Graphic Media Alliance

07/01/2025

4 Things Employers Need to Know About the DOL’s New Approach to Independent Contractor Classification

Source: Fisher Phillips, June 25, 2025

The DOL recently announced that it will no longer enforce the Biden-era 2024 rule that made it harder to classify workers as independent contractors, signaling a shift back toward a more flexible standard favored by manufacturers. While the 2024 rule technically remains in effect for private litigation, the DOL’s enforcement will now rely on pre-2024 “economic realities” principles. This move aligns with the Trump administration’s broader efforts to ease contractor classification rules, though manufacturers must still navigate varying state laws and remain cautious amid ongoing litigation and potential future reversals. For a deeper dive into the situation, you can read Fisher Phillips' full Insight here.

What Do Manufacturers Need to Know?

There are four key points that manufacturers should consider in light of this announcement.

1. The Use of Independent Contractors Just Got Easier: Due to the highly specialized nature of most manufacturing operations, industry employers often rely on a complex network of related independent contractors for seasonal work, equipment maintenance, logistics, or production support. The DOL’s decision to halt enforcement of the 2024 rule gives manufacturing employers more leeway to engage these workers, with whom they often enjoy longstanding and mutually beneficial relationships, with less fear of misclassification liability under federal law.

2. There’s Room for Cautious Optimism – But Risk Remains: While federal enforcement is easing, the 2024 rule still applies in private lawsuits, and some states enforce stricter tests (like California’s ABC test). Manufacturers with operations in multiple states must take care to assess classification practices on a jurisdiction-by-jurisdiction basis, even in production fundamentals and processes are static between facilities.

3. It’s Time to Audit Contractor Relationships: This is an ideal moment for manufacturers to review independent contractor arrangements, especially where the work is long-term, on-site, or closely integrated with production. Re-evaluating contracts, job scopes, and control measures can help reduce risk and align with both federal and state standards, while potentially enhancing the quality of relationships between manufacturers.

4. Be Ready to Adapt Again: Worker classification standards often shift with political changes. Manufacturers should structure contractor relationships to be flexible and well-documented – allowing them to pivot quickly if a future administration reimposes a stricter rule. Consulting counsel now can save substantial costs later.