The U.S. Department of Labor (DOL) recently announced it is revisiting rules classifying which workers are independent contractors and which are employees. Its new proposal would roll back a Biden administration rule that it said was flawed. 

“The tens of millions of Americans who work as independent contractors are helping drive the Golden Age of the American economy,” said U.S. Secretary of Labor Lori Chavez-DeRemer. “The department’s proposed rule seeks to protect these workers’ entrepreneurial spirit and simplify compliance for American job creators navigating a modern workplace, all while maintaining robust protections for employees under the Fair Labor Standards Act.” 

DOL intends to return to a framework established at the end of the first Trump administration that relies primarily on the level of control an employer has over a worker and the worker’s opportunity for profit and loss. While the Biden administration had outlined a multi-pronged test based on a totality of circumstances, the department now says “the principal flaw” of that approach is a lack of clarity on how employers should weigh those factors. The Trump administration also suggested the Biden rule “could have a chilling effect on independent contractor arrangements involving individuals who are, in fact, in business for themselves.” 

“The department believes that streamlined regulations in line with Congress’s intent when it passed the Fair Labor Standards Act would improve compliance, reduce misclassification, and reduce costly litigation in an economic environment that needs flexibility and innovation,” said DOL Wage and Hour Division Administrator Andrew Rogers. 

In ECFA’s recent “HR Hot Topics: 2026 Edition” webinar, Dustin Gaines, Partner with My Church Law Firm, and Jake Lapp, ECFA Senior Vice President of Member Accountability, further explored this matter and underscored the importance of classifying workers correctly under both federal and state rules. Learn more by accessing that webinar here or checking out the topic in ECFA’s recently released 2026 Church & Nonprofit Tax & Financial Guide. 

The new DOL proposal is open to public comment through April 28, 2026.