DOL’s sudden halt on 2024 contractor rule leaves businesses in limbo

Businesses and workers are once again grappling with regulatory whiplash as the U.S. Department of Labor (DOL) abruptly halted enforcement of its 2024 independent contractor rule on May 1, 2025.

This sudden pivot, detailed in a Field Assistance Bulletin (FAB No. 2025-1), signals another turn in the long-standing “tennis match” over worker classification under the Fair Labor Standards Act (FLSA), creating fresh operational uncertainties. The Wage and Hour Division (WHD) will instead revert to older guidance while it reconsiders the Biden-era rule.

Policy Pendulum: This latest development extends what HRDive describes as a “regulatory see-saw that dates back several election cycles.” The 2024 rule, which took effect in March 2024 and aimed for a “totality-of-the-circumstances” framework, had itself replaced a 2021 Trump administration rule perceived as more business-friendly. “The back-and-forth over different administrations’ DOL rules can leave one’s head spinning,” observed analysts at Foley & Lardner LLP.

Official Justification: The DOL explained in its announcement that because “a number of lawsuits are pending in federal courts challenging the legality of the rule,” its WHD “will no longer apply the 2024 rule’s analysis.” Donald Harrison III, Acting Administrator for the WHD, stated the DOL “is currently reviewing and developing the appropriate standard for determining FLSA employee versus independent contractor status.” For now, investigators will rely on Fact Sheet #13 (from July 2008) and the reinstated Opinion Letter FLSA2019-6, which the Biden DOL had previously withdrawn.

Industry Welcomes Pause: Business groups, who had challenged the 2024 rule arguing it created “increased costs, reduced flexibility, legal uncertainty, and rising litigation costs” according to the Coalition for Workforce Innovation, lauded the non-enforcement. “This week’s announcement by the Department is another example of how the Trump Administration is reversing growth-inhibiting regulations issued during the Biden administration,” said Marc Freedman, vice president of the U.S. Chamber of Commerce’s Employment Policy Division. American Trucking Associations President Chris Spear called it “a crucial first step toward returning to the common-sense standard set forth in President Donald Trump’s first term.”

Uncertainty Persists: Despite the DOL’s enforcement pause, the 2024 rule technically remains in effect for private litigation, creating what Duane Morris analysts term “a notable gap between the law as it stands… and the agency’s enforcement practices.” This situation, which legal experts like Greg Feary described to TTNews as “temporary,” means employers may face differing standards and should consult counsel, especially considering varying state laws like California’s ABC test, as highlighted by Robinson Bradshaw. The Economic Policy Institute noted the reinstated Trump-era opinion letter gives gig economy apps wide berth.

Future Rule Expected: The DOL’s May 1 bulletin “is both a temporary return to older classification standards for enforcement purposes and a sign of likely future DOL rulemaking to rescind and replace the 2024 rule,” according to Duane Morris. Analysts at Littler.com concur, stating “it is virtually certain that the DOL will dramatically change or replace the rule when its review is completed.” This anticipation of further change underscores the ongoing instability for businesses trying to navigate worker classification.