DOL Proposes to Simplify Independent Contractor Rule
March 03, 2026
Last week, the U.S. Department of Labor (DOL) announced a proposed rule aimed at providing greater clarity for employers and workers in determining whether a worker should be classified as an employee or an independent contractor under the Fair Labor Standards Act (FLSA) and related federal laws.
If finalized, the proposal would rescind the department’s 2024 independent contractor rule and replace it with an employee classification framework similar to the standard adopted in 2021. The proposed approach is intended to simplify and clarify the distinction between employees covered by FLSA protections and individuals properly classified as independent contractors.
On Feb. 5, NDA staff met with DOL officials and the White House’s Office of Management and Budget to urge the administration to rescind the 2024 rule and return to the 2021 simplified approach.
Benefits for demolition contractors: Simplified independent contractor rules will help support predictable subcontractor relationships, preserve legitimate project-based and specialized work arrangements, and reduce administrative and compliance costs that can disrupt active jobsites.
The analysis in the department’s proposed rule would:
- Apply an “economic reality” test to determine whether a worker is in business for themselves as an independent contractor or is an employee economically dependent on an employer for work.
- Identify and explain two “core factors” to help determine if a worker is economically dependent on an employer for work or in business for him or herself:
- The nature and degree of control over the work.
- The worker’s opportunity for profit or loss based on initiative and/or investment.
The proposed rule will now have a 60-day comment period. NDA will be submitting comments on behalf of the demolition industry.