DOL Proposes to Rescind Biden-Era Independent Contractor Rule

What Florida Businesses Need to Know About the Proposed DOL Rule

On February 27, 2026, the U.S. Department of Labor’s Wage and Hour Division published a Notice of Proposed Rulemaking in the Federal Register proposing to rescind the Biden Administration’s 2024 independent contractor classification rule under the Fair Labor Standards Act and to replace it with a modified version of the two-core-factor framework that the first Trump Administration established through a 2021 final rule. The public comment period for the proposed rule closes on April 28, 2026.

For Florida businesses that rely on independent contractor relationships — and in this state, that covers a substantial portion of the business community across construction, real estate services, healthcare staffing, logistics, insurance, franchise operations, and professional services — the proposed rule matters regardless of your view on which administration’s analytical framework more accurately captures the economic reality of independent work. The proposed rule reinstates a structured, weighted approach that provides materially greater predictability for businesses building contractor-dependent workforce models, and the comment period that closes on April 28 presents a meaningful opportunity for affected businesses to put their experience with the existing framework on the regulatory record. This article explains what the proposed rule does, where it came from, what it does not fix, and what specific steps Florida businesses should take during and after the comment period.

The Analytical Dispute at the Core of Every Independent Contractor Classification Question

The fundamental legal question in independent contractor classification under the Fair Labor Standards Act — the economic reality test — has not changed. Courts and regulators across administrations have consistently held that the ultimate question is whether a worker is economically dependent on the putative employer for their livelihood, as a covered employee is, or is genuinely operating as an independent economic actor in business for themselves. What successive administrations have disagreed about, sharply and repeatedly, is the methodological framework for answering that question — and that disagreement about methodology has had real consequences for millions of working arrangements nationwide and for the Florida businesses that structure their workforce around independent contractor relationships.

The methodology dispute centers on two competing approaches. The first assigns structured, differential weight to the factors in the analysis, identifying two core considerations — the worker’s control over the manner and means of the work, and the worker’s genuine opportunity for profit or loss based on the exercise of managerial skill — as carrying more analytical weight than secondary factors. When both core factors point in the same direction, that direction ordinarily determines the classification outcome. This structured approach produces more predictable results, gives businesses a meaningful basis for evaluating their contractor relationships before engaging counsel or auditors, and aligns the regulatory framework more closely with the factor hierarchy that federal courts have historically applied.

The second approach applies a holistic, totality-of-the-circumstances analysis across a broader set of factors, assigning no predetermined weight to any single factor and declining to elevate any factor as categorically more probative than others. Proponents argue this approach produces more accurate results in complex or atypical working arrangements. The business community’s experience with the 2024 Biden rule — which applied this approach across six equally-weighted factors — was that classification analyses became longer, more expensive, and less certain in outcome without producing meaningfully more accurate classifications. The Florida construction industry, which employs tens of thousands of workers as independent subcontractors, found the six-factor, no-hierarchy framework particularly difficult to apply consistently given the variety of project types and working arrangements that are routine in commercial and residential construction.

How the Framework Has Shifted Across Administrations

Understanding the proposed rule requires some familiarity with how the federal regulatory framework for independent contractor classification has changed across administrations — a regulatory history that reflects the ongoing tension between the two methodological approaches and that has produced real disruption for businesses trying to maintain compliant workforce models through the transitions.

The Obama Administration’s Department of Labor issued informal guidance in 2015 strongly favoring the expansive, unweighted approach and asserting broad employee coverage as the interpretive default. The incoming Trump Administration withdrew that guidance in 2017. In 2019, the Wage and Hour Division issued Opinion Letter FLSA2019-6, applying a structured multi-factor economic reality analysis to workers providing services through a virtual marketplace platform and concluding that those workers were independent contractors, relying significantly on their autonomy over schedule, their ability to serve multiple clients, and their genuine opportunity to increase earnings through their own managerial decisions. The Biden Administration withdrew that opinion letter in February 2021, and it was reinstated and redesignated by the current administration in May 2025.

The first Trump Administration published a final rule in January 2021 — the first time the DOL had ever codified the economic reality factors into a formal regulatory rule — designating two factors as carrying the greatest analytical weight: the nature and degree of control over the work, and the opportunity for profit or loss based on managerial skill. Three additional factors served as supplemental considerations: the skill and initiative required for the work, the permanence of the working relationship, and the extent to which the work is integrated into the employer’s production process. A federal district court in Texas subsequently ruled that the Biden Administration’s attempts to delay and then withdraw the 2021 rule were procedurally improper under the Administrative Procedure Act, and that the 2021 rule had been effective from its original March 8, 2021 effective date throughout. The Biden Administration nonetheless published its replacement six-factor rule in January 2024, effective March 11, 2024, returning to the unweighted totality-of-the-circumstances framework. That 2024 rule was challenged in five separate federal lawsuits, all of which were stayed when the DOL indicated it was reconsidering the rule. In May 2025, the Wage and Hour Division published Field Assistance Bulletin No. 2025-1, announcing that it would no longer apply the 2024 rule in FLSA investigations as an interim measure pending formal rulemaking. The February 27, 2026 Notice of Proposed Rulemaking is the formal regulatory mechanism for accomplishing the 2024 rule’s rescission and establishing a new framework.

What the Proposed DOL Rule Does

Restores a Two-Core-Factor Framework

The centerpiece of the proposed rule is the reestablishment of a structured analytical framework in which two core factors carry greater weight than the others. The first core factor is the nature and degree of the worker’s control over the manner and means of performing the work — including whether the worker sets their own schedule, selects which projects or assignments to accept or decline, and retains the ability to provide services to other clients, including the putative employer’s competitors. The second core factor is the worker’s genuine opportunity for profit or loss based on the exercise of managerial skill, business judgment, or personal investment in tools, equipment, materials, or helpers that is independent of and not funded by the putative employer.

When both core factors point toward the same classification outcome, the proposed rule provides that the analysis is essentially resolved — additional secondary factors may be considered but will not ordinarily overcome the alignment of the two core factors. When the core factors point in different directions, or when one or both are ambiguous in a specific working arrangement, three secondary factors come into play: the skill and initiative required for the work, the degree of permanence of the working relationship, and the extent to which the work is integrated into the putative employer’s production process or ordinary business operations.

Notably, the proposed rule differs from the 2021 rule in at least one important respect: it is designed to apply not only to worker classification under the FLSA, but uniformly across the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act as well — both of which use the FLSA’s definition of ‘employ.’ This represents an expansion of the proposed rule’s scope relative to the 2021 framework, and Florida businesses with workforce models that span the FLSA, FMLA, and MSPA — including agricultural operations in Central and South Florida and multi-state employers with Florida operations — should evaluate the proposed rule’s implications across all three statutory frameworks, not only the FLSA.

What the Proposed Rule Does Not Do

The proposed rule applies exclusively to federal classification standards under the FLSA, FMLA, and MSPA. It has no effect on state law classification standards, and in Florida, that is a significant limitation that businesses must keep in mind. Florida does not have a separate worker classification statute of general application that mirrors the FLSA’s economic reality test, and Florida courts have generally looked to the FLSA framework and related common law principles for guidance. However, specific Florida regulatory regimes — workers’ compensation, unemployment compensation, and certain licensing and regulatory frameworks applicable to construction contractors, real estate professionals, and others — apply their own classification criteria that are unaffected by the federal proposed rule. A classification outcome that is clearly correct under the federal economic reality test may still produce a different result under one of Florida’s sector-specific classification frameworks.

The proposed rule also does not resolve the pending litigation challenging the 2024 Biden rule. Those five lawsuits remain stayed while the rulemaking proceeds, and they will need to be resolved or dismissed as the new rulemaking advances. The final rule, if and when adopted, will face its own litigation risk from employee advocacy groups and labor unions who will argue that the two-core-factor framework underprotects workers and departs from the congressional intent underlying the FLSA’s broad definition of ‘employ.’ Florida businesses should treat the proposed rule as providing guidance on the direction of the regulatory framework rather than as a settled final answer on classification standards.

The Current Enforcement Landscape During the Proposed Rulemaking Period

While the proposed rule is pending, the enforcement landscape is transitional but more employer-favorable than it was under the 2024 rule. The Wage and Hour Division has been operating under Field Assistance Bulletin No. 2025-1 since May 2025, meaning that WHD investigators are not applying the 2024 rule’s six-factor, no-hierarchy analysis in their own enforcement investigations. They are instead applying the 2008 Fact Sheet 13 guidance and the reissued 2019 opinion letter framework as interim measures.

However, and this is a point that affects Florida businesses differently depending on their risk exposure profile, the 2024 rule technically remains in effect for purposes of private litigation. A worker or class of workers pursuing a private FLSA action against a Florida employer can still argue that the 2024 rule’s six-factor framework should govern the classification analysis in that litigation, and at least some courts may give weight to that argument depending on the specific circuit’s jurisprudence and the court’s approach to administrative deference in the post-Chevron landscape. Florida businesses with meaningful exposure to private FLSA actions — particularly those in the construction, logistics, gig economy, and staffing industries — should not assume that the WHD’s enforcement posture fully eliminates the risk of private litigation under the 2024 framework during the period before the proposed rule is finalized.

What the Proposed Rule Means for Key Florida Industries

Construction and Subcontracting

Florida’s construction industry is one of the most significant independent contractor-intensive sectors in the state, and it has been navigating classification risk across the regulatory transitions with varying degrees of consistency and success. The proposed rule’s two-core-factor framework is more aligned with the structural realities of construction subcontracting — where subcontractors typically control the manner and means of their specialized work, maintain their own tools and equipment, price their services on a project basis, and work for multiple general contractors simultaneously — than the 2024 rule’s framework was. Florida contractors and subcontractors who maintain compliant working arrangements will find the proposed framework easier to satisfy and to document than the six-factor, no-hierarchy standard.

That said, construction employers should be cautious about reading the proposed rule’s favorable direction as license to expand their contractor workforces without appropriate evaluation. The secondary factors — particularly the permanency of the working relationship and the degree to which the work is integrated into the employer’s production process — can create classification risk even under a two-core-factor framework for workers who provide services exclusively to one contractor on a long-term, ongoing basis without the genuine operational independence that characterizes legitimate subcontracting. The proposed rule changes the framework; it does not change the underlying legal requirement that contractor relationships be structured with genuine independence.

Real Estate, Insurance, and Professional Services

The real estate and insurance industries in Florida have long operated with large independent contractor workforces under licensing frameworks that have their own classification structures. Real estate agents are generally classified as independent contractors under both federal law and Florida’s licensing framework, provided their relationships are structured appropriately under their broker agreements. The proposed rule’s two-core-factor framework is consistent with the way most bona fide real estate agent relationships are structured — agents control their own work, set their own schedules, manage their own client relationships, and have a genuine opportunity for profit or loss through the management of their own transactions.

Insurance agents operating under exclusive or semi-exclusive carrier arrangements present a more fact-specific classification question under any framework, because the carrier’s control over marketing materials, compliance requirements, and rate structures can create ambiguity about the nature-and-degree-of-control factor. Florida insurance agencies and carriers with large field agent workforces should use the comment period and the period following finalization of the proposed rule as an opportunity to review their agent relationships against the two-core-factor framework and to document the indicia of genuine independence that support contractor classification.

Franchise Operations

Florida’s franchise industry — one of the most robust franchise markets in the country — has its own complex relationship with independent contractor classification. Franchisors who exercise detailed control over their franchisees’ operations through standards manuals, training programs, and brand compliance requirements generate classification risk under the control factor. The proposed rule’s two-core-factor framework does not eliminate that risk, but the profit-or-loss factor — particularly the franchisee’s genuine investment of capital in the franchise business, the franchisee’s exposure to business-level financial risk, and the franchisee’s ability to drive revenue through their own managerial decisions — has always been a strong countervailing consideration that supports independent contractor classification for bona fide franchise relationships. Florida franchisors and their counsel should evaluate their franchisee relationships against the proposed rule’s two-factor framework and document the profit-or-loss factor’s presence in those relationships with specific, contemporaneous evidence.

What Florida Businesses Should Do Before and After April 28

Consider Submitting Comments Before April 28, 2026

The public comment period on the proposed rule closes on April 28, 2026. The DOL is required to consider and respond to substantive comments before finalizing the rule, and comments from Florida businesses describing their real-world experience with the 2024 rule’s six-factor framework can meaningfully inform the DOL’s final rule drafting and its regulatory impact analysis. Comments need not be lengthy to be effective; a concise, specific, factual description of how the 2024 rule affected a particular business’s classification practices and workforce decisions is more valuable to the regulatory record than a general policy argument.

Audit Independent Contractor Relationships Against the Proposed Framework

Regardless of whether you submit comments, the comment period is a productive time to audit your existing independent contractor relationships against the proposed rule’s two-core-factor framework and to identify relationships where the classification is clearly supportable, relationships where the analysis is close under either factor, and relationships where additional documentation of contractor independence would strengthen the classification record. A classification audit conducted now — while the regulatory direction is clear but the rule is not yet final — gives you the opportunity to remediate structural issues in close relationships before the final rule takes effect and before a WHD investigation or private litigation puts those relationships under formal scrutiny

Review and Update Independent Contractor Agreements

Independent contractor agreements that were drafted against the 2024 rule’s six-factor framework, or that were drafted without specific attention to either framework, should be reviewed and updated to document the indicia of genuine independence that the proposed rule’s core factors require. The agreement should accurately reflect the contractor’s control over the manner and means of the work, the contractor’s opportunity to accept or decline projects, the contractor’s ability to work for multiple clients, the contractor’s investment in their own tools and equipment, and the contractor’s exposure to business-level profit or loss. An agreement that describes a genuinely independent working relationship correctly is your first and best documentation that the classification is proper. An agreement that describes independence that does not exist in practice is a liability, not an asset, in a classification challenge.

DISCLAIMER: This article is provided for general informational purposes only and does not constitute legal advice. The information contained herein reflects the law as of the date of publication and may not reflect subsequent legal developments. Application of legal principles will vary based on the specific facts of each situation. This article does not create an attorney-client relationship. You should consult with a qualified attorney before taking any action based on information contained in this article. Munizzi Law Firm represents clients throughout Florida in business formation, mergers and acquisitions, commercial real estate, and related transactional matters.