An ABI Committee Newsletter
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| Vol 20, Num 2 | June, 2026
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by Tatyanah M. Brehouse and John Kettering
Pietragallo Gordon Alfano Bosick & Raspanti, LLP, Pittsburgh
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On Feb. 26, 2026, the Department of Labor (DOL) announced a proposed rule, “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act.” The proposal would replace the 2024 analysis for determining whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA).
Specifically, the proposed rule would return the analysis to a focused “economic reality” test looking at a worker’s economic dependency on a company, rejecting the 2024 “totality of the circumstances analysis.” The 2024 approach identified six factors to be weighed in determining a worker’s status, but did not identify any core factors or assign any weight to the factors. The six factors under the 2024 rule are:
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- Opportunity for profit or loss depending on managerial skill: If the worker exercises business acumen to affect their earnings, this would suggest independent contractor status.
- Investments by the worker and the potential employer: If the worker's investment is capital or entrepreneurial in nature, this would suggest independent contractor status.
- Degree of permanence of the work relationship: A defined period or non-exclusive relationship allowing the worker to seek other revenue streams suggests independent contractor status.
- Nature and degree of control: The lack of the employer's control over performance, scheduling, and supervision, including technological monitoring, suggests independent contractor
status.
- Extent to which the work performed is integral to the employer's business: When the work performed is not critical, necessary, or central to the business's core business, it suggests independent contractor status.
- Skill and initiative: The worker using specialized skills in an entrpreneurial manner suggests independent contractor status.
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