If you were one of the few members that could not make it to the sold out ASE Employment Law Briefing last week, this article will help bring you up to speed on a couple of DOL regulatory issues covered at the event.

The U.S. Department of Labor is reversing the Biden-era rule that redefined independent contractor status. The previous rule placed significant emphasis on criteria that often favored classifying workers as employees rather than independent contractors. The current administration has announced a return to a more balanced set of criteria designed to more fairly determine independent contractor status.

1. 1. The opportunity for profit or loss the worker might have
   2. The financial stake and nature of any resources a worker has invested in the work
   3. The degree of permanence of the work relationship
   4. The degree of control the employer has over the person’s work
   5. Is the work being done essential to the employer’s business
   6. Worker skill and initiative

The DOL reported that going forward the Independent Contractor definition is now based upon DOL Fact Sheet #13 – Economic Reality Test.

The other rule being reviewed for change by the Trump DOL pertains to joint employer status. On one level this is a highly charged labor concern that unions have tried to get settled in their favor to make union organizing easier. Joint employment looks at two separate businesses that are working together but are legally separated by either franchiser-franchisee status or contractor sub-contractor relationships and to be found to legally be treated as one employer for purpose of National Labor Relations Act, Fair Labor Standards Act, Family and Medical Leave Act, Title VII of the Civil Rights Act, and even state law application in certain circumstances.

What the Biden era joint employment rules tried to allow was application of legal responsibility and liability against two separate businesses and treat them as a single employer. The Trump Administration will try to resurrect a legal joint employer rule recognizing the separate entities as such and that as a regulation can withstand Court scrutiny.

Pursuant to the DOL regulatory agenda published recently, the rule is expected to propose something similar to the four factor balancing test used previously to determine whether affiliated businesses jointly employ workers.

The previous four factor test used the following criteria:

• Whether a business can hire or fire employees,
• Whether it controls their schedules or conditions of employment to a substantial degree,
• Whether it determines workers' pay rates and the methods by which they are paid, and
• If it maintains workers' employment records.

Employers are advised to check two scenarios that can lead to DOL scrutiny.

Does your company use independent contractors?

Many companies do in way or another. IC’s are a less expensive alternative to hiring employees and are a more flexible equivalent to an employment relationship. It is recommended IC’s be brought in under a contractor agreement and that they are not treated the same as employees. Check to see if the IC is taking on other outside projects separate from your company. It is also advisable to not let contractors use company equipment. They should have their own as they a separate business.

Does your company use subcontractors?

If your company hires subcontractors, to avoid being found in a joint employment situation make sure policies and practices that apply to the subcontractor are not controlled or heavily influenced by your company. Don’t exercise control over the subcontractor’s work schedules, pay rates, and pay methods and certainly don’t maintain that subcontractor’s worker employment records.

The recent proposed actions of the U.S. DOL should alleviate some of the potential for government enforcement against employers that use IC’s or subcontractors.

Sources: LAW 360 Employment Authority. Details Independent Contractor, Joint Employer Plans (9/4/2025). DOL Finalized Overhaul of FLSA Joint Employer Test (12/1/2020)