DOL Issues Proposed Rule on Worker Classification

The U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) published a proposed rule concerning the process and criteria used to determine a worker’s classification as an employee or an independent contractor under the Fair Labor Standards Act and related federal laws.

This proposed rule would rescind DOL’s 2024 Final Rule addressing the classification of independent contractors and replace it with an analysis for employee classification similar to the one adopted by DOL in 2021. The classification analysis in the proposed rule would:

Apply an “economic reality” test to determine whether a worker is in business for himself or herself as an independent contractor or is an employee economically dependent on an employer for work;
Identify and explain two “core factors” to help determine if a worker is economically dependent on an employer for work or in business for him- or herself:
The nature and degree of control over the work; and
The worker’s opportunity for profit or loss based on initiative and/or investment;
Identify other factors to help determine a worker’s status as an employee or independent contractor, 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;
Advise that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible; and
Provide eight fact-specific examples applying the factors to real-life circumstances.

Last year, DOL published guidance advising WHD field staff on the analysis to apply when determining employee or independent contractor status. That guidance instructed agency investigators to stop applying the analysis from DOL’s 2024 rule in current enforcement matters but, instead, rely on the principles outlined in Field Assistance Bulletin No. 2025-1 and Fact Sheet #13.

The 2024 final rule prompted a number of federal lawsuits challenging its legality. As a result, DOL said last year that it would be “…reconsidering the 2024 Rule, including whether to rescind the regulation.”

DOL will be accepting comments on this proposed rule through 11:59 pm (ET) April 28, 2026.

< Previous Post

Next Post >

ODP Updates the MAAC on Paid Relative Caregiving & Travel Limitations

By Tim Sohosky • May 29, 2026

On Thursday, May 28, the Office of Developmental Programs (ODP) provided an update to the Medical Assistance Advisory Committee (MAAC) regarding current policies and upcoming regulatory changes following a recent Commonwealth Court decision. On February 17, 2026, the PA Commonwealth Court issued a decision in Dunkelberger v. Department of Human Services that determined that ODP’s limitations on provider model services (specifically the 40/60-hour caps and 90-day travel maximums) were null and void. The decision was based on process rather than policy validity; the Court found that these limitations were not properly promulgated as regulations in accordance with the Commonwealth Documents Law and Regulatory Review Act. To maintain a balanced approach between flexibility and oversight, ODP is moving forward with the following actions: Regulatory Amendments: ODP will amend regulations to establish formal authority for setting service delivery limits that support individual welfare and program integrity. Self-Directed Model Agreements: ODP has already modified agreements for self-directed models to clarify limits on overtime, combined relative service provision, and travel restrictions. Travel Restrictions: Due to the inability to monitor services effectively over long distances, service provision will now be limited to Pennsylvania and contiguous states. Waiver Changes: ODP will seek modifications through the amendment process to the Consolidated, P/FDS, Community Living, and Adult Autism Waivers to include: New requirements for agencies providing IHCS and Companion services to disclose a DSP's relationship to participants; and Strengthened programmatic oversight and integrity measures. Life Sharing Alternative: For participants requiring more than 60 hours of paid care from a relative, the Life Sharing (24/7) service model remains the recommended alternative. ODP anticipates a public comment period for these proposed waiver changes beginning in January 2027.

Two men with intellectual disabilities working happily on a tablet.

Shapiro Administration's Strategic Investments in ID/A Community Lead to Highest Number of Pennsylvanians Ever Served in HCBS

By Tim Sohosky • May 28, 2026

Press Release from DHS : Published May 27, 2026

ODP Provides Updates to PBC 2026/27 Residential Pay-for-Performance

By Cathy Barrick • May 28, 2026

The Office of Developmental Programs (ODP) has shared ODPANN 26-039 . The purpose of this communication is to provide updated details about the Residential Performance-Based Contracting (PBC) Pay-for-Performance (P4P) initiatives for Fiscal Year 2026/27. Updates are provided in red . Please review the announcement for more details. Visit here to access the Pay for Performance (P4P): Residential Rural Capacity Expansion Plan template .