By Sean A. Monson
We Got One Prediction Right! Sort Of. The Trump Administration Changes Standard for Determining Independent Contractor Status Under the FLSA for Department of Labor Investigations
After the election results of November 2024, I considered what changes in the law we might see with the change in presidential administrations. I made some predictions. After the first 100 days of the second Trump administration, some of my predictions came to pass, and others did not. One prediction just recently moved from the “did not come to pass” to the “came to pass” category. Sort of.
On May 1, 2025, the Wage and Hour Division of the Department of Labor issued a memorandum for its regional administrators and district directors discussing the factors that should be considered in determining whether a worker is an independent contractor, and therefore, not subject to the Fair Labor Standards Act’s (FLSA) requirements. A copy of the memorandum is linked here. This area has seen a lot of turbulence recently: The Obama administration adopted a standard; the first Trump administration changed it (to make it easier for companies to classify someone as an independent contractor); and the Biden administration changed the standard back to something similar to the Obama standard. Well, the second Trump administration has changed it again.
When I predicted that the second Trump administration would put its hands in the cookie jar a second time and change the standard, I thought that the Department of Labor would simply reinstate the first Trump administration’s standard. I was wrong. If you recall, the first Trump standard emphasized the degree of control that the company exercised over the worker and the opportunity for the worker to make a profit or loss. This time around, the Trump administration has turned the clock back to 2008. A standard set forth in Fact Sheet #13 (2008) (linked here) now governs the Department of Labor’s determination of whether a worker is an independent contractor under the FLSA. The relevant guidance from that Fact Sheet is as follows:
The U.S. Supreme Court has on a number of occasions indicated that there is no single rule or test for determining whether an individual is an independent contractor or an employee for purposes of the FLSA. The Court has held that it is the total activity or situation which controls. Among the factors which the Court has considered significant are:
1) The extent to which the services rendered are an integral part of the principal's business
2) The permanency of the relationship
3) The amount of the alleged contractor's investment in facilities and equipment
4) The nature and degree of control by the principal
5) The alleged contractor's opportunities for profit and loss
6) The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor
7) The degree of independent business organization and operation
There are certain factors which are immaterial in determining whether there is an employment relationship. Such facts as the place where work is performed, the absence of a formal employment agreement, or whether an alleged independent contractor is licensed by State/local government are not considered to have a bearing on determinations as to whether there is an employment relationship. Additionally, the Supreme Court has held that the time or mode of pay does not control the determination of employee status.
Now, are you ready for a big plot twist?! The May 2025 Memo expressly states that it only relates to investigations by the Department of Labor and that “[u]ntil further action is taken” the Biden-era rule “remains in effect for purposes of private litigation.” Thus, as of now, there are two standards governing the determination of whether someone is an independent contractor under the FLSA. One for purposes of Department of Labor investigations and one for purposes of private litigation. It makes my head hurt. As a reminder, the Biden-era rule focuses on whether the worker is dependent on the company for the type of work being done, not income. The Biden-era rule focuses on the following six factors in making that determination:
1) The worker’s opportunity for profit or loss based on managerial skill
2) Investments by the worker and the potential employer
3) The degree of permanence of the work relationship
4) The nature and degree of control over performance
5) The extent to which the work performed is an integral part of the employer’s business
6) The worker’s skill and initiative
While the Biden-era rule and its focus on economic dependence for work lives to fight another day, it is likely to be a short stay of execution. It is only a matter of time before the Biden-era standard is put out to pasture and the Department of Labor adopts the 2008 rule for all purposes.
Protections for LGBTQ Persons Rolled Back
In response to the Supreme Court’s decision in Bostock v. Clayton County, recognizing trans-gender status and sexual orientation as protected under Title VII of the 1964 Civil Rights Act, the EEOC under the Biden administration issued guidance stating that various behaviors directed towards gay and transgender individuals violated Title VII. Such behavior included disclosing someone’s sexual orientation or gender identity without their permission (“outing”), repeated and intentional use of a pronoun inconsistent with an employee’s known gender identify (“misgendering”), or denial of access to a bathroom consistent with an individual’s gender identity.
The Trump administration issued an executive order rejecting this guidance. And on May 15, 2025, a federal court in Texas blocked the Biden-era guidance nationwide asserting that it was overreach by the Biden administration. The Trump administration touted the ruling on the EEOC’s website and will, it is fair to say, not appeal it. The EEOC will likely issue new guidance on this issue in the near future. It is a current “hot button” issue for the Trump administration.
The Revenge of “Sorry Not Sorry”
The lawyers in Parsons’ employment law department do a lot of teaching at employment law seminars throughout the Intermountain West. One of my favorite cases to talk about in such trainings over the last couple of years has been the “sorry, not sorry” case. For those not familiar with this case, it is a case out of California in which a female employee working at a prison complained about another male prison posting violent, sexist and really horrible stuff about her (including veiled threats to kill her) on his Instagram account. The employer’s response was infamously “sorry, not sorry” as the conduct happened online and the employer determined that conduct occurring online, outside the workplace, is not actionable.
The district court granted the employer summary judgment, dismissing the case. The Ninth Circuit Court of Appeals reversed finding that “even if discriminatory or intimidating conduct occurs wholly offsite, it remains relevant to the extent it affects the employee’s working environment.” The Ninth Circuit sent the case back to the district court for trial. Parsons’ lawyers have used this case to remind employers that unlawful harassment is not limited to the four corners of the workplace. It can also happen online, and employers should make sure that their anti-harassment policies reflect that fact.
In another huge plot twist, let’s talk about what happened at trial. Each side presented evidence, and the case was sent to the jury. The jury found that the plaintiff was subject to the conduct she complained about because of her gender (i.e. she had been harassed because of her gender) and that the conduct was unwelcome by her. But what is the final element of an unlawful harassment claim? It is that the conduct complained of must be sufficiently severe or pervasive to alter the terms and conditions of the employee’s employment. And that, the jury found, did not happen. So the employer won and the plaintiff recovered nothing. You have heard Parsons’ lawyers repeatedly say that litigation is unpredictable. This result is Exhibit A, B, C and D.
Pregnancy Related Conditions Do Not Include Abortions According to Louisiana Judge
Previous updates have highlighted the fact that the EEOC’s existing regulations, implemented during the Biden administration, state that abortions are covered under the Pregnant Workers Fairness Act (the PWFA) as “related medical conditions” of pregnancy. That meant that, under the regulations, employees who had an abortion were afforded the same leave and accommodation rights under the PWFA as pregnant workers and workers who give birth. Yesterday, a federal district court judge in Louisiana said “not so fast.” In a case brought by various Catholic organizations and the States of Louisiana and Mississippi challenging the regulation’s provision relating to coverage for abortions, the judge agreed with the plaintiffs. The judge found that if Congress intended for abortions to be covered under the PWFA, “it would have spoken clearly when enacting the statute, particularly given the enormous social, religious, and political importance of the abortion issue in our nation at this time.” In his ruling, the judge vacated the provision of the EEOC regulations stating that abortion is a “related medical condition” of pregnancy and childbirth. The rest of the regulations still stand. The judge’s order applies nationwide.
Question Corner
Day One or Day 90? Navigating Sick Leave Eligibility
By Corey J. Hunter
Q. Can we uphold our employee handbook policy that states employees are eligible for sick leave after 90 days of employment, or must we adhere to State sick leave laws that state they should be eligible upon being hired?
A. Generally, an employer must adhere to State sick leave laws requiring employees to be eligible for sick leave upon hire, even when those laws contradict employee handbook policy. But where no such law exists, an employer can likely enforce handbook policy.
Utah, for example, does not have a statewide law requiring employers to provide sick leave or requiring that sick leave, if offered, begin at hire. A Utah employer might therefore uphold a handbook policy making employees eligible for sick leave accrual or use only after 90 days of employment. Idaho likewise lacks a statute requiring sick leave, allowing employers the same flexibility.
Washington state, on the other hand, strikes a middle ground. There, sick leave must accrue beginning on the first day of employment, but employers need not permit use of sick leave until 90 days after employment commences. Colorado restricts employers to a greater degree, requiring both accrual and use of sick leave from day one.
Note that in some states, municipalities may impose additional requirements. Employers should always ensure their handbooks are tailored to the unique requirements of each state where the employer operates.
