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Employment Law Update: U.S. Department of Labor Resurrects Guidance Classifying Workers as Independent Contractors

The U.S. Department of Labor’s Wage and Hour Division (“DOL”) under the Trump administration has doubled down on its commitment to the traditional economic-realities analysis for determining whether workers are employees or independent contractors under the Fair Labor Standards Act (“FLSA”). Like many issues subject to federal agency interpretation, the analysis surrounding the classification of employees versus independent contractors is subject to the swinging pendulum of who resides in the White House.
 
On May 1, 2025, the DOL issued a field bulletin signaling that it would no longer apply the 2024 rule, promulgated under the Biden Administration, and directing investigators to evaluate worker status using the seven-factor framework outlined in the George W. Bush-era Fact Sheet #13 (July 2008). One day later, on May 2, 2025, the DOL formally reinstated Opinion Letter FLSA2019-6—now redesignated as Opinion Letter FLSA2025-2. 
 
This Opinion Letter concludes that service providers who obtain gigs through a virtual marketplace company (“VMC”) are, under the facts presented, independent contractors. This guidance departs from Biden-era guidance, viewing such gig workers as employees. These recent agency pronouncements, taken together, provide updated guidance to businesses that engage freelancers, gig workers, or other non-traditional talent.
 
Fact Sheet #13 reiterates seven non-exclusive factors, none of which is dispositive:
   
The DOL stresses that the analysis focuses on the totality of the circumstances and that window-dressing, such as written contracts labeling a worker an “independent contractor,” the method of pay, or where the work is performed, carries little weight if the economic realities weigh in favor of employee status. 
 
Practical Steps for Employers

1. Audit Now, Using the Seven Factors. Map each engagement against the Fact Sheet #13 criteria, documenting facts that establish worker autonomy, capital investment, and entrepreneurial opportunity.
2. Align Practices with Policies. Written agreements should accurately reflect day-to-day realities: true discretion over hours, freedom to work for competitors, absence of mandatory training, and responsibility for tools and expenses.
3. Limit Reserved Rights. Retain only those controls necessary to protect quality, safety, or brand reputation. Overly prescriptive instructions, especially on scheduling, performance methods, or discipline, can jeopardize contractor status.
4. Preserve Evidence of Independence. Maintain proof that contractors advertise services broadly, hold their own insurance, bear financial risk, and work for multiple clients.
5. Train Supervisors. Front-line personnel must understand the boundaries of permissible interaction with contractors. Routine supervision or performance evaluation is something the DOL will look for because of how it negates the concept of an independent contractor.   
6. Monitor State Law. Some jurisdictions impose stricter tests. Adopt the most protective standard that applies to your workforce.

The DOL’s renewed focus on economic reality, coupled with the resurrection of a platform-worker-friendly opinion letter, signals that properly structured gig and freelance arrangements can withstand agency scrutiny. Nevertheless, the practical dividing line between contractor and employee status remains fact-intensive and nuanced. Businesses that lean heavily on non-traditional labor models should seize this moment to recalibrate their practices, shore up documentation, and train personnel before the DOL, or a private plaintiff, comes knocking.
 
For assistance conducting an internal classification audit or responding to a governmental wage and hour audit or inquiry, please do not hesitate to contact Whiteford’s Labor and Employment practice group.

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