The Department of Labor Takes Another Turn on Worker Classification
The Department of Labor Takes Another Turn on Worker Classification
A new worker classification test transportation companies should watch closely.
Executive Summary
For decades, whether a worker was an employee or an independent contractor under the Fair Labor Standards Act (FLSA) was a question determined by a judicially created, multi-factor balancing test. But over the last five years, that determination has been governed by a volley of proposed and enacted regulations between the Trump and Biden administrations. The latest exchange occurred on February 27, 2026, when the Department of Labor (DOL) issued a Notice of Proposed Rulemaking that would rescind the 2024 rule and largely restore the 2021 framework, with several important modifications.1
Three rules in six years across three administrations. For transportation suppliers, particularly motor carriers, that rely on independent contractors, the regulatory seesaw has had real consequences. Although the 2024 rule remains in effect, transportation companies should take steps now to prepare for the new rule.
The Pre-2021 Judicial Test
The FLSA does not define “independent contractor.” That gap was filled by the Supreme Court in 1947 in the companion decisions United States v. Silk and Rutherford Food Corp. v. McComb.2 The Court’s analysis in those cases — whether, as a matter of economic reality, the worker is economically dependent on the putative employer or is instead in business for themselves — has anchored the analysis ever since.
In the subsequent decades, federal courts developed the Silk and Rutherford framework into a multifactor “economic reality” test. Although the circuits varied in how they articulated the factors, a consensus emerged around six points: (1) control, (2) opportunity for profit or loss, (3) investment, (4) skill, (5) permanence, and (6) the extent to which the work is integral to the employer’s business.3 Two features of this judicial test matter for what followed. First, it was holistic. No factor carried greater weight, and courts evaluated the totality of the circumstances.4
Second, it was judge-made, the DOL declining to issue guidance codifying a binding worker classification test.5
The 2021 Rule: Selecting Two Factors to Simplify the Test
In the waning days of the first Trump administration, the DOL promulgated its first-ever worker classification rule.6 The 2021 rule retained the economic reality framework but made two significant changes: (1) it reduced the analysis to five factors by folding “integral to the business” into a reconceived “integrated unit of production” factor; and (2) it elevated control and opportunity for profit or loss as core, determinative factors.7 Under the proposed rule, when the core factors point in the same direction that classification was highly unlikely to be altered by the other three factors.
The practical consequence was a test friendlier to independent contractor classification. The rule also included illustrative examples, one of which mattered especially for trucking: a motor carrier’s requirement that an owner-operator use a speed limiter was characterized as compliance with a specific legal obligation and did not constitute control.
The 2024 Rule: The Multi-Factored Test Makes a Come Back
The Biden administration ordered an about-face. Its rule, implemented March 11, 2024, rescinded the 2021 rule and effectively replaced it with the six-factor, judicially created totality-of-the-circumstances test.8 No factor received additional weight. The “integral part” factor was restored as a standalone consideration. And investment was expanded into its own factor, comparing worker and employer investments qualitatively.
The 2024 rule was, by design, a return to the pre-2021 judicial approach and a test that was harder to satisfy for businesses seeking to classify workers as independent contractors. It also removed the illustrative examples that had provided some additional guidance to regulated industries.
The 2026 Proposal: Back to the Future
The 2026 proposal largely restores the 2021 framework. The five-factor structure returns. Control and opportunity for profit or loss are once again core factors, and when they align, the proposal states that the non-core factors are “highly unlikely, either individually or collectively, to outweigh” them.9 The “economic reality” inquiry — whether the worker is economically dependent or in business for themselves — remains the ultimate question.
But the 2026 proposal is not a carbon copy of the 2021 rule. There are three significant departures.
First, the proposal extends the classification analysis beyond the FLSA to the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act, both of which incorporate the FLSA’s definitions of “employ” and “employee.”10 Neither the 2021 rule nor the 2024 rule did this. A uniform federal classification test across three statutes is a meaningful simplification for employers that navigate all three.
Second, the “integral part” factor — which the 2021 rule subordinated into the integrated-unit-of-production concept — returns as a permissible “other factor,” though one that remains, along with the other non-core factors, “less probative” than the two core factors.11 The proposal thus threads a needle, restoring the factor’s availability without restoring its weight.
Third, the proposal adds illustrative examples, particularly on the “skill” factor that the 2021 rule left underexplained. It also expressly states that the rule may be relied upon by employers invoking the good-faith reliance defense under Section 10 of the Portal-to-Portal Act, 29 U.S.C. § 259 — an important point for employers building a compliance record.12
What This Means for the Transportation Industry
The transportation industry has been at the center of the classification debate for decades, and the 2026 proposal carries distinct implications for motor carriers that rely on the vast community of owner-operators that underpin the way goods and cargo move throughout the nation.
The core-factor framework, if restored, will substantially reduce reclassification risk under DOL enforcement. But the more consequential question for carriers is how the final rule will treat the “legal obligations” issue. For example, motor carriers are subject to 49 C.F.R. Part 376, which requires lease contracts to give the carrier “exclusive possession, control, and use of the equipment for the duration of the lease” while simultaneously providing that this requirement is not intended to affect independent contractor status. The 2024 rule’s suggestion that compliance with legal obligations “may” constitute evidence of control created real tension with Part 376 and with the broader constellation of FMCSA mandates — hours-of-service, electronic logging devices, drug and alcohol testing, driver qualification, vehicle inspection — that motor carriers routinely incorporate into independent contractor agreements. A restored 2021-style framework helps provide clarification.
Steps to Take Now During the Ongoing Rulemaking Process
As the proposal receives public comment and proceeds through the finalization process, motor carriers should take steps to assess their operations for exposure to the new worker classification test. Specifically:
- Audit existing independent contractor agreements against both the proposed 2026 framework and the state-law standards applicable in every jurisdiction where the business operates (e.g., continued compliance with AB 5 for operations in California).
- Preserve good-faith reliance documentation. Section 10 of the Portal-to-Portal Act allows employers to avoid FLSA liability based on good-faith reliance on a DOL regulation even if the regulation is later invalidated. Document the rule in effect at each stage of the business’s independent contractor practices.
- Submit comments before April 28, 2026, particularly on industry-specific issues such as the treatment of safety-related contract provisions, the interaction between the rule and Part 376, and FMCSA compliance obligations.
- Watch the final rule’s examples closely. The presence or absence of an analog to the 2021 rule’s speed-limiter example will signal how carriers should draft and administer their independent contractor agreements going forward.
Looking Ahead
Three administrations have now issued worker classification rules, each reversing its predecessor. Nothing about the current proposal suggests the cycle is over. A future administration can — and, on this track record, likely will — revisit the question again.
If you have questions about how to navigate this or future worker classification regulations, Hanson Bridgett’s Transportation and Logistics and Labor and Employment practice groups are available.
1 Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act, 91 Fed. Reg. 9932 (proposed Feb. 27, 2026).
2 United States v. Silk, 331 U.S. 704 (1947); Rutherford Food Corp. v. McComb, 331 U.S. 722 (1947).
3 See, e.g., Real v. Driscoll Strawberry Assocs., Inc., 603 F.2d 748, 754 (9th Cir. 1979); Parrish v. Premier Directional Drilling, L.P., 917 F.3d 369 (5th Cir. 2019).
4 See id. at 380.
5 See 86 Fed. Reg. 1170, 1172 (noting that the Wage and Hour Division has published numerous opinion letters).
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