The realities of the ever-evolving American economy require that federal law clearly distinguish between when workers are employees and when they are independent contractors. On April 1, 2025, the Department of Labor took a meaningful step in that direction, announcing it would no longer enforce the Biden-era independent contractor rule while it undergoes departmental review.
Although DOL investigators have been directed not to apply the rule’s problematic six-factor “totality of the circumstances” test, the rule technically remains in effect for private litigation. Legal challenges to the rule, including one supported by NRF, are still pending before the Fifth Circuit.
Retailers, like many other employers, rely on independent contractors for a wide range of essential services, including billing, facility maintenance, data analysis, delivery, marketing and more critical services. Any change to the definition of an independent contractor is significant because it determines coverage under federal wage-and-hour laws. When the applicability of the FLSA becomes muddied, millions of people who choose to operate as independent contractors — as well as the businesses that depend on their expertise — face uncertainty, operational disruptions and potential legal challenges.
Given the importance of the relationship between businesses and independent contractors, NRF is proud to support two pieces of legislation introduced by Rep. Kevin Kiley, R-Calif., that would support independent workers and enhance businesses' ability to partner with these individuals. The Modern Worker Empowerment Act modifies current federal labor laws to create a standard and consistent test for determining whether a worker is classified as an independent contractor or an employee. The Modern Worker Security Act creates a federal safe harbor, permitting companies to offer portable benefits to independent contracts.