Worker classification remains a recurring risk area for employers because legal analysis often changes how a relationship functions in practice, not just how it is labeled in an agreement.
As standards evolve and enforcement continues, employers may benefit from taking a fresh look at how they evaluate independent contractors, staffing relationships, and related work arrangements.
What changed about Independent Contractor Classification?
In the final days of the first Trump Administration, the Department of Labor (“DOL”) issued an independent contractor rule that significantly clarified the standards for determining contractor status and expanded the instances in which a worker could be deemed a contractor.
The Biden Administration then attempted to craft its own rule which reversed much of what the first Trump Administration had changed and inserted a “totality of the circumstances” test. In May 2025, the DOL announced it no longer would enforce the Biden-era rule.
In February 2026, the DOL announced a new rule. The new rule gives greater weight to the nature and degree of control over the work of the individual and the worker’s opportunity for profit or loss. Additionally, the new rule expands the scope of the new test to the Family Medical Leave Act and the Migrant Seasonal Agricultural Worker Protection Act. It also clarified that requiring a contractor to follow safety standards, carry insurance, or meeting legal obligations does not prove employer control under the new rule.
Why does Independent Contractor Classification matter?
Misclassification can create exposure across multiple areas at once. Depending on the facts, a worker-classification problem may raise wage-and-hour issues, tax concerns, benefits questions, unemployment or workers’ compensation implications, and overtime disputes or other employment rights.
The legal risk is only part of the issue. Classification decisions also affect business planning, onboarding, supervision, documentation, and vendor relationships. If agreements say one thing but managers operate differently in practice, the mismatch can increase the chance of challenge.
That is why employers should not rely solely on template agreements or historical assumptions. A stronger approach is to compare the written relationship against how the work is actually performed.
What Independent Contractor Classification criteria should employers review?
A practical worker-classification review may include:
- Worker classifications
- The workers “actual”
- Contractor Agreements
- Amount of control the employer exercises over the individual in reality (not based on the contract)
- Extent the individual has an opportunity to earn profits or incur losses
How can BrownWinick help?
BrownWinick can provide a worker classification review designed to help employers assess independent contractor arrangements, related agreements, staffing relationships, and areas of potential exposure.
When classification decisions are revisited proactively, employers are better positioned to reduce risk before a claim, audit, or dispute brings the issue to the surface.
Request an Employer Compliance Review today.
Additional Resources
If your organization is reviewing this issue, you may also be interested in these other compliance issues:
Form I-9 Compliance Audit: What Employers Should Review
Retirement Plan Amendments: Year-End Deadline Approaching
