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In 2026, the Department of Labor (DOL) has signaled a shift in its enforcement position on independent contractor classification under the Fair Labor Standards Act (FLSA), potentially making it easier for businesses to classify workers as contractors.
The DOL is no longer enforcing the 2026 independent contractor rule and will instead rely on a more traditional "economic reality" test for determining worker status. This shift may lead to more businesses classifying workers as independent contractors at the federal level.
Instead of the 2026 rule, the DOL will use the traditional "economic reality" test, which considers various factors like the degree of control by the employer, the permanency of the relationship, and the worker's opportunities for profit or loss.
In place of the 2026 Rule, the DOL will apply the prior “economic realities” test as described in Fact Sheet #13 (2008) and Opinion Letter FLSA2019-6. This framework focuses on whether the worker is economically dependent on the employer (and, thus, an employee) or in business for themselves (and, thus, an independent contractor).
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The DOL's decision to suspend enforcement of the 2026 Rule means WHD investigators will evaluate independent contractor status under the FLSA using the more familiar, broad "economic reality" test the DOL has used for decades, which is widely viewed as more employer friendly.
Although no new legal duties are being imposed, employers should continue to carefully assess how workers actually function in the job - not just how the job is written in contracts, job descriptions, or titles. While the 2026 Rule technically remains in place, the DOL WHD is not enforcing it. For now, the DOL is returning to its traditional interpretation of employee v. independent contractor status under the FLSA, while awaiting the outcome of ongoing litigation and considering potential rule changes.
Although no new legal duties are being imposed, employers should continue to carefully assess how workers actually function in the job - not just how the job is written in contracts, job descriptions, or titles. While the 2026 Rule technically remains in place, the DOL WHD is not enforcing it. For now, the DOL is returning to its traditional interpretation of employee v. independent contractor status under the FLSA, while awaiting the outcome of ongoing litigation and considering potential rule changes.
Margie Faulk is a senior level human resources professional with over 15 years of HR management and compliance experience. A current Compliance Advisor for HR Compliance Solutions, LLC, Margie, has worked as an HR Compliance advisor for major corporations and small businesses in the small, large, private, public and Non-profit sectors. Margie has provided small to large businesses with risk management strategies that protect companies and reduces potential workplace fines and penalties from violation of employment regulations. Margie is bilingual (Spanish) fluent and Bi-cultural.
Margie’s area of expertise includes Criminal Background Screening Policies and auditing, I-9 document correction and storage compliance, Immigration compliance, employee handbook development, policy development, sexual harassment investigations/certified training, SOX regulations, payroll compliance, compliance consulting, monitoring US-based federal, state and local regulations, employee relations issues, internal investigations, HR management, compliance consulting, internal/external audits, and performance management.
Margie is a speaker and accomplished trainer and has created and presented compliance seminars/webinars for over 16 US and International compliance institutes. Margie has testified as a compliance subject matter expert (SME) for several regulatory agencies and against regulatory agencies, thank goodness not on the same day. Margie offers compliance training to HR professionals, business owners, and leadership to ensure compliance with workplace and regulations.
Margie’s unique training philosophy includes providing free customized tools for all attendees. These tools are customized and have been proven to be part an effective risk management strategy. Some of the customized tools include the I-9 Self Audit. Correction and Storage program, Ban the Box Decision Matrix Policy that Employers can provide in a dispute for allegations, Family Medical Leave Act (FMLA) Compliance Guide, Drug-Free Workplace Volatile Termination E-Book and other compliance program tools when attendees register and attend Margie’s trainings.
Margie holds professional human resources certification (PHR) from the HR Certification Institution (HRCI) and SHRM-CP certification from the Society for Human Resources Management. Margie is a member of the Society of Corporate Compliance & Ethics (SCCE).
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