DOL Proposes New Independent Contractor Rule, and It Would Change the Practical “Weighting” of the Test

On February 26, 2026, the U.S. Department of Labor’s Wage and Hour Division (WHD) announced a proposed rule (NPRM) that would rescind the 2024 federal independent contractor rule and replace it with a revised framework modeled on the Department’s 2021 approach. The proposal is not final yet, but it matters now because it signals where federal enforcement and litigation arguments may head next.

The headline change

The proposal would emphasize two “core factors” as typically carrying greater weight in the analysis:

1. the nature and degree of control over the work, and

2. the worker’s opportunity for profit or loss based on initiative and or investment.

The Notice of Proposed Rulemaking (NPRM) also lists three additional factors that may be especially important when the two core factors point in different directions:

• the amount of skill required

• the permanence of the working relationship

• whether the work is part of an integrated unit of production 

The DOL frames all of this under the familiar “economic reality” inquiry, which examines whether the worker is in business for themself or economically dependent on the putative employer.

Why Florida employers should care, even before anything becomes final

If you run or advise businesses that use 1099 labor, gig-style arrangements, staffing models, or project-based consultants, this proposal is a real-world risk signal for three reasons.

First, it may change the rhetorical center of gravity of disputes. When a rule announces that two factors usually carry greater weight, it tends to shape how investigators ask questions, how plaintiffs plead cases, and how defense counsel frames the “best” facts.

Second, the proposal would apply not only to the Fair Labor Standards Act (FLSA), but also to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) by incorporating the same Part 795 analysis into those regulatory schemes. That expansion matters for industries with seasonal or agricultural labor and for any employer already juggling FMLA coverage questions.

Third, WHD’s enforcement posture has already been in flux. In May 2025, WHD issued Field Assistance Bulletin 2025-1, instructing investigators on the analysis to apply in enforcement while the Department revisited the 2024 rule. So even though this February 2026 proposal is “just” a proposal, the agency has been signaling for some time that it wants to move away from the 2024 approach in investigations.

A key principle employers often underestimate: “actual practice” beats paperwork

One of the most practical, litigation-relevant provisions in the NPRM is the reminder that the parties’ actual practice is more relevant than what is “contractually or theoretically possible.” In other words, a beautifully drafted independent contractor agreement is helpful, but it cannot rescue a relationship that functions like employment in the day-to-day reality.

This is where misclassification problems usually arise. Businesses design a contractor model on paper, but operations slowly drift. Schedules become dictated, exclusivity becomes expected, supervision becomes constant, and the contractor’s economic upside begins to look more like a wage than an entrepreneurial opportunity. Under the proposed framework, those facts are likely to be central because control and profit-or-loss opportunity are the two core factors.

Comment deadline and what happens next

The public comment period runs for 60 days after publication in the Federal Register. The Federal Register posting for this NPRM is dated February 27, 2026. Comments are due April 28, 2026, per DOL summaries of the rulemaking.

If finalized, the rule would replace the existing Part 795 approach, but until then, the legal landscape will continue to include a mix of: (1) WHD enforcement guidance, (2) evolving regulatory text, and (3) federal court application of the economic realities doctrine.

What employers should do now

This is the part where a lot of posts get mushy, so let’s keep it concrete and defensible.

If your business uses independent contractors, now is a good time to do a focused audit that is built around the two core factors and the “actual practice” principle.

Action items that usually produce immediate clarity:

• Map operational control: who sets schedules, assigns work, controls workload, and supervises performance in practice.

• Document entrepreneurial opportunity: what initiative or investment actually affects profit or loss for the worker, beyond simply working more hours.

• Check permanence signals: how long relationships last, whether work is ongoing and indefinite, and whether contractors are functionally woven into the business like employees.

• Stress-test the contract against reality: identify any provisions that are never used in practice, because those are often the first things attacked in a dispute.

None of that requires predicting the final rule. It is simply good risk management under the economic realities framework DOL is proposing to elevate.

A note on what this proposal does not do

It does not create a safe harbor, and it does not replace state law tests for state wage claims, unemployment, or workers’ comp. It is aimed at federal-law classification under the FLSA, and the DOL proposes extending the same approach to the FMLA and MSPA because those statutes use the FLSA definition of “employ.”