Independent Contractor Rule 2026: Where the DOL Test Stands

As of October 2026, the DOL's 2024 independent contractor rule is still the regulation on the books, but the agency stopped applying it in its own investigations in May 2025 and proposed a replacement in February 2026. No final replacement rule had been published when this was reviewed, so employers face two federal tests at once.

Key takeaways

  • The 2024 rule (89 Fed. Reg. 1638, effective March 11, 2024) uses a six-factor, totality-of-the-circumstances economic reality test.
  • Field Assistance Bulletin 2025-1 (May 1, 2025) says the Wage and Hour Division no longer applies the 2024 analysis in investigations, but the 2024 rule remains in effect for private litigation.
  • The February 27, 2026 proposed rule would rescind the 2024 analysis and return to a modified 2021 framework built on two core factors: control and opportunity for profit or loss.
  • State tests such as California's ABC test can be stricter than any federal version, and they apply regardless of the federal outcome.
  • Classify to the strictest test that applies to each worker, and document the analysis.

What is the current status of the DOL independent contractor rule?

The timeline matters because each step changed something different:

DateActionPractical effect
January 7, 20212021 rule publishedIntroduced two "core factors" approach
January 10, 20242024 final rule published; effective March 11, 2024Rescinded the 2021 rule; six-factor totality test
May 1, 2025Field Assistance Bulletin 2025-1WHD stops applying the 2024 analysis in investigations; 2024 rule stays in effect for private litigation
February 27, 2026Notice of proposed rulemaking (RIN 1235-AA46)Proposes rescinding the 2024 analysis and restoring a modified 2021 framework
April 28, 2026Comment period closedFinal rule pending; check the Federal Register for publication

A search of Federal Register documents from the Wage and Hour Division in October 2026 showed the February 2026 proposal as the latest action, with no final rule yet published. A related joint employer proposal was published on April 23, 2026. Because a final rule could appear at any time, and would likely face legal challenges, check the Federal Register and the DOL rulemaking page before relying on this summary.

How does the 2024 six-factor test work?

The 2024 rule asks whether a worker is economically dependent on the employer or in business for themselves. The DOL's revised Fact Sheet #13 lists six factors, none of which is decisive:

  1. Opportunity for profit or loss depending on managerial skill
  2. Investments by the worker and the employer
  3. Degree of permanence of the work relationship
  4. Nature and degree of control
  5. Whether the work is integral to the employer's business
  6. Skill and initiative

The fact sheet also notes that a job title, a Form 1099, the place where work is performed, licensing and the timing of pay do not determine status. That point catches many employers who treat a signed contractor agreement as the answer.

What would the 2026 proposed rule change?

According to the proposed rule published in the Federal Register on February 27, 2026, the DOL would treat two core factors as the most probative: the nature and degree of control over the work, and the worker's opportunity for profit or loss based on initiative or investment. When both point the same way, that is substantial evidence of the right classification. Other factors include the amount of skill required, the permanence of the relationship, and whether the work is part of an integrated unit of production. The proposal emphasizes actual practice over what a contract theoretically allows.

The proposal would also apply the same analysis under the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act, which borrow the FLSA's definition of employment.

What the DOL uses in investigations today

Under FAB 2025-1, WHD enforces using the 2008 version of Fact Sheet #13, as further informed by Opinion Letter FLSA2019-6. The 2026 proposal describes the same enforcement approach with reference to Opinion Letter FLSA2025-2. In practice, the agency's current enforcement position is close to the proposed framework, while private plaintiffs can still argue under the 2024 rule.

Why the federal rule may not be your controlling test

A DOL rule interprets the FLSA only. It does not change:

  • State wage laws. California uses the ABC test for most purposes. According to the California Labor and Workforce Development Agency, a worker is an employee unless the hiring entity shows the worker is free from its control, performs work outside the usual course of its business, and is customarily engaged in an independently established trade of the same nature. Prong B alone defeats many contractor arrangements.
  • Federal employment taxes. The IRS applies its own common-law test for withholding and payroll taxes.
  • Unemployment insurance and workers' compensation. Each state sets its own test, often stricter than the FLSA.
  • Court decisions. Courts decide FLSA classification cases under the economic reality test as developed in their own circuit's case law, and are not required to defer to the DOL's view.

So a worker might pass the proposed federal test and still be an employee under state wage law. That is why the strictest applicable test should drive your decision. The same multi-state logic appears in our guide to multi-state payroll with conflicting rules.

What should HR and payroll do while the rule is in flux?

Run a contractor inventory

  • Pull every vendor paid as an individual or single-member business from accounts payable, not only those HR knows about.
  • Note the work location state, length of engagement, hours pattern, who supervises the work, and whether the person does the same work as employees.
  • Flag anyone working on a continuous, open-ended basis under a manager's direction.

Score each worker against three tests

For each flagged worker, document the analysis under the 2024 six factors, the proposed core-factor framework, and the applicable state test. If any test you are subject to points to employee status, treat it as a reclassification candidate.

Plan reclassification carefully

Common mistakes

  • Relying on a contractor agreement or Form 1099 as proof of status.
  • Assuming the DOL enforcement pause protects against private lawsuits. FAB 2025-1 says the 2024 rule still applies in private litigation.
  • Converting long-tenured employees to contractor status because a new federal rule looks friendlier, without checking the state test.

Frequently Asked Questions

Is the 2024 independent contractor rule still in effect?

Yes, as a regulation. It has not been rescinded as of October 2026. However, under Field Assistance Bulletin 2025-1, the Wage and Hour Division no longer applies its analysis in investigations and instead uses the 2008 Fact Sheet #13 and related opinion letter guidance. The bulletin states the 2024 rule remains in effect for private litigation.

When will the new DOL contractor rule take effect?

No date is set. The proposal was published February 27, 2026, and comments closed April 28, 2026. A final rule must be published in the Federal Register, usually with a delayed effective date, and legal challenges are likely. Monitor the DOL's misclassification rulemaking page and the Federal Register rather than relying on predicted timing.

Does the federal rule override California's ABC test?

No. The DOL rule interprets only the FLSA and, if finalized as proposed, the FMLA and MSPA. California's ABC test continues to govern state wage and hour obligations for most workers in California. Where federal and state tests differ, employers must satisfy both, which in practice means the stricter one.

Can we use the proposed rule to reclassify employees as contractors?

That is risky. A proposed rule is not law, the 2024 rule still governs private lawsuits, and state tests may be stricter. Even after a final rule, actual working conditions decide status. Changing classification without changing how the work is controlled and paid invites claims. Get legal advice first.

Next steps

  1. Assign one owner to monitor the Federal Register and the DOL rulemaking page for a final rule.
  2. Complete a contractor inventory with accounts payable within the next quarter.
  3. Document a three-test analysis for each higher-risk worker and review it with counsel.
  4. Update procurement so that new individual contractor engagements require HR review.
  5. Find related guidance in our Payroll and Labor Compliance hub.

The federal contractor rule is actively changing. This article reflects the record as of October 2026 and is general information, not legal advice. Confirm the current status and your classification decisions with employment counsel.

Last reviewed: October 2026.

Sources

Comments

Post a Comment

Popular Posts

Why Workday Onboarding Breaks Down for Frontline Employees

Image
The Onboarding Gap Nobody Talks About Workday's onboarding module is well-designed for its intended audience: office-based, desk workers with reliable computer access, personal email addresses, and the digital literacy to navigate a web-based portal. For this population, Workday onboarding works well, it automates tasks, routes approvals, collects documents, and creates a reasonably smooth first-week experience. But most organizations using Workday have a substantial population of frontline workers: warehouse employees, retail staff, manufacturing workers, healthcare aides, food service workers, drivers. For this population, the standard Workday onboarding experience frequently fails in ways that are predictable, documented, and, crucially, fixable. Understanding why it breaks down and what actually works is increasingly urgent as labor market competition for frontline talent intensifies. How Standard Workday Onboarding Is Designed Workday's new hire onboarding (delivered throu...
Read more

How to Improve the Customer Experience (CX)

Customer experience is the sum of every interaction a customer has with your company, from the first ad they see to the way a return gets handled years after the purchase. Companies that take this seriously outperform those that treat CX as a support function. The ones that struggle tend to confuse customer satisfaction scores with actual improvements, or fix the wrong things. Here's a practical look at what actually moves CX forward. Start with where customers actually struggle Most CX improvement programs begin with surveys. Surveys are useful but limited, they capture what customers are willing to articulate after the fact, which tends to under-report friction in the middle of an experience and over-index on the most recent interaction. The richer data comes from observing behavior directly: where do customers drop off in a purchase flow? Where do support tickets spike? What search queries are people entering on your site that suggest they can't find what they're loo...
Read more

Infor HCM Software Engineer Jobs: Salary Factors and Skills

An Infor HCM software engineer's salary depends mostly on the type of employer, the depth of Infor platform knowledge, and location. Engineers who combine general software skills with hands-on experience in Infor CloudSuite HCM, Lawson, Infor ION integrations and payroll logic tend to command more than generalist developers, because that combination is scarce in the job market. What does an Infor HCM software engineer actually do? The title covers several different jobs, and pay follows the job more than the title. Broadly, these engineers build, configure, integrate and support the Infor human capital management stack, which includes core HR, payroll, benefits, talent management and workforce management. Many organizations still run the older on-premises Infor Lawson system alongside or instead of the cloud suite, so experience with both is common. Typical responsibilities include: Building and maintaining integrations between Infor HCM and payroll providers, benefits carrie...
Read more

UKG Union Contract and Overtime Rules for Multi-Site Food Plants

Multi-site food manufacturers running UKG often struggle with one thing: each plant has its own union contract, shift pattern and overtime rules, while the timekeeping system is configured centrally. The fix: document every contract rule precisely, map it to UKG pay rules and work rules, test against real timecards, and handle true exceptions with add-ons rather than core customization. Disclosure: The author works at CloudApper, which makes the UKG add-ons discussed in this article. Why are union contracts so hard to configure in UKG? Federal law sets a floor. Under the Fair Labor Standards Act, non-exempt employees must receive at least one and a half times their regular rate for hours worked over 40 in a workweek. Collective bargaining agreements frequently go further, and food plants often have several agreements across locations. Common contract provisions include: Daily overtime after 8 hours, or after 10 on a four-day schedule. Double time on the seventh consecutive day o...
Read more

How Do I Log In and Sign In to Workday HCM

Workday HCM is the system your organization uses to manage everything from your pay stubs and benefits to time off requests and performance reviews. Getting in is usually simple once you know where to go, but first-time login, password resets, and single sign-on setups can trip people up if no one has walked them through it. Here's what you need to know. How to find your Workday login URL Workday doesn't have one universal login page. Each organization has its own tenant, a dedicated instance with a unique URL. Your company's HR department or IT team should have provided the URL when you were onboarded. It usually looks something like your-company.workday.com or wd3.myworkday.com/yourcompany . If you weren't given the URL, check your onboarding email, your company's intranet, or ask HR directly. Some organizations also link to Workday from their internal HR portal. Don't try to guess the URL, there's no central directory, and guessing wrong just takes...
Read more

How to Search in Workday: Find Reqs, Reports, People and Tasks

To search in Workday, type into the global search bar at the top of any page, press Enter, then use the category filters on the left of the results to narrow to people, organizations, tasks and reports or other object types. Workday only returns items your security roles allow you to see, so missing results often mean an access issue rather than a typo. How does Workday search work? Workday uses a single global search box rather than separate menus for each module. Everything in the tenant, from a worker's profile to a job requisition to a custom report, is an object that search can find if you have permission to view it. Three points explain most search behavior: Security trimming. Results are filtered by your security groups. A recruiter and a payroll partner typing the same term will see different results. Categories. After you press Enter, results are grouped into categories that appear as filters. Clicking one hides everything else. Related actions. Once you open an...
Read more

New Apple Watch Health Features Will Be Available This Year, but Blood Pressure and Blood Sugar Sensors Will Not Be Available Until Next Year

Image
What Apple confirmed for its upcoming watch lineup Apple's annual health feature announcements for its Watch lineup continue to generate significant attention, both from health enthusiasts who track every new sensor addition and from the clinical research community that increasingly uses consumer wearables in studies. The pattern that has emerged over the past several product cycles is consistent: Apple confirms a set of features that will ship with the current year's model and acknowledges separately that other, more complex sensors are still in development and will not arrive on schedule. This year's announcement followed that pattern closely. Several new health monitoring capabilities are confirmed for the current Apple Watch generation, representing meaningful additions to what the device can track passively. At the same time, the two most anticipated sensor additions, continuous blood pressure monitoring and non-invasive blood glucose measurement, will not be availa...
Read more

The Future of Employee Healthcare Key Concerns and Strategies for 2024

In a rapidly evolving professional landscape, employers are grappling with an array of challenges as they plan employee-sponsored healthcare strategies for 2024. A recent survey conducted in the US in August 2023 sheds light on the primary concerns and emerging trends in the realm of employee healthcare. Mental health, healthcare costs, pharmacy expenditures, and transformative technologies are at the forefront of employer considerations, signaling a need for comprehensive and innovative approaches to employee well-being. Rising Mental Health Concerns A staggering seven in 10 employers reported a surge in mental health concerns, marking a significant uptick from the previous year. With 77% of employers experiencing an increase and an additional 16% anticipating future challenges, the mental health landscape is a top priority. The implications of the ongoing pandemic, remote work dynamics, and societal shifts are evident as employers grapple with addressing and supporting the mental ...
Read more

How Digital Marketing Helps Your Business Grow: A Practical Plan

Digital marketing helps a business grow by putting it in front of buyers at the moment they search, compare and decide, then measuring which efforts produce revenue. Search, content, email, paid ads and social channels let even small teams reach targeted audiences, test messages cheaply and shift budget toward what works, something print and broadcast advertising rarely allow. How does digital marketing actually drive business growth? Growth comes from three levers: reaching more of the right people, converting more of them into customers and keeping those customers longer. Digital channels touch all three. Reach. Search engines, professional networks and industry newsletters connect you with people already looking for what you sell. Conversion. Clear landing pages, case examples and easy contact options turn interest into conversations. Retention. Email, customer education content and community channels keep existing customers engaged and open to expansion. The underlying ...
Read more

ERP Solution Guide: How to Choose the Best ERP for You

What Is an ERP System and Why Does It Matter? An enterprise resource planning (ERP) system is software that integrates the core functions of a business — finance, inventory, procurement, human resources, manufacturing, and customer management — into a single, connected platform. Instead of data living in separate spreadsheets or standalone applications that don't talk to each other, an ERP creates one source of truth for the entire organization. For growing companies, the question is usually not whether they need an ERP but when and which one. Getting this decision right has long-term consequences. A poorly chosen ERP creates more problems than it solves — forcing teams to work around the system, creating data integrity issues, and consuming IT resources in an endless cycle of customization and maintenance. A well-chosen ERP, on the other hand, becomes the operational backbone that lets a company scale without proportionally growing its administrative overhead. Understandin...
Read more