DOL Proposes Another Independent Contractor Shift. Businesses Should Assume Litigation Is Coming.

On February 27, 2026, the U.S. Department of Labor’s Wage and Hour Division issued a Proposed Rule that may once again change how independent contractor status is determined under the Fair Labor Standards Act.

If finalized, this would be the third major shift in less than a decade.

The current standard took effect in 2024. Now the DOL is considering a return to the 2021 framework, with modifications.

The proposed return emphasizes two core factors:

1. The degree of control the worker actually exercises over the work; and
2. Whether the worker has a genuine opportunity for profit or loss.

The DOL’s stated reason is predictability. It argues that the 2024 “totality-of-the-circumstances” approach, where no factor carried predetermined weight, created uncertainty and discouraged legitimate independent contractor relationships. The agency believes a return to the 2021 “core factors” framework may reduce compliance costs and slightly increase independent contracting.

That is the policy argument.

The litigation reality is different.

This Is an Enterprise Risk Issue, Not a Technical HR Update

Independent contractor classification is no longer a drafting exercise. It is a balance sheet issue.

If misclassification is alleged, exposure can include:

• Unpaid wages and overtime
• Liquidated damages
• Attorneys’ fees
• Class or collective actions
• Parallel state claims under NY Labor Law
• Freelance Isn’t Free Act liability
• Retaliation claims
• Potential personal liability for owners and executives

If your revenue model relies on independent contractors, regulatory volatility does not reduce risk. It increases it.

Each swing in federal policy invites a new wave of audits, private litigation, and opportunistic claims.

Classification Risk Is Built Into How Your Business Operates

At Lieb at Law, P.C., we evaluate classification risk the way a litigator would, not the way a form agreement does.

We look at:

• Compensation and commission structures
• Control mechanisms in practice, not just on paper
• Use of technology for supervision or tracking
• Non-competes and restrictive covenants
• Termination authority
• Integration into core business functions
• How the model will appear to a jury

Independent contractor status is determined by economic reality. That reality is shaped by operations, not labels.

If your agreements say “independent contractor” but your workflows say “employee,” the contract will not save you.

Why Acting Now Matters

Public comment on the Proposed Rule is open through April 28, 2026. The final rule may look different. It may shift again in the next administration.

Waiting for regulatory stability is not a strategy.

The prudent move is to stress-test your model under both frameworks and determine:

• Where exposure exists today
• How a plaintiff’s lawyer would frame the case
• Whether your documentation aligns with actual practice
• Whether structural adjustments can reduce risk without breaking the business model

Independent Contractor Risk Audit

If your company engages independent contractors, now is the time to:

• Audit agreements and compensation structures
• Evaluate control and supervision practices
• Assess exposure under federal and state law
• Review notice, deduction, and payment compliance
• Align operational reality with legal positioning

Lieb at Law, P.C. represents businesses, founders, and executives in high-stakes misclassification and wage-and-hour litigation. We also conduct proactive classification audits designed to reduce litigation exposure before a claim is filed.

Regulatory instability is not a defense to misclassification. It is a reason to prepare.

To schedule a confidential strategy session, contact Lieb at Law, P.C.

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New NYS Law Lets Models Sue Agencies for Abuse

Effective June 19, 2025, the New York State Fashion Workers Act, A05631E, will protect New York's 180,000 fashion industry professionals--models, influencers, photographers, and stylists--from their management company's exploitation through unfair pay, sexual abuse, harassment, and discrimination.

Now, victims can bring a new lawsuit for experiencing unsafe working conditions, exploitative contracts, delayed payments, and abuse where they can collect liquidated damages (double to three times damages) and attorneys' fees. 

The Act Requires:

• A zero tolerance policy for abuse, harassment, or other forms of inappropriate behavior
• Models to receive copies of the final agreement that has been negotiated 
• Overtime payments of at least 50% higher than contracted hourly rate for work exceeding 8 hours in a 24 hour period 
• Meal breaks for jobs over 8 hours
• Liability insurance for models’ health and safety
• Management agencies commission is capped 20%
• Management agencies must utilize transparent contracts & provide copies to models
• Clear consent for the use of digital replicas
• Modeling agencies to register with the State of New York to operate

Prohibited practices that could lead to a lawsuit under the Act (plus related laws) include:

• Discrimination / harassing models on the based of sex, orientation, race, color ethnicity, national origin, disability and other categories  
• Retaliatory action against models for filing complaints
• Making power of attorney a necessary condition for entering into a contract with an agency
• Collecting signing fees or deposits from models
• Deducting fees other than agreed upon commission from models' earnings
• Renewing contracts without models' consent
• Creating, altering, or manipulating a model's digital replica using AI without models' clear written consent.

These new lawsuits are designed to close a loophole that modeling agencies have utilized to escape licensing & regulation by considering themselves management companies, rather than talent agencies, under New York State General Business Law § 171(8), known as the "incidental booking exception." 

Fed DOL Implements Multifactor Analysis for Worker Classification as Employee v. Independent Contractor

The Department of Labor (DOL) announced that on March 11, 2024, a new rule, 89 FR 1638, will go into effect restoring the multifactor analysis used by courts for decades in determining if an individual is an employee or Independent Contractor (IC) under the Fair Labor Standards Act (FLSA). 

Misclassifying workers as ICs rather than employees can result in wage claims with liquidated damages and attorneys' fees under the FLSA, which can be catastrophic for business to continue to exist. Simply, you have to get it right and ICs that are misclassified have excellent cases because liquidated damages are two (2) times the amount not received. 

This new rule is being announced because DOL had concerns about the 2021 IC Rule where it did not fully align with the FLSA's text and purpose. 

The six factors under the New Rule are:

1. Opportunity for profit or loss
2. Financial stake and nature of resources invested in the work
3. Degree of permanence of the work relationship
4. Degree of control the employer has over the person’s work
5. Whether the work is essential to the employer’s business
6. Worker’s skill and initiative

This new rule provides a consistent approach for conducting business with ICs and employes. 

You can read the Department of Labor's release on this new law here. You can read the final rule here. 

New Independent Contractor Standard Proposed by Department of Labor for FLSA

If you are interested in wage and hour claims, or better yet if you are a business owner or manager, you are going to want to read this. 

On October 13, 2022, the Department of Labor opened the comment period, which runs through November 28, 2022, for it's revised analysis to determine if an individual is an employee or an independent contractor for a wage and hour claim (i.e., misclassification claim). As a reminder, independent contractors are also known as self-employed workers and freelancers, and are considered to be in business for themselves and therefore, not entitled to minimum wages and overtime pay under the Fair Labor Standards Act (FLSA). 

However, if an employer gets this wrong, by considering an employee an independent contractor, tht employer can be subject to penalty, called liquidated damages, and more. It's a catastrophic mistake that really needs to be avoided at all costs. 

The Proposed Rulemaking is available here in full.

Comments can be made electronically at Federal eRulemaking Portal at https://www.regulations.gov.

In summary, the Proposed Rulemaking is attempting to reassert the Economic Reality Test, where "[t]he ultimate inquiry is whether, as a matter of economic reality, the worker is either economically dependent on the employer for work (and is thus an employee) or is in business for themself (and is thus an independent contractor)." In analyzing the test, the following, non-exclusive facts are generally examined, including: "the opportunity for profit or loss, investment, permanency, the degree of control by the employer over the worker, whether the work is an integral part of the employer's business, and skill and initiative." Under the Proposed Rulemaking, the Department of Labor will examine the factors in the Economic Reality Test by returned to a totality-of-the-circumstances analysis rather than focusing on core factors. No longer will two factors be considered most probative and carry greater weight. Now, all factors matter and should be analyzed when determining whether a worker is an independent contractor or an employee who is subject to rights under the FLSA. 

Workplace Discrimination FAQs

Is employment discrimination illegal?

 

Yes, discrimination in employment is illegal in the United States. Depending on the state you live in, there may be even greater protections, rights, and damages available to victims of workplace discrimination.

 

What qualifies as employment discrimination?

 

The laws enforced by the US Equal Employment Opportunity Commission (EEOC), and your individual state, entitle victims to sue for compensation in the event of unfair treatment based on their protected status or protected class.

 

While these vary from state-to-state, they may include the following: race, ethnic background, visible traits (hair texture, hairstyle, donning of religious garments or items), color, national origin, citizenship status, alienage status, immigration status, lawful source of income (subsidy recipient status), occupation, religion, creed, marital status, partnership status, sex, gender, sexual orientation, gender identity or expression (transgender status), domestic violence victim status, stalking victim status, sex offense victim status, familial status, pregnancy, presence of children, handicap (disability), age, military status, uniformed service, veteran status, first responder status, arrest record, and sealed conviction record.

 

Does discrimination have to be intentional to warrant compensation?

 

No. Regardless of whether the discrimination was unintentional or caused by implicit biases, you are entitled to fair compensation.

 

What is the most common workplace discrimination?

 

The most common types of discrimination in the workplace include racial discrimination, age discrimination, sex or gender discrimination, and disability discrimination.

 

Can an independent contractor sue for discrimination?

 

In many places, you can sue for workplace discrimination whether you are an employee, a domestic worker, or an independent contractor. If you are unsure of whether or not this applies in your state or locale, it’s best to consult with a skilled employment discrimination lawyer.

 

Who do workplace discrimination laws apply to? 

 

You have a right to compensation if you are discriminated against by anyone in the workplace. This could include a boss, coworker, vendor, client, patron, temp agency, or franchisor. 

Where can discrimination occur?

While workplace discrimination often occurs in the office, it can happen anywhere—over a conference call, in a meeting, at a holiday party, or at a work lunch—so long as you were fulfilling your work responsibilities at the time of the discriminatory incident. 

 

How do I know if I have been discriminated against at work?

 

Federal and state laws prevent hiring managers from changing available compensation, rates of pay, hours, or availability of employment based on your protected class status. Wages must be substantially equal between genders and, in cities like New York City, wage transparency will be required when jobs are advertised.

 

If you have been treated unfairly in any of these ways, have been spoken to in a demeaning way, or have been subjected to offensive jokes or comments based on your protected class status, then you may have a case for workplace discrimination and should consider reaching out to an experienced New York discrimination lawyer.

 

Can I be fired for speaking out against discrimination?

 

Not legally, no. If you are speaking out against discrimination in the workplace, you are protected from retaliation. This is true regardless of whether you are speaking out for yourself or on behalf of someone else. If you or a loved one have been fired or treated unfairly for speaking out against discrimination at work, we would love to take on your case and ensure that you receive the compensation that you deserve. Give us a call.

 

Can you sue for workplace discrimination?

 

Yes. Not only is it possible to sue for workplace discrimination, but Lieb at Law, P.C. has helped countless individuals recover compensatory damages and punitive damages for the pain inflicted by this unlawful act. Workplace discrimination is a violation of your rights and should never be tolerated.

 

How long do I have to sue for workplace discrimination?

 

Typically, federal law requires that you make a filing within 300 days of the discrimination (this may be cut down to 180 days based on your state’s laws, or even to 3 months if you work in education in places like New York).  However, certain state law claims can be brought up to 3 years after the incident. So, you should call right away and let us determine if you still have time to bring your case. 

 

What can I recover if I sue for workplace discrimination?

 

Employment discrimination claims can result in very high awards because they are designed to compensate victims for lost back-pay, lost front-pay, and experiencing emotional distress / loss of dignity. Additionally, the law provides that victims can recover other forms of compensatory damages, punitive damages, and their attorneys’ fees. In fact, the perpetrator can lose their license (if licensed), be required to take trainings, and be ordered to stop their offensive behavior. There are fines and more. However, we are ethically required to advise you that our prior results do not guarantee a similar outcome. So, you should contact us today and get a tailored evaluation of your specific situation.

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