New DOL Guidance May Expand Who Qualifies as an Independent Contractor.

New DOL Guidance May Expand Who Qualifies as an Independent Contractor: What Employers Need to Know

The U.S. Department of Labor (DOL) recently issued a new Field Assistance Bulletin (FAB) that could significantly impact how businesses classify their workers. While this update does not represent a sweeping rule change, it offers important insight into how DOL investigators will assess whether a worker is an employee or an independent contractor.

For employers, this bulletin signals a potential shift in enforcement priorities and a broader interpretation of who may qualify as an independent contractor. Understanding what this means for your organization is critical to avoiding costly misclassification penalties.

What Is a Field Assistance Bulletin?

A Field Assistance Bulletin, or FAB, is internal guidance provided to DOL investigators. It outlines how they should interpret and apply labor laws during investigations. While an FAB does not carry the force of law, it plays an important role in shaping enforcement actions and compliance expectations.

This particular bulletin focuses on the DOL's approach to worker classification under the Fair Labor Standards Act (FLSA). It reflects a move away from the stricter standards that were emphasized during the Biden administration.

A Shift in Independent Contractor Analysis

Under prior Biden-era guidance, the standard for classifying workers as independent contractors was more limited. The government leaned toward treating more workers as employees, emphasizing factors like control over the work and economic dependence on the employer.

The new FAB signals a more flexible approach. While it does not open the door for every worker to be classified as an independent contractor, it arguably expands the definition to include more types of workers. This is a significant development for industries that rely on freelance, contract, or gig-based labor.

What This Means for Employers

If your business uses independent contractors, this guidance may provide greater flexibility in how you structure those relationships. However, it is essential to proceed with caution. Misclassifying workers can lead to wage claims, back taxes, and fines.

Employers should:

• Review current contractor relationships and documentation
• Ensure that independent contractors meet the updated criteria
• Avoid exercising too much control over contractors' schedules, methods, or outputs
• Clearly outline the scope of work and terms in written agreements

It is also important to remember that classification rules can vary by state. Some states apply stricter standards than the federal government, including ABC tests or state-specific interpretations of worker status.

Stay Ahead of Compliance Risks

As this guidance evolves, employers should monitor further updates from the DOL and consult with compliance experts to review their classification practices. Proactive auditing and clear documentation can help protect your business from enforcement actions.

At CTR Payroll | HR, we help employers stay compliant with federal and state employment laws. 

Need help navigating the independent contractor landscape? Contact CTR Payroll | HR today!

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