Biden Rule”). Instead, the DOL said it would use Fact Sheet #13 (July 2008) to determine whether a worker is an employee or independent contractor.

In September, the Trump DOL announced that it was going to “examine the circumstances under which a worker should be classified as an employee or independent contractor for the purpose of federal wage and hour requirements,” suggesting that it would develop a new rule.

It was not surprising that the Trump DOL abandoned the 2024 Biden Rule. The DOL had issued a rule in the final days of the first Trump administration (the “2020 Trump Rule”), which the Biden administration immediately delayed and then rescinded. The Biden administration then issued its own rule, which became effective in March 2024.

What was surprising, however, was that the Trump DOL neither officially rescinded the 2024 Biden Rule nor promptly announced that it would not enforce it—and then waited until September to say it would examine the circumstances under which a worker should be classified as an employee or independent contractor.

Given the work that the first Trump administration had done on this issue, including promulgating its own rule, it is not exactly clear why the second Trump administration has not done more in its first year. We will continue to monitor developments in this area and provide updates as new information becomes available.

Top settlements of 2025 show importance of proper classification

The top settlements in 2025 were for millions of dollars and stemmed from claims brought by app-based drivers. These events show that companies that classify drivers as independent contractors should take particular care to ensure those workers are properly classified.

Grubhub: $\$24.75$ million settlement

Grubhub agreed to pay $\$24.75$ million to settle a decade-long California class action brought by delivery drivers who alleged they were misclassified as independent contractors and underpaid as a result.

Lyft: $\$19.4$ million settlement

Lyft agreed to pay $\$19.4$ million to the state of New Jersey for unpaid unemployment contributions, interest, and penalties tied to drivers classified as independent contractors between 2014 and 2017. The case arose when Lyft drivers filed for unemployment and disability benefits, which led to an audit of Lyft’s records from 2014 to 2017 by the New Jersey Department of Labor and Workforce Development.

Uber Eats: $\$15$ million settlement

In Seattle, Uber Eats agreed to pay $\$15$ million to resolve claims under Seattle’s Independent Contractor Protections and App-Based Worker Minimum Payment ordinances. The ordinances ensure pay transparency and require companies to notify workers how much a job pays, including how earnings are calculated before work begins and at the time of payment.

As noted above, the top settlements in 2025 involved cases with app-based drivers. This is due to the fact that companies that engage drivers usually work with a large number of them, which creates opportunities for class action lawsuits.

Companies that engage professional workers are less susceptible to class action lawsuits because it is not common to have a large number of workers performing the same function.

Nonetheless, these settlements are a reminder that all companies should carefully classify workers as employees or independent contractors.

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.