The U.S. Department of Labor (DOL) announced on Friday that, based on a document to be published in the Federal Register,it will rescind the independent contractor rule issued by the Biden administration in 2024. The Department's Wage and Hour Division plans to return to the "economic reality test" to determine whether workers are independent contractors under the Fair Labor Standards Act.

The economic reality test weighs two core factors to determine whether the work is a person's primary source of income: first, the degree of control the worker has over their work, and second, the opportunity for profit or loss based on initiative, investment, or both.

This approach largely restoresa final rule adopted in 2021, which was implemented duringthe first term of President Donald Trump.

The DOL also stated that it will apply this analytical framework when enforcing the Family and Medical Leave Act and the Migrant and Seasonal Agricultural Worker Protection Act.

The rule will replace the Biden-era framework used to determinewhether a worker is an independent contractor or an employee. At that time,the Society for Human Resource Management (SHRM) stated that the 2024 rule"fueled ambiguity and discouraged businesses from providing necessary training to independent workers, which is detrimental to both parties."

Major trucking associations welcomed the move

Trucking groups expressed support for the upcoming change.

The American Trucking Associations (ATA) stated that the measure willrestore the independent contractor definition used during Trump's first term. The association criticized the Biden administration's modification of the definition, calling it "opaque and deliberately confusing," aimed at "depriving self-employed individuals of the freedom to choose to work as independent contractors."

Previously, multiple trucking groups had sued the DOL over the Biden administration's 2024 rule, fearing it woulddisrupt owner-operator arrangementsand couldturn these business partners into employees。

The Owner-Operator Independent Drivers Association (OOIDA) also believes the new proposal aligns with the needs of its members and traditional trucking models.

"Today's proposal is largely similar to the 2021 rule, ensuring that owner-operators can continue to work under their existing arrangements with carriers without fear of being reclassified as employees," said Colin Long, OOIDA's director of government affairs, in a statement on Thursday.

OOIDA stated that the previous rule contained a "problematic speed-limiter loophole" that "could allow carriers to micromanage independent contractors."

The association said it looks forward to reviewing the details of the proposal to ensure that independent truck drivers are not controlled like employees.

Why replace the 2024 final rule

In a press conference Thursday morning, a Wage and Hour Division administrative official said it was important to replace the 2024 final rule—not just rescind it—because the DOL was concerned that the multiple economic reality factors described in the 2024 rule "were seen as setting a higher and... broader threshold than the standard used by the U.S. Supreme Court and other courts in determining independent contractor status."

Ultimately, the spokesperson said, the goal is to provide "clearer guidance for businesses and workers" when determining independent contractor status during the hiring process.

"Properly implemented as proposed, it will reduce the number of misclassifications in both directions," he added.

What the proposed rule means for workers and employers

Is the proposed regulation less friendly to workers? It may be hard to say.

"Commentators like to call the new rule 'employer-friendly' and the 2024 rule 'employee-friendly,' but in my experience, that oversimplifies and ignores the nuances presented in these situations," Nisha Verma, a labor and employment attorney at Dorsey & Whitney, told HR Dive via email.

Verma said workers might actually prefer the 2026 independent contractor classification because they work with multiple companies and do not want to be "tied to one company." She added that individuals often make these choices due to layoffs and economic conditions, so the DOL's proposal "comes at the right time."

"I would like to see worker choice play a greater role in the future analysis, especially because workers know more than businesses about their tax situations, their ability to earn other income, and their need for flexibility," Verma said.

The 60-day public comment period begins Friday and ends April 28. After that, the DOL must adopt a final rule.

This article was contributed to by Trucking Dive reporter David Taube.