The US Department of Labor (DOL)has proposed a new rule that will formally rescind the harmful Biden Administration Independent Contractor rule.
The 2024 DOL independent contractor rule, enacted under the Biden Administration, that went into effect in March 2024, altered guidelines for classifying workers, often resulting in more workers being classified as employees, thereby limiting independent contractor flexibility while increasing compliance costs.
While the examples are many, one estimate suggested that reclassifying app-based delivery and rideshare drivers as employees could have resulted in $31 billion in lost income for approximately 3.4 million gig workers.
The Trump administration has already eased the stringent and punitive rules, but the DOL is now pursuing a final fix.
Karen Kerrigan, CEO and President of the Small Business & Entrepreneurship Council (SBE Council), has issued a statement welcoming the change. She said the update is an important step to restoring clarity and long-standing principles under the Fair Labor Standards Act.
“For startups and small businesses, this is important. Independent contractors are vital across industries, from construction and logistics to technology, health care, and professional services, among many others. Startups and small businesses often rely on specialized, project-based talent to scale efficiently and stay competitive. A more realistic, precedent-based standard provides businesses with clearer guidance while reducing unnecessary compliance risk and costly litigation,” said Kerrigan. “For the vast majority of independent contractors, how they decide to work is a choice based on personal financial needs, family responsibilities, and professional goals.”
