Deciding whether to classify a worker as an employee or independent contractor can be difficult, but misclassifying employees can lead to serious legal and financial consequences. The 2024 independent contractor rule (2024 Rule) is currently not enforced, and DOL has reinstated a more lenient and flexible test than the 2024 Rule, which may allow more workers to be considered independent contractors. The NFIB Small Business Legal Center published a blog with additional details on the current test. Since May 1, 2025, DOL is evaluating independent contractor status using traditional “economic reality” principles. 

The Economic Reality Test considers: 

• The extent to which the services rendered are an integral part of the business 

• The permanency of the relationship between worker and employer 

• The amount of investment in facilities, equipment, or helpers 

• The nature and degree of control 

• Opportunities for profit and loss 

• The amount of skill, initiative, judgement, or foresight required 

While DOL has not officially rescinded the 2024 Rule, the agency has indicated that it plans to revoke the rule through formal rulemaking. In the meantime, employers can use the Economic Reality Test to assess whether a worker is an employee or an independent contractor. 

The NFIB Small Business Legal Center published a blog with more information on how to determine worker classification and the risks of misclassification. For additional guidance on worker classification, visit NFIB’s Legal Guide Series to review the recently published Guide to Independent Contractors.