Police Officer on Traffic Duty Assignment is Joint Employee of Their Police Department and the Contractor
When a police officer was seriously injured while working an extra traffic duty assignment, the question wasn’t whether he should get help – it was who should help pay for it.
That question has now been answered by the New Jersey courts in an unreported decision on May 14, 2025. The decision upholds the trial court’s decision that the private company the officer was helping that day must share the cost of his workers’ compensation benefits – even though the officer wasn’t technically their employee.
The ruling was based on the “special mission” doctrine. Normally, if you’re commuting to work and get into an accident, it’s not covered by workers’ comp. But the “special mission” rule says if you’re doing something outside your normal routine because your job requires it – especially in service of both public and private interests – it may still count as work.
The court found that from the moment the officer left the station in a marked patrol car, they were on duty for both the city and the private company. He was heading to a location specifically to provide traffic safety while the contractor worked, which is a service the company had paid the city to provide.
Because the city and the contractor had an agreement in place – including insurance, payment arrangements, and a clause about who’s responsible if something goes wrong – the court said it was only fair that they contribute.
This decision is important because it reaffirms that private companies that benefit from public officers’ services – especially under formal agreements – can be held financially responsible when things go wrong.
For workers, this case reinforces the protections of workers’ compensation – even when your job takes you outside the office or police station.
DOJ Retracts Biden-Era Independent Contractor Classification Rule
On May 1, 2025, the United States Department of Labor’s (“DOL”) Wage and Hour Division announced it would not enforce or apply the Biden-era 2024 Final Rule regarding independent contractor classification (“2024 Rule”). Specifically, the DOL directed its investigators “not to apply the 2024 Rule’s analysis” in enforcement matters. The DOL’s announcement will undoubtedly make it easier to classify workers as independent contractors at the federal level—and continues a seesaw of regulatory pull-back from Biden-era directives. While the 2024 Rule does remain in effect for private litigation and certain state-specific tests still impose higher worker classification standards than the current federal guidelines, the DOL’s announcement is a win for employers seeking to classify workers as contractors.
The 2024 Rule
Under the 2024 Rule, classifying workers as independent contractors was somewhat akin to threading a needle. Imposed on March 15, 2024, the 2024 Rule mandated a complex, employee-friendly analysis that focused on a holistic review of the “totality of the circumstances” to ascertain whether a worker was “economically dependent” on an employer and, therefore, not an independent contractor. These six factors included:
The nature and degree of an employer’s control over the worker;
The worker’s opportunity for profit or loss;
Any investments by the workers and the employer;
The degree of permanence of the working relationship;
The extent to which the work performed is integral to the employer’s business; and
The amount of specialized skill and business initiative required.
Under the 2024 Rule, no factor was assigned more weight than another. Thus, the 2024 Rule was commonly referred to as the “totality of the circumstances” test. The net result was a high degree of both difficulty and uncertainty for employers seeking to classify workers as independent contractors.
Legal Challenges to the 2024 Rule
Business groups quickly challenged the 2024 Rule in courts across the country. At present, five lawsuits are pending. In each, the main argument is that the 2024 Rule was arbitrary, capricious, and imposed an undue burden on businesses. No court has halted or enjoined the 2024 Rule. While the Biden-era DOL mounted a vigorous defense in each case, the current DOL’s retreat from the 2024 Rule renders the ultimate outcome of these cases unclear. For example, in one case pending before the Fifth Circuit (Frisard’s Transp., LLC v. United States), the Court of Appeals stayed the proceeding after the government submitted a status report noting the DOL was in the process of reconsidering the 2024 Rule-at-issue in the litigation. Ultimately, the DOL’s pivot to the more lenient standard could have massive implications for these proceedings.
The DOL Retracts the 2024 Rule
In its May 1 announcement, the DOL directed investigators to analyze a worker’s status under the longstanding “economic reality” test, described in the Department’s 2008 Fact Sheet 13 and 2019 Opinion Letter. The more traditional economic realities test looks at various factors to determine whether a worker is actually in business for themselves (and therefore a contractor) or dependent on the hiring entity (and thus an employee). These factors include:
Whether the work is integral to the hiring entity’s business;
The permanency of the parties’ relationship;
The contractor’s investments in facilities or equipment;
The degree of control by the hiring entity over the contractor;
The contractor’s opportunity for profit or loss;
The amount of independent judgment or initiative required in marketplace competition for the contractor to succeed; and
The degree of independence with which the contractor organizes and operates their business.
This traditional economic reality test is widely considered more employer-friendly. It is highly-likely that the DOL under President Trump will issue new, formal rulemaking on the subject in the near future.
Employer Takeaways
Regardless of the DOL’s announcement, employers should remain vigilant and ensure they are compliant with applicable classification rules; which greatly vary by jurisdiction.
For example, certain states’ classification standards far outpace federal guidelines and are more employee friendly. California, New Jersey, and Massachusetts use the much stricter “ABC test” to determine whether a worker is an independent contractor. Under that test, employers must prove (1) a worker is free from the hiring entity’s control and direction, (2) the work is outside the hiring entity’s usual course of business, and (3) the worker is customarily engaged in an independently established trade, occupation, or business. Employers must prove all three elements to properly classify a worker as an independent contractor.
Employers should also closely monitor regulatory developments. As noted above, it is highly likely that the DOL will implement a new final rule in the near future. If and when that occurs, employers should be prepared for accompanying changes and evaluate their existing worker classifications. Given the shifting administrative environment, it is crucial that employers stay flexible in order to both maximize opportunities presented by favorable changes and, conversely, be prepared if—or when—the regulatory winds shift once more.
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Department of Labor’s New Guidance on Enforcing Biden Administration’s Independent Contractor Rule
On May 1, 2025, the Department of Labor (DOL) issued a field assistance bulletin providing guidance to the DOL’s Wage and Hour Division staff about the “analysis to apply when determining employee or independent contractor status for purposes of enforcing the FLSA.” The DOL is in the process of evaluating the issue and working on establishing the appropriate standard to address this question of the standard for determining worker classification under the FLSA.
Under the Biden administration, the DOL issued a rule—Employee or Independent Contractor Classification Under the Fair Labor Standards Act (2024 Rule)—outlining the analysis for determining employee or independent contractor status under the FLSA. The 2024 Rule specified that six factors would be considered to evaluate the nature of the workers’ status, but no single factor was dispositive. These factors were (1) worker opportunities for profit or loss, (2) worker and potential employer investments, (3) work relationship permanence, (4) employer control over work, (5) extent to which work performed was integral to employer’s business, and (6) use of worker skill and initiative.
The DOL will no longer apply this analysis. Instead, until a new standard is issued, the DOL’s Wage and Hour Division will enforce the FLSA based on Fact Sheet #13 (2008) and as further informed by Opinion Letter FLSA2019-6 (which the Biden administration withdrew but is now reinstated as FLSA2025-2). Fact Sheet #13 emphasized that there is no “single rule or test” for determining worker classification, but there are seven significant factors to consider:
the extent to which the services rendered are an integral part of the principal’s business;
the permanency of the relationship;
the amount of the alleged contractor’s investment in facilities and equipment;
the nature and degree of control by the principal;
the alleged contractor’s opportunities for profit and loss;
the amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and
the degree of independent business organization and operation.
Fact Sheet #13 also highlighted that certain factors are “immaterial” to the analysis. These factors include (1) place where work is performed, (2) absence of formal employment agreement, (3) whether the alleged independent contractor is licensed by the state/local government, and (4) the time or mode of pay.
The now-reinstated Opinion Letter FLSA2019-6, issued during the first Trump administration, outlines the DOL’s Wage and Hour Division’s position on gig economy worker classification. The letter analyzes the status of workers who are engaged through a virtual marketplace platform.
Since these workers were not economically dependent on the virtual marketplace platform, did not have a permanent working relationship with the platform, are able to switch to working for different platforms, have opportunities for profit and loss (even if the platform sets prices), are not integrated into the platform (e.g., they do not develop, maintain, or operate the platform), and the platform did not invest in facilities or equipment for the workers, the workers could be classified as independent contractors.
While the DOL continues to evaluate the appropriate standard, stakeholders should exercise heightened caution when structuring working relationships and reexamine current classifications in light of this regulatory shift.
The BR International Trade Report: May 2025
Recent Developments
Various trade deals in the air.
U.S.-China trade deal: Washington and Beijing take steps to ease trade war. On May 12, the United States and China announced a deal to deescalate the trade tensions between the two countries. The centerpiece of the deal is a 90-day pause to the 100+ percent tariffs each country had imposed on the other. As of May 14, the United States lowered its general tariff on Chinese goods to 30 percent, while China lowered its tariffs on American goods to 10 percent. During the 90-day pause, the countries will endeavor to negotiate a more lasting resolution to ongoing trade tensions.
Trump administration announces UK trade deal. On May 8, President Trump announced his administration’s first major trade deal since his “Liberation Day” unveiling of broad reciprocal tariffs on April 2. Leaders in Washington and London agreed to terms that would (i) establish a “new trading union” for aluminum and steel products, (ii) lower the tariff on UK-origin automobiles to 10 percent for the first 100,000 vehicles imported into the United States each year, and (iii) streamline customs procedures for products exported from the United States. Notably, under the terms of the deal, the United States’ 10 percent base reciprocal tariff on UK-origin goods remains in effect. Shortly after the agreement was announced, International Consolidated Airlines, the owner of British Airways, purchased $13 billion of Boeing planes.
White House announces trade deals with Saudi Arabia and Qatar. Over May 13-14, during President Trump’s visit to the Middle East, the White House announced a $600 billion investment commitment from Saudi Arabia and a $142 billion U.S.-Saudi arms deal, as well as “an economic exchange worth at least $1.2 trillion” with Qatar.
United States and Ukraine sign long-awaited critical minerals deal. On April 30, the United States and Ukraine signed a natural resources deal which establishes the U.S.-Ukraine Reconstruction Investment Fund (the “Investment Fund”). The Investment Fund grants the United States certain priority access to Ukrainian critical minerals, oil, and natural gas in exchange for military assistance. Unlike previous iterations of the deal, the April 30 agreement did not require Ukraine to reimburse the United States for past military aid. Treasury Secretary Scott Bessent emphasized that the deal embodies America’s efforts to encourage peace between Russia and Ukraine, stating “[t]his agreement signals clearly to Russia that the Trump Administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine over the long term.”
United Kingdom and India agree to trade deal. On May 6, after more than three years of negotiations, the United Kingdom and India announced a free trade deal, described by the UK government as “the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU.” Meanwhile, the United States is seeking to enter into a significant trade agreement with India. In late April, Vice President JD Vance and Indian Prime Minister Narendra Modi met in India to “finalize[ ] the terms of reference for . . . trade negotiation[s].”
Semiconductor export controls. On May 13, Commerce announced a range of long-awaited actions regarding export controls (see our alert) applicable to advanced integrated circuits and computing items, including:
rescission of the Biden Administration’s “AI Diffusion Rule,” which was scheduled to significantly broaden preexisting controls over such items effective May 15;
informing the public that export licensing requirements may apply (a) to the export, re-export, and transfer of such items (such as to cloud providers) for use in training large AI models for persons in China and certain other restricted countries, where there is knowledge that such models are for use in WMD or military-intelligence applications, or (b) U.S. person “support” for such activity;
issuance of guidance regarding red flags that may present a risk of diversion of controlled items to prohibited end-users or end-uses; and
imposition of export licensing requirements applicable to most transactions worldwide involving certain Huawei “Ascend” chips, on the ground that such chips were produced in violation of U.S. export controls.
Section 232 investigations update.
Critical Minerals: On April 15, President Trump ordered the initiation of a Section 232 investigation into imports of processed critical minerals, which the U.S. Department of Commerce (“Commerce”) launched on April 22. Subsequently, he issued an April 24 executive order to spur the exploration and extraction of critical mineral deposits located on the seabed.
Trucks: On April 22, Commerce launched a Section 232 investigation into imports of certain medium- and heavy- duty trucks, their parts, and their derivatives. The probe aims to assess whether such imports compromise the country’s ability to meet domestic demand and pose risks to national security.
Aircraft, jet engines, and related parts: On May 1, Commerce Secretary Howard Lutnick initiated a national security investigation into imports of aircraft, jet engines, and related parts, which could lead to additional tariffs, among other measures. Among other factors, Commerce will investigate the concentration of U.S. imports of such items from a small number of suppliers, along with what Commerce described as “foreign government subsidies and predatory trade practices.”
President Trump orders rescission of Syria sanctions. During a speech in Saudi Arabia, the president announced his intent to remove all U.S. sanctions on Syria—in place for decades—explaining that his decision followed discussions with Saudi Crown Prince Mohammed bin Salman and Turkish President Recep Tayyip Erdoğan and aims to give Syria “a chance at greatness.” The next day, the president met with Syrian President Ahmad al-Sharaa, formerly associated with al-Qaeda, who led the rebel group that toppled the Assad regime in December 2024. This marked the first meeting between an American president and a Syrian leader since 2000.
U.S. Department of the Treasury (“Treasury”) announces intent to launch a “fast track” process for CFIUS review of foreign investments. Treasury’s May 8 announcement, issued under the auspices of President Trump’s February “America First Investment Policy” memorandum (see our prior alert), sets the stage for eventual implementation of streamlined review for preferred investors by the Committee on Foreign Investment in the United States (“CFIUS”). Treasury noted that it will design a pilot program featuring a “Known Investor Portal” through which CFIUS can collect information from foreign investors in advance of a CFIUS filing.
U.S. Trade Representative issues final rule on Chinese ships. On April 17, the Office of the United States Trade Representative (“USTR”) issued a final rule concerning the imposition of port fees on Chinese vessel operators, owners, and Chinese-built vessels. The rule seeks to implement steep tonnage-based port fees for both Chinese-built ships and Chinese-owned ships, with the intent of resurrecting the U.S. commercial shipbuilding industry. Following a 180-day implementation period, annually increasing tonnage-based fees will be levied at U.S. ports on Chinese-owned and operated ships, while Chinese-built ships face increasing fees based on net tonnage or containers. In addition, fees of $150 per car will be levied on all foreign-built car carriers, not just those with ties to China. After three years, incrementally increasing restrictions will be placed on the transportation of liquified natural gas (“LNG”) via foreign-built vessels. Check out our coverage of the final rule here.
Amidst U.S. trade tensions, incumbent governments retain power in Canadian and Australian elections.
Down in the polls by double digits only a few months ago, Canada’s Liberals surged in response to trade tensions with the United States and the resignation of longtime Prime Minister Justin Trudeau, who was replaced as party leader by Mark Carney. Conservative leader Pierre Poilievre, once considered the strongest contender to become prime minister, lost his parliamentary seat in the elections. The new government will look to reshape relations with the United States, which Prime Minister Carney initiated with a White House visit on May 6.
A similar story played out in Australia, where incumbent Labour Party Prime Minister Anthony Albanese fended off a challenge by Peter Dutton’s Liberal-National coalition. Similar to Canada, U.S. trade tensions loomed large in the election.
European Union announces retaliatory tariff plan against the United States. The retaliatory measures would target a list of almost 5,000 goods which total approximately $107 billion in European imports. Reports suggest that U.S.-origin aircraft and automobiles would be hit hardest by the tariff package.
UK Government takes control of last remaining “virgin steel” plant in country from Chinese company. Following the announcement by British Steel’s Chinese parent company, Jingye, that it would stop purchasing materials to keep the blast furnace running at the Scunthorpe plant, the UK government took action to prevent the closure of the plant. Although neither the plant nor British Steel have been nationalized for the time being, emergency legislation passed by the UK Parliament allows Business Secretary Jonathan Reynolds the ability to direct the British Steel board and staff, allowing for the purchase of necessary materials.
Florida’s Proposed Choice Act to Add Significant Teeth to Enforcement of Non-Compete Agreements
Recently, the Florida legislature passed the “Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act.” For certain employees earning higher salaries, the CHOICE Act will make it much easier to enforce non-compete agreements in Florida and allow companies to enforce longer non-compete periods. It is expected that Governor DeSantis will sign the legislation soon, and the new law will take effect on July 1, 2025.
HIGHLIGHTS OF THE NEW LAW
It applies to “Covered Employees” which includes employees and independent contractors who either:
Work primarily in Florida; or
Work for an employer whose principal place of business is in Florida and their agreement is expressly governed by the Florida law.
A “Covered Employee” must also earn or be reasonably expected to earn a salary greater than twice the annual mean wage of the county in this state in which the covered employer has its principal place of business, or the county in this state in which the employee resides if the covered employer’s principal place of business is not in this state. Notably, “salary” includes the annualized base wage, salary, professional fees, and “other compensation for personal services” as well as “the fair market value of any benefit other than cash.” But “salary” does not include things such as health care benefits, severance pay, retirement benefits, expense reimbursement, discretionary incentives/awards, “distribution of earnings and profits not included as compensation for personal services,” or anticipated but indeterminable compensation such as tips, bonuses, or commissions.
”Health care practitioners” are exempted, but remain subject to current law, section 542.335.
The Act permits non-compete agreements up to four years in length. In contrast, under Florida’s current non-compete statute, employee-based non-competes lasting longer than 2 years are presumed to be unreasonable and unenforceable.
To fit under the Choice Act:
The employee must be advised in writing of the right to seek counsel before signing;
The employee must acknowledge in writing that the employee will receive confidential information or customer relationships during their employment;
If the employee has a garden-leave agreement, the non-compete period is reduced day-for-day “by any non-working portion of the notice period”; and
The employer must provide at least 7 days’ notice of the non-compete before an offer of employment expires or 7 days’ notice before the date that an offer to enter into a “covered non-compete agreement” expires.
The CHOICE Act also addresses Covered Garden Leave Agreements, which require employers to keep paying an existing employee for a certain period of time (up to 4 years) even though the employee is not required to perform any work. Garden Leave Agreements are common in sales and other customer relationship-based jobs as a way for employers to solidify and secure a departing employee’s client relationships before he or she starts a new job. Similar to Covered Non-compete Agreements, the Covered Garden Leave Agreements also require a seven-day notice period prior to signing, notice that advises the employee of the right to seek counsel, and an acknowledgment that the employee will receive access to confidential information or customer relationships.
For those covered, the CHOICE Act requires strict enforcement and makes it much easier for employers to obtain injunctions. Courts are required to preliminarily enjoin a Covered Employee from providing competing services to any business, entity, or individual during the non-compete period. Covered Employees can only modify or dissolve the injunction if they prove by clear and convincing evidence that (1) they are not in a competing role or will not use the employer’s confidential information or customer relationships, (2) the employer failed to pay or provide the consideration provided in the non-compete agreement following a reasonable opportunity to cure, or (3) the new employer seeking to hire the covered employee is not engaged in and is not planning or preparing to engage in business activity similar to the enforcing employer in the geographic area specified in the non-compete agreement.
The statute also requires courts to enjoin the new business or individual employing the employee subject to a non-compete or garden leave agreement, at which point the burden shifts to the new employer in the same manner as it shifts to the employee (although the new employer may not be allowed to claim “failure to pay” – i.e., the second defense noted above). Thus, businesses that are not parties to the non-compete agreement can still be subject to lawsuits and injunctive relief.
Notably, the Choice Act does not modify existing law, including Florida’s current non-compete law in section 542.335. Employees who are not “Covered Employees” under the CHOICE Act or who otherwise have not signed a non-compete that complies with the new Act can still have enforceable restrictive covenants under existing Florida law. But because section 542.335 places a significantly higher barrier on enforcing restrictive covenants, employers relying on non-compete agreements should obtain legal advice to determine whether to modify their agreements to take advantage of this new law.
NEXT STEPS FOR EMPLOYERS
Anyone with employees in Florida or with non-compete agreements that choose Florida law should contact an attorney to determine whether existing agreements should be revised in light of the CHOICE Act, and whether new agreements should take advantage of its provisions. It is likely that current agreements do not have certain language or meet the new notice requirements required under the Act.
Parties contemplating corporate transactions involving Florida businesses or Florida employees that include restrictive covenants may now wish to rely on a Florida choice-of-law provision (if applicable) rather than the law of a foreign jurisdiction, such as Delaware, which would not be affected by the CHOICE Act.
Companies should carefully review their current confidentiality policies and procedures to ensure that they are properly documenting employees’ receipt of and agreements to protect company confidential information and customer relationships.
Companies should review employee compensation to ensure that the employees whom the company desires to be subject to non-competes under the new law meet the “salary” threshold.
DOL Shelves Independent Contractor Rule
On May 1, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (Division) issued Field Assistance Bulletin (FAB) No. 2025-1 (“FAB 2025-1”), announcing that it is currently working to reformulate the test as to how independent contractor status is determined under the Fair Labor Standards Act (“FLSA”).
Although it is unclear what contours the revised rule will eventually take, FAB 2025-1 signals a clear intention to make it easier for businesses to classify workers as independent contractors.
The rulemaking process will take time. FAB 2025-1 accordingly provides that, during the interim, the DOL will no longer enforce a 2024 rule established under the Biden administration. The 2024 rule, which consisted of a non-exhaustive multi-factor test, is largely viewed as placing a difficult hurdle with respect to independent contractor classification.
FAB 2025-1 relaxes the DOL enforcement standard by reverting to the “economic reality” framework outlined in Fact Sheet #13 (July 2008), as informed by Opinion Letter FLSA2019-6. The “economic reality” framework asks whether the worker is an independent contractor in business for themselves, or an employee economically dependent on the business they serve. While this does not involve a single rule or test, significant factors include:
The extent to which the services rendered are an integral part of the principal’s business.
The permanency of the relationship.
The amount of the alleged contractor’s investment in facilities and equipment.
The nature and degree of control by the principal.
The alleged contractor’s opportunities for profit and loss.
The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
The degree of independent business organization and operation.
As compared to the 2024 rule, many believe that the “economic reality” framework provides more flexibility and favors independent contractor classification. The Division’s press release accompanying FAB 2025-1 states that going back to this “longstanding” framework “provides greater clarity for businesses and workers navigating modern work arrangements while legal and regulatory questions are resolved.”
Although this change in DOL enforcement policy is a welcome change for businesses, caution when making classification decisions is still appropriate, for the following reasons:
First, businesses should remain mindful that state law may apply and have stricter classification requirements with respect to independent contractors.
Second, the 2024 rule, which is currently facing multiple legal challenges in federal court, will remain in effect for the purposes of private litigation. However, the Division is reconsidering the rule, including whether to rescind and replace it with a different standard.
Third, the independent contractor pendulum may swing right back to a stricter test if a Democrat next takes the White House.
As the Division’s approach to worker classification continues to unfold, employers should closely follow new developments and consult legal counsel for guidance on worker classification matters.
Employment Law This Week – Episode 390 – Independent Contractor Rule, EEO-1 Reporting, and New York Labor Law Amendment [Video, Podcast]
This week, we’re covering the U.S. Department of Labor’s (DOL’s) decision to halt enforcement of the Biden-era independent contractor rule, the upcoming EEO-1 reporting season (starting on May 20), and New York State’s new labor law amendment, reducing damages for first-time frequency-of-pay violations.
DOL Halts Enforcement of Independent Contractor Rule
The DOL will no longer enforce the Biden-era independent contractor rule, which sought to tighten the criteria under which a hired worker can be considered an independent contractor for purposes of the Fair Labor Standards Act. The agency will now revert to the less stringent “economic realities” test.
EEO-1 Reporting Begins Soon
The proposed 2024 EEO-1 Component 1 data collection season is scheduled to begin on May 20, with a deadline to file by June 24. As expected, Component 2 pay data collection will not be required this year or in the coming years.
New York Amends Labor Law to Limit Damages in Frequency-of-Pay Lawsuits
New York Governor Kathy Hochul signed into law a budget bill that includes an amendment to the New York Labor Law that dramatically limits the relief employees can seek for first-time violations of frequency-of-pay provisions.
DOL Abandons 2024 Independent Contractor Test
What You Need to Know
The U.S. Department of Labor has announced it will no longer enforce the 2024 independent contractor rule under the Fair Labor Standards Act (FLSA), reverting to the more employer-friendly 2008 “economic reality” test.
The 2008 Rule and a reinstated 2019 Opinion Letter—favorable to app-based and gig economy businesses—will guide enforcement actions, emphasizing factors like control, investment, and profit/loss potential to determine worker status.
While the shift is seen as beneficial to businesses, employers must continue to monitor developments and ensure compliance with federal, state, and local classification standards to avoid misclassification penalties.
On May 1, 2025, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) announced that it will no longer enforce its 2024 independent contractor rule under the Fair Labor Standards Act (“FLSA”). The nixed 2024 rule previously set forth a six-factor test to classify workers as employees or independent contractors based on a “totality of the circumstances test” of non-exhaustive factors.
The 2024 rule had been subject to numerous legal challenges in district courts across the country because employers considered it to skew towards classifying workers as independent contractors. Now, the DOL will revert back to the framework set out back in 2008 in Fact Sheet #13 (the “2008 Rule”) until it can develop a revised standard.
The DOL’s Guiding Independent Contractor Standard (for now)
The 2008 Rule asserts that “an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.” Under this 2008 Rule, the employer-employee relationship under the FLSA is tested by “economic reality” rather than “technical concepts.” It also states that the following factors are considered significant in determining whether there is an employee or independent contractor relationship:
The extent to which the services rendered are an integral part of the principal’s business;
The permanency of the relationship;
The amount of the alleged contractor’s investment in facilities and equipment;
The nature and degree of control by the principal;
The alleged contractor’s opportunities for profit and loss;
The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and
The degree of independent business organization and operation.
Finally, the 2008 Rule provides that certain factors, such as (i) where work is performed; (ii) the absence of a formal employment agreement; (iii) whether an alleged independent contractor is licensed by a state or local government; and (iv) the time or mode of pay, are immaterial to determining whether there is an employment relationship.
Impact of the DOL’s Recent Departure from the 2024 Test
The DOL’s announcement does not formally revoke the 2024 rule, but it does indicate that changes to the rule will be forthcoming. The DOL will now utilize the Fact Sheet #13 and a 2019 Opinion Letter (which was previously withdrawn) to conduct audits and other enforcement actions.
The 2019 Opinion Letter re-instituted by the DOL on May 2, 2025, addresses whether the workers of a virtual marketplace company that provides an “online and/or smartphone-based referral service that connects service providers to end-market consumers” are independent contractors or employees. In essence, the 2019 Opinion Letter concludes that these “on-demand” workers for virtual marketplace companies, who perform services for users (such as transportation, delivery, shopping, moving, etc.), are independent contractors, not employees. App-based rideshare companies and other similar technology-based service companies will be directly impacted by the DOL’s announcement.
While these recent DOL announcements are generally viewed as more employer-friendly, time will tell if that is the practical reality of these changes. Don’t forget – state and local laws can impact the analysis of proper worker classification, so employers need to stay vigilant to ensure they are not making any major changes that would violate those pesky geographic nuances.
Employers Should Proactively Monitor This Area
Employers should evaluate their existing employee classifications in light of these recent developments to ensure that employees are properly classified to avoid violations of the FLSA’s requirements, including minimum wage, overtime, and recordkeeping. This is particularly important for employers to consider because misclassification issues can be costly. Additionally, employers need to stay alert for any further changes because the DOL has signaled that additional rulemaking regarding independent contractor classification under the FLSA is expected.
Businesses Get a Break: DOL Won’t Enforce 2024 Independent Contractor Rule
Takeaways
When analyzing employment status under the FLSA, DOL investigators will apply previous subregulatory guidance, instead of the 2024 independent contractor final rule, including a 2019 opinion letter addressing independent contractor status and a 2008 fact sheet.
Several lawsuits challenging the 2024 final rule are pending but the litigation is on hold as the DOL considers whether to rescind the rule.
For now, the 2024 final rule remains in effect “for purposes of private litigation.”
The U.S. Department of Labor (DOL) will no longer apply the 2024 independent contractor final rule when analyzing whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA).
The 2024 final rule revised the standard for determining whether a worker is an employee or independent contractor under the FLSA. (See Labor Department Releases Independent Contractor Final Rule, Revising Standard.) Several lawsuits over the 2024 final rule are still pending, but the DOL has recently sought to put the litigation on hold while it reconsiders whether to defend or rescind the rule. (See Employers Still Need to Abide 2024 Independent Contractor Rule Despite DOL Hints of Dropping It.) In the meantime, the DOL has paused enforcement of the final rule, directing its field staff not to apply the rule in agency investigations.
Field Assistance Bulletin
The DOL’s directive came in a Field Assistance Bulletin issued May 1, 2025, by Acting Administrator of the Wage and Hour Division (WHD) Donald M. Harrison, III. The bulletin, “FLSA Independent Contractor Misclassification Enforcement Guidance,” instructs WHD field staff that instead of applying the standard set forth in the 2024 final rule, investigators must analyze employment status under the longstanding framework set forth in Fact Sheet #13 and Opinion Letter FLSA2019-6, which addresses independent contractor status in the gig economy.
A return to prior guidance “provides greater clarity for businesses and workers navigating modern work arrangements while legal and regulatory questions are resolved,” the DOL announced in a press statement.
The enforcement guidance applies “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.”
Fact Sheet #13
Issued in 2008, Fact Sheet #13 cites numerous factors courts historically have considered when determining whether an individual “is engaged in a business of his or her own” as a matter of economic reality or is dependent on the entity for which they are performing work. These factors include:
The extent to which the services rendered are an integral part of the principal’s business.
The permanency of the relationship.
The amount of the alleged contractor’s investment in facilities and equipment.
The nature and degree of control by the principal.
The alleged contractor’s opportunities for profit and loss.
The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
The degree of independent business organization and operation.
In 2024, the DOL revised Fact Sheet #13 to conform to the new final rule. The DOL on May 1 restored the 2008 version to conform to its current enforcement position.
The 2024 final rule adopts and details six similar “economic reality” factors. The 2024 final rule does not include “degree of independent business organization and operation” among the delineated factors. It allows for consideration of other factors beyond this non-exclusive list, although allowing for greater flexibility in evaluating the “totality of the circumstances” of the relationship. This flexibility, however, has made it more challenging for businesses seeking clear criteria for ensuring their intended independent contractors are not classified as employees under the DOL standard.
Opinion Letter
Opinion Letter FLSA2019-6 is referenced in the Field Assistance Bulletin as additional guidance informing the independent contractor analysis. The opinion letter addresses the employment status of gig workers who contract with customers through a virtual marketplace company’s (VMC) platform.
Applying the traditional six factors, the wage and hour administrator determined that the workers in question did not fit “any traditional paradigm” covered by the FLSA. The VMC is merely a “referral service,” and the platform users do not have a working relationship with the company. Rather, they work for the consumers with whom they match on the platform.
The DOL withdraw the opinion letter during the Biden Administration. The acting wage and hour administrator recently reinstated the guidance and redesignated it as Opinion Letter FLSA2025-2 (May 2, 2025).
Takeaway
The Field Assistance Bulletin indicates that WHD will not enforce the 2024 final rule while it develops the “appropriate” independent contractor standard. It also states, however, that DOL may exercise its enforcement authority in specific cases as explicitly directed by the wage and hour administrator.
The DOL did not attempt, in the meantime, to restore a streamlined independent contractor final rule published by the first Trump Administration. The Trump rule focused on two “core” factors that DOL considered most probative of independent contractor status. That final rule, issued in early 2021, was rescinded by the Biden DOL before it took effect. To resurrect the Trump final rule would require the DOL to undertake formal notice-and-comment rulemaking.
The 2024 final rule remains in effect “for purposes of private litigation” relating to independent contractor status under the FLSA, the WHD noted. Businesses also need to comply with the more restrictive state laws defining independent contractor status in the jurisdictions where they operate.
Workplace Strategies Watercooler 2025: The Election Is Over, What’s Next? Part I [Podcast]
In part one of this two-part Workplace Strategies Watercooler 2025 podcast series on changes employers can expect from the new administration, Jim Plunkett (shareholder, Washington, D.C.) sits down with Scott Kelly (shareholder, Birmingham) to discuss the current status and challenges faced by federal contractors following changes at the Office of Federal Contract Compliance Programs (OFCCP) due to President Trump’s Executive Order 14173, including the revocation of EO 11246, compliance options, and ongoing obligations under federal anti-discrimination laws. Next, Jim speaks with John Merrell (shareholder, Greenville) regarding expected changes in traditional labor policy, including the makeup of the National Labor Relations Board (NLRB), the role of the general counsel, and the NLRB’s case priorities, standards, and decisions. Finally, Jim talks with Wayne Pinkstone (shareholder, Philadelphia) about anticipated changes within the Occupational Safety and Health Administration (OSHA) during President Trump’s second term, including the administration’s regulatory agenda, the fate of the heat stress rule proposed under the previous administration, and the overall leadership and enforcement of the agency.
DOL Alters Enforcement Position on Independent Contractors
On May 1, 2025, the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) issued a Field Assistance Bulletin stepping back from a restrictive independent contractor rule issued under the Biden administration — a move that should be welcomed by manufacturers and franchisors who depend on workforce models including independent contractors. Although the 2024 rule remains on the books, the DOL has issued an enforcement guidance signaling a shift back toward a more business-friendly framework.
Specifically, the DOL position in the 2024 Fact Sheet and the 2024 regulations (“2024 Rule”) stated that the “economic realities” of the worker’s relationship with the purported employer would determine whether that worker was an employee or an independent contractor. Specifically, in the 2024 Rule, the DOL’s enforcement position was that, if the worker was economically dependent on the employer for work, then worker would be considered an employee. If the worker was truly in business for themselves, then the worker would be an independent contractor. Under this rule, business were required to examine the totality of the working relationship to determine the worker’s status. This 2024 Rule went through numerous, detailed examples that left little doubt that the intention was to make it more difficult to classify a worker as an independent contractor. Once the worker was deemed an employee, that worker was entitled to minimum wage, overtime, and other protections under the Fair Labor Standards Act.
In its May 1, 2025, announcement, the DOL directed WHD investigators not apply the 2024 Rule in their current enforcement matters. The announcement further stated that the WHD would return to the enforcement position from its 2008 Fact Sheet and 2019 Opinion Letter, returning to the more traditional “economic realities” test. The factors described are significantly more lenient than the 2024 Biden-era rule. This signals a return to a more predictable and flexible standard, allowing for more workers to be considered as independent contractors.
The New (Old) Test Is Effective Immediately
Effective May 1, DOL investigators will evaluate independent contractor status under traditional “economic realities” principles. This means weighing several factors to determine whether a worker is truly in business for themselves or dependent on the hiring entity.
The factors are:
Whether the work is integral to the business;
The duration and permanency of the relationship;
The worker’s investment in equipment or materials;
The business’s degree of control over the worker;
The worker’s opportunity for profit or loss;
The level of market competition and initiative exercised; and
The degree of independent business operation.
The 2024 Rule Still Exists (For Now)
Five DOL enforcement actions over the 2024 Rule remain pending, but the DOL has sought to pause those lawsuits while it reconsiders the 2024 Rule. It is important to note that, while the DOL will no longer enforce the 2024 Rule, it has not yet been rescinded or revised. Therefore, it remains in place for private litigants until the DOL takes further action. But, in its May 1 announcement, the DOL stated its intention to develop regulations for how workers should be classified. Companies, including franchisors and manufacturers, should stay vigilant, particularly in industries prone to misclassification claims.
Businesses should be cautious about making changes to their classification of workers based on the May 1 announcement, given that the 2024 Rule remains the law. They should also continue to monitor the DOL’s potential repeal/revision to the 2024 Rule. As always, they should reach out to counsel on these issues, as re-classifying workers can have significant consequences.
Implications for Companies, Including Franchisors and Manufacturers
This more balanced framework allows businesses to structure relationships with franchisees and service providers in a way that better reflects operational needs without automatically triggering employee status under federal wage laws.
Don’t Ignore State-Level Rules
Federal flexibility doesn’t equal nationwide relief. Many states — especially California, New Jersey, and Massachusetts — have adopted more rigid standards, like the ABC test, making it harder to maintain contractor classifications.
Key Takeaways
Audit your workforce by jurisdiction, even if your national strategy aligns with federal guidance. Local laws could create hidden landmines.
Reassess current contractor relationships in light of the relaxed enforcement stance, especially in roles involving logistics, field services, and third-party distribution.
Work with legal counsel to create classification models that align with both federal and applicable state law.
Monitor regulatory developments as the DOL is likely to propose a formal rescission or new rule later this year.
Be flexible and prepared for any changes you implement now should be easy to reverse in case the political winds shift again.
Bid Protests in Nevada
In Nevada’s competitive public procurement landscape, contractors and vendors invest substantial time and resources to secure government contracts. When a bid is unsuccessful — especially when there’s a suspicion of procedural errors or unfair treatment — the Nevada Revised Statutes (NRS) provide a formal avenue for challenge.
Understanding the Bid Protest or “Appeal” Process under NRS 333.370
Nevada law allows a person who submitted an unsuccessful bid or proposal to file an “appeal” challenging the contract award. However, strict deadlines and procedural requirements apply.
1. Timing Is Critical
An appeal must be filed within 11 days of the date of award as listed in the bid record. This timeline is generally non-negotiable and begins the moment the bid award becomes public.
2. Filing Requirements
The appeal process starts by submitting a notice of appeal to both the Purchasing Division and the Hearings Division of the Department of Administration. This notice must contain a written statement detailing the alleged violations of NRS Chapter 333.
3. Mandatory Security Deposit
To discourage frivolous appeals, Nevada law requires the appellant to post a bond or provide other approved security. The amount must equal 25% of the total value of the successful bid. If the contract value is based on estimates, 25% of the estimated value is used instead. This security is held until a final determination is made. If the appeal is rejected and the award is upheld, a claim may be made against the bond or other security by the Purchasing Division in an amount equal to the expenses incurred or other monetary losses suffered by the Purchasing Division and procuring agency.
4. Contested Hearing
A contested hearing must occur within 20 days of the notice of appeal. The successful bidder must also receive notice and has the right to intervene and participate. The procedures of the contested hearing, including notice provisions, contents of the appeal, avenues of informal disposition, contents of the record, standards of review, standards of proof, and requirements for the final decision are detailed in NRS 233B.121 and 233B.125.
The record for a contested hearing must include, at minimum:
All pleadings, motions and intermediate rulings.
Evidence received or considered.
A statement of matters officially noticed.
Questions and offers of proof and objections, and rulings thereon.
Proposed findings and exceptions.
Any decision, opinion or report by the hearing officer presiding at the hearing.
The hearing officer will issue a determination within 60 days, which must be in writing and include findings of fact and conclusions of law.
5. Grounds for Cancellation
Importantly, the hearing officer may only cancel a contract award if there is a finding of non-compliance with NRS Chapter 333. A cancellation of the award requires a new award in compliance with the procurement Chapter 333.
6. Automatic Stay and Limitations on Legal Action
Once an appeal is filed, it operates as a stay — halting further action on the contract until a decision is rendered. Additionally, judicial review is generally not available until the administrative process concludes.
7. Emergency Purchases
While the appeal is pending, the state is allowed to make temporary open-market purchases to meet urgent needs, minimizing disruption to public services.
8. No Liability for Damages
Even if an appeal is successful, the statute explicitly shields the state and its agents from liability. This includes attorneys’ fees, lost income, and other costs incurred by the unsuccessful bidder.
Final Thoughts
If you’re considering a bid protest or appeal, it’s advisable to consult legal counsel early to assess the merits of your case and navigate the complex procedural framework.
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