Federal labor and employment standards continue to shift as agencies revisit rules issued over the past several years. For HR professionals, staying current on these developments is critical to managing compliance risk and workforce strategy.
Developments with the Independent Contractor Standard
In 2021, the first Trump Administration sought to clarify how the U.S. Department of Labor (DOL) determines whether a worker is properly classified as an independent contractor under the Fair Labor Standards Act (FLSA). Prior to that rulemaking, the DOL applied a longstanding “economic realities” test that balanced six factors, each given equal weight:
- The extent to which the work performed is an integral part of the employer’s business;
- The worker’s opportunity for profit or loss based on managerial skill;
- The relative investments of the employer and the worker;
- Whether the work requires special skill and initiative;
- The permanency of the relationship; and
- The degree of control exercised or retained by the employer.
Citing the need to provide greater clarity for employers, the 2021 Independent Contractor Rule (2021 IC Rule) retained all six factors but identified two as “core” factors carrying greater weight in the analysis: (1) the nature and degree of the worker’s control over the work, and (2) the worker’s opportunity for profit or loss.
The Biden Administration opposed the 2021 IC Rule. In 2024, the DOL formally rescinded the rule and reinstated the traditional six-factor framework, returning to a totality-of-the-circumstances approach without elevating any particular factors.
Shortly after President Trump’s return to office last year, the DOL issued a Field Assistance Bulletin announcing that it would no longer apply the Biden-era rule in enforcement actions. However, the agency stopped short of formally reinstating the 2021 IC Rule.
The DOL has now signaled it is prepared to take formal regulatory action. Today, the agency announced a proposed rule that would officially rescind the Biden Administration’s rule and replace it with an analysis similar to the 2021 IC Rule, again giving greater weight to the two “core” factors of control and opportunity for profit or loss. The DOL is accepting public comments on the proposed rule through April 28, 2026.
Joint-Employer Developments at the NLRB
At the same time, the National Labor Relations Board (NLRB) continues to solidify the joint-employer standard adopted during the first Trump Administration.
The joint-employer rule addresses when two separate entities—such as a company and its customer, or a company and a staffing agency—may be deemed “joint employers” under the National Labor Relations Act. If two entities are considered joint employers, both may share responsibility for essential terms and conditions of employment, including hiring, firing, discipline, supervision, wages, benefits, hours, and other working conditions.
In 2020, the Trump Administration issued a rule clarifying that an entity would be considered a joint employer only if it possessed and exercised substantial direct and immediate control over one or more essential terms and conditions of employment. Indirect control, reserved but unexercised authority, sporadic control, or de minimis involvement would not, standing alone, establish joint-employer status.
In 2023, the Biden Administration finalized a broader rule under which even reserved or indirect control—whether exercised or not—could be sufficient to establish a joint-employer relationship.
That 2023 rule was challenged in court and ultimately vacated. As a practical matter, the 2020 rule has remained in effect. Today, however, the NLRB took formal steps to withdraw the 2023 rule from the Code of Federal Regulations, reinforcing its commitment to maintaining the 2020 standard. Notably, the 2020 rule itself remains the subject of a pending challenge in federal appellate court.
What This Means for Employers
We continue to monitor developments in labor and employment law. Although we are now more than one year into the new Administration, regulatory activity remains focused on revisiting and reversing Biden-era changes.
HR professionals should anticipate continued shifts in both independent contractor and joint-employer standards, with potential compliance implications for workforce classification, staffing relationships, and vendor arrangements.
