On February 26, 2026, the Department of Labor (DOL) and National Labor Relations Board (NLRB) announced proposed rules to formally rescind Biden-era versions of the independent contractor and joint employer tests and resume using more business-friendly versions of these tests previously adopted during the first Trump administration. How these agencies utilize these tests will provide employers with insight and guidance as to how the administration will analyze these issues, though each Circuit Court will rely on its own precedents in litigation.
The Independent Contractor Test
The independent contractor test is used to determine a worker’s status as an employee covered under the Fair Labor Standards Act (FLSA). The DOL’s proposed rule will formally reinstate the “economic reality” test previously adopted at the end of Trump’s first term, which focuses on whether a worker economically depends on the employer for work to determine if the worker is an employee or independent contractor for purposes of the FLSA.
Under the economic reality test, two “core factors” are given greater weight: 1) the nature and degree of control over the relevant work and 2) the worker’s opportunity for profit or loss based on initiative or investment. If these two “core factors” do not align, then additional factors will be considered, including the amount of skill required for the work, degree of permanence of the working relationship, and whether the work is part of an integrated unit of production. These factors are not exhaustive, however, and no single factor will control.
The DOL will receive public comments on the rule until April 28, 2026. If the proposed rule is adopted, it will likely result in more findings of workers as independent contractors who are excluded from the FLSA’s minimum wage and overtime requirements.
The Joint Employer Test
The NLRB’s joint employer test is used to determine whether two or more entities can be considered employers of the same workers for the purposes of collective bargaining under the National Labor Relations Act. The NLRB’s proposed rule would return to an earlier version of the joint employer test adopted in 2020 that focused on an employer’s actual exercise of control over an employee. This version focused on four factors, including whether the employer:
- Hires or fires the employee;
- Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
- Determines the employee’s rate and method of payment; and
- Maintains the employee’s employment records.
This announcement had been anticipated since President Trump returned to the White House in January 2025 but had been delayed due to the NLRB not regaining a quorum until the beginning of 2026. Now that the NLRB has resumed acting with a majority of members appointed by President Trump, more employer-friendly decisions are expected to be issued over the remainder of the current term.
For more information regarding these changes, please contact Nicholas J. Golding or any member of the KDDK Labor and Employment group.
