The Labor Department on Thursday released a new independent contractor rule to determine whether workers are employees or independent contractors under the Fair Labor Standards Act.
"While we are still carefully reviewing the rule, we are hopeful the Department has meaningfully addressed the serious concerns raised about the prior rule," Dale Brown, president and CEO of the Financial Services Institute, said Thursday in a statement. "Our members have chosen the independent contractor model — many making the switch from an employee model — so that they can build their own businesses and better serve their clients. It is crucial that advisors' ability to choose the business model that best meets their professional goals and their clients' needs is preserved."
Labor filed the rule at the Office of Management and Budget for review in early January. The OMB review took 30 days.
Labor said in a statement that it is taking comments on the new plan until April 28. "Once the comment period closes, the department will consider the input received during the comment period on its proposal as it develops a final rule," a Labor spokesperson told ThinkAdvisor Thursday.
The proposed rule "would rescind the department'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 the department in 2021," Labor said in the statement. "Consistent with Supreme Court and federal circuit court precedent, the proposed rule would make it easier to properly differentiate between employees with the protections under the Fair Labor Standards Act and those workers who work as independent contractors."
FSI and its coalition partners sued Labor over the 2024 rule, asking the court to declare it invalid, prohibit the rule's implementation and allow the 2021 independent contractor rule to remain in effect. On April 29 of last year, the court granted Labor's motion for a temporary suspension to provide DOL sufficient time to "reconsider the regulation."
The 2024 rule went into effect in March 2024.
In May 2025, Labor issued a field assistance bulletin directing agency investigators not to enforce the Biden-era independent contractor rule, Employee or Independent Contractor Classification Under the Fair Labor Standards Act. FSI cheered the move.
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