Last week, the Department of Labor announced that it is pausing enforcement of the Biden-era rule on independent contractors, with plans for a repeal. 

“Agency investigators are directed not to apply the 2024 rule’s analysis in current enforcement matters,” according to a press release dated May 1. “This approach provides greater clarity for businesses and workers navigating modern work arrangements while legal and regulatory questions are resolved.”

RELATED: Federal Government Releases Confusing New Independent Contractor Rule

A variety of business groups, including PPAI, have opposed the rule, with several arguing that it creates hardships for businesses and filing lawsuits asking the agency to repeal it.

“Plaintiffs and their members continue to be saddled with increased costs, reduced flexibility, legal uncertainty, and rising litigation costs from the Rule,” argues a brief filed April 23 by the Coalition for Workforce Innovation, a business group that represents dozens of companies that rely on independent contractors, such as Uber and Lyft.

The current rule was enacted in January 2024 and amended a 2021 rule enacted late in the first Trump administration. CWI originally filed suit challenging the 2021 rule and amended its complaint to challenge the new rule in March 2024.

  • The DOL rule was intended to provide guidance to avoid improperly classifying an employee as an independent contractor, potentially denying them rights such as minimum wage and overtime pay.
  • The rule has created problems for the promotional products industry, as a significant portion of promo’s salesforce intentionally consider themselves to be independent.
  • PPAI took a public stance against the proposed rule even before it was adopted, arguing that the promo industry has been unfairly lumped with other industries in which workers are commonly misclassified as independent contractors against their wishes.
  • PPAI members expressed support for the Modern Worker Empowerment Act during LEAD in April. This bill would amend the Fair Labor Standards Act and aims to provide a clear definition that is more favorable to independent workers.

ICYMI: LEAD 2025: Supporting The Modern Worker Empowerment Act

The DOL press release emphasizes that the new guidance “does not change existing regulations but reflects how the department is allocating enforcement resources” while it reviews the 2024 rule.

Justin Barnes and Jeffrey Brecher, attorneys writing for Law360, say that for now, the 2024 rule remains in effect and “What happens next is uncertain” but “it is unlikely that the DOL will actively enforce the 2024 rule. Further, they suggest that the agency will not defend the Biden-era rule and to expect new rulemaking rescinding it.

For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.