Labor Department Submitted New Contractor Rule

The agency sent a proposal to the White House to revise federal worker classification standards.

Updated on Sept. 30, 2026 in Unions

Labor Department Submitted New Contractor Rule

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Should it be easier for companies to classify their workers as independent contractors?

The Department of Labor has submitted a new rule to the Office of Management and Budget regarding independent contractor status. This proposal aims to provide businesses with increased certainty when classifying their employees.

Why it matters

The proposed regulation seeks to shift away from the 2024 Biden administration standard currently facing legal challenges. Reclassifying workers as independent contractors would exempt them from specific protections under the Fair Labor Standards Act.

The Department of Labor rule aims to facilitate classifying workers as independent contractors, a designation that removes eligibility for Fair Labor Standards Act protections. The proposal is currently undergoing final review at the White House.

The players

Department of Labor

This federal executive department is responsible for occupational safety, wage and hour standards, and unemployment insurance benefits.

Office of Management and Budget

This executive office oversees the implementation of the President's vision across the federal government and manages regulatory review.

The details

The Department of Labor moved to advance this regulatory change to replace the 2024 classification framework. This administrative action is intended to resolve ongoing disputes regarding how businesses define their workforce status.

The Biden administration adopted its worker classification standard in 2024.
The rule reached the White House for review on September 30, 2026.

Political Context

The move aligns with efforts to redefine labor standards under the Fair Labor Standards Act, drawing scrutiny from labor advocates concerned about the loss of worker protections. Opposition groups argue that narrowing the definition of an employee weakens collective bargaining power and limits access to overtime pay.

Workers reclassified under this rule may lose access to federal wage and hour protections guaranteed by the Fair Labor Standards Act. For businesses, the change represents a significant effort to reduce legal uncertainty surrounding contractor versus employee designations.

The takeaway

The transition from the 2024 standard reflects an ongoing federal effort to clarify the regulatory environment for business operations. Stakeholders should prepare for potential shifts in legal requirements for contract employment as the rule moves toward final adoption.