Labor Department stops enforcing Biden's gig worker protection rule

On May 1, 2025, the DODepartment of Labor's Wage and Hour Division announced it will no longer enforce the 2024 independent contractor rule. Acting Administrator DMDonald M. Harrison III issued a Field Assistance Bulletin directing investigators to use the older standard from the first Trump administration.

The 2024 Biden rule established a comprehensive six-factor economic realities test to determine whether workers are employees or independent contractors. The test considered opportunity for profit or loss, investment, permanence of relationship, employer control, whether work is integral to business, and worker skill and initiative.

The new guidance directs WHD field staff to analyze employment status using Fact Sheet #13 and Opinion Letter FLSA2019-6, which focus on just two core factors: control over work and opportunity for profit or loss. This streamlined approach makes it easier to classify workers as independent contractors.

The Biden-era rule took effect in March 2024 despite legal challenges from BGbusiness groups. It was designed to address what the Biden administration saw as growing worker exploitation in the gig economy, offering protections like minimum wage and overtime pay.

The 2024 rule has not been formally rescinded and technically remains in effect for private litigation. But without DOL enforcement, workers must pursue individual lawsuits to challenge misclassification, which few have resources to do.

According to the Trump administration's regulatory agenda, the DOL plans to formally rescind the current rule and publish a proposed replacement in September 2025. The replacement may resemble the 2021 rule from the first Trump term that was never implemented.

A recent update shows the White House received the proposed rule but provided no details on its contents or publication date. The formal rescission will end any private litigation based on the 2024 standard.

Workers classified as independent contractors pay both halves of Social Security and Medicare taxes, can't access unemployment insurance, and don't qualify for workers' compensation. Companies save approximately 30% in labor costs through contractor classification.