Several lawsuits are currently pending in U.S. federal courts, challenging the legality of the Department of Labor’s (DOL) rule entitled Employee or Independent Contractor Classification Under the Fair Labor Standards Acti (“2024 Rule”), which outlines the framework for determining employee or independent contractor status under the Fair Labor Standards Act (FLSA).  

In the litigations, DOL has taken the position that it is reconsidering the 2024 Rule, including whether to rescind the regulation. Specifically, DOL states that it is currently reviewing and developing the appropriate standard for determining FLSA employee versus independent contractor status. Consistent with this position, DOL will no longer be applying the 2024 Rule’s analysis when determining employee versus independent contractor status in FLSA investigations. DOL will instead enforce the FLSA in accordance with its Fact Sheet #13 (July 2008), and as further supported by its Opinion Letter FLSA2019-6 with respect to any matters for which no payment has been made, directly to individuals or to DOL, for back wages and/or civil money penalties as of May 1, 2025.  

The DOL is, however, reserving its right to exercise enforcement authority in specific matters explicitly deemed appropriate by its Administrator, or designee, as an appropriate allocation of resources.  

According to the DOL, this updated guidance supersedes any contrary or conflicting guidance previously issued and until further action is taken, the 2024 Rule will remain in effect for purposes of private litigation and nothing in this FAB changes the rights of employees or responsibilities of employers under the FLSA (See Fact Sheet #13 (March 2024)). 

While this newly updated guidance provides updated considerations for independent contractor classification under the FLSA, it does not override California’s stricter state laws. Employers in California must continue to follow the state’s ‘ABC Test’ established under AB 5 and its subsequent amendments, which impose more stringent requirements for classifying workers as independent contractors.