The U.S. Department of Labor’s Wage and Hour Division issued May 1 new guidance to field workers for determining whether a person is an employee of a company or an independent contractor. The new guidance in effect tosses a 2024 rule instituted by the Biden administration that has been subject to litigation. In place of the 2024 rule, the Wage and Hour Division intends to use a 2008 Fact Sheet and a 2019 Opinion Letter when interpreting the Fair Labor Standards Act.

“For enforcement purposes, there is little substantive difference between the 2024 Independent Contractor Rule and the seven-factor test described in Fact Sheet #13,” the National Association of Home Builders said. “This new guidance doesn’t change builder best practices, but indicates that the administration may redefine independent contractors in the near future. The main difference is that the guidance standard examines the extent to which the worker’s business organization and operation are independent from the principal, while the 2024 Independent Contractor rule does not consider business structure.”