The DOL Eased Up on Contractor Rules — But Don’t Get Too Comfortable

by Lezlee Hatch | June 2025

The Department of Labor just hit the brakes on enforcing the stricter 2024 independent contractor rule. Sounds like good news, right? Kind of — but don’t toss your compliance checklist just yet.

🚫 What This Doesn’t Mean:

• You’re not off the hook in private lawsuits — the 2024 rule still applies there.

• States like California, New York, and Massachusetts are still cracking down hard.

• You can’t just call someone a 1099 and hope for the best — it doesn’t work that way.
  

✅ What Did Change:

The DOL is going back to the old-school “economic realities” test to decide if someone’s a contractor or an employee. This approach gives more flexibility to businesses that use gig workers or freelancers.

🧠 So, What Should You Be Doing?

• Audit your 1099s – Make sure they’re truly independent. If they’re not, fix it now before it turns into a bigger problem.

• Document everything – If you’re classifying someone as a contractor, keep records to back it up.

• Know your state rules – Some states are way tougher than the federal government.

• Update your contracts – Make sure they clearly outline independence and scope of work.

  
  

⚠️ Why It Matters:

Messing this up can cost you big: unpaid overtime, IRS penalties, missed benefits, and lawsuits.

Plus, you could lose legal protections if you misclassify someone.

The feds might be easing off, but your state (and the courts) probably aren’t. Keep your compliance tight, your contracts clean, and don’t let the word “contractor” get you in trouble.