By: Ty Hyderally, Esq. and Jamie Davila, Esq.

Date: October 28, 2025

The Trump administration plans to officially rescind a U.S. Department of Labor’s Biden-era rule classifying workers as independent contractors under the Fair Labor Standards Act after the Department of Labor announced that they will no longer enforce that rule.  Under the current Biden Rule, the multifactor of the “totality of the circumstances” test that was commonly used by the courts, to define and classify what is an independent contractor, was the governing methodology of how to classify independent contractors. Although the rule was supported for many years, it faced many legal challenges such as from business groups who argued that the rule unlawfully interfered with contractual relationships and deprived millions of the right to work as independent contractors.

The factors that the courts looked into and balanced were: (1) the opportunity for profit or loss dependent on managerial skill; (2) investments by the worker and the potential employer; (3) the degree of permanence of the work relationship; (4) the nature and degree of control; (5) the extent to which the work performed is an integral part of the employer’s business; and (6) the skill and initiative required for the position.[1]

The Department of Labor anticipates adopting the 2021 rule that was proposed by the first Trump administration in which the two main factors used in the analysis of the independent contractor was: (1) the nature and degree of control over the relevant work and (2) an individual’s opportunity for profit or loss. The return to this two-factor analysis allows for a greater flexibility and expansion of the “gig” economy as well as for temporary, seasonal, or project-based workers.

What does this mean for Employers?

The Department of Labor has yet to formally rescind the Biden-era rule.  Thus, the Biden-era rule still formally remains in effect. However, the regulatory agenda shows that a formal rescission could have been  published in September 2025.  However, this rescission has not yet occurred due to the federal government shutdown. It is important to note that the courts are not bound by the Department of Labor’s rule and independent contractor relationships continue to endure strict scrutiny. Further, many states impose stricter tests for worker classification, including New Jersey. Companies that employ independent contractors should start to review and assess their current classifications to ensure that the workers classified as independent contractors truly meet the requirements for the independent contractor classification under the law in the State where the employee resides/works. [2]

If you feel that you are the target of discrimination, harassment, whistleblower retaliation, or some other issue in the workplace, or if you have any questions regarding your rights as an employee, you should seek out an experienced attorney who concentrates in employment law. Our firm has been concentrating in employment law for over twenty-two (22) years!

En nuestra firma hablamos español. This blog is for informational purposes only. It does not constitute legal advice and may not reasonably be relied upon as such. If you face a legal issue, you should consult a qualified attorney for independent legal advice about your particular set of facts. This blog may constitute attorney advertising. This blog is not intended to communicate with anyone in a state or other jurisdiction where such a blog may fail to comply with all laws and ethical rules of that state or jurisdiction.

[1] Keith E. Kopplin, Maggie Santen, Zachary v. Zagger, Trump Administration to Rescind Biden-Era Independent Contractor Rule-What Could a New Rule Look Like; https://natlawreview.com/article/trump-administration-rescind-biden-era-independent-contractor-rule-what-could-new (Last visited on October 28, 2025).

[2] Id.