Trump Administration Proposes
New Independent Contractor Standard

On Feb. 26, 2026, the U.S. Department of Labor’s Wage and Hour Division announced a proposed rule that would rescind the Biden administration’s 2024 independent contractor regulation and replace it with a framework closely modeled on the 2021 rule issued during President Trump’s first term.
The proposal would maintain the “economic reality” test under the Fair Labor Standards Act (FLSA). The goal of the multi-factor test is to decide if the worker is economically dependent on the employer for work or is instead in business for themself. The proposed rule would substantially change how the DOL weighs the relevant factors, giving the greatest weight to two “core” factors: the worker’s control over the work and the worker’s opportunity for profit or loss based on initiative or investment.

 

The proposal would also apply the same classification analysis across the Fair Labor Standards Act (FLSA), Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act, creating a more uniform federal framework for worker classification under statutes that use the FLSA’s definition of “employ.”

Background: Why the Rule Matters for the Private Club Industry

The independent contractor standard determines whether a worker is treated as an employee entitled to federal wage-and-hour protections—such as minimum wage and overtime—or as an independent contractor operating a business of their own. It has become increasingly relevant for private clubs whose services rely on workers who are often classified as independent contractors, such as caddies, golf teachers and fitness instructors. Because independent contractors are generally not covered by the FLSA’s minimum wage and overtime requirements, the DOL’s standard can materially affect labor costs, compliance risk, business models and workers' access to statutory protections.

Summary of the Proposed Rule’s Main Changes

The proposed rule would formally rescind the Biden-era independent contractor status regulation, which took effect in March 2024. The 2024 rule used a six-factor, totality-of-the-circumstances analysis in which no factor of the “economic realities” test was given predetermined weight. The Trump administration has criticized that approach as insufficiently predictable, arguing that the 2024 rule did not provide clear guidance on how different factors should be weighed when they point in different directions.

“Clearer application of longstanding judicial standards means businesses can classify workers more confidently and avoid mistakes that are costly, both to workers and businesses alike,” DOL’s Wage and Hour Administrator Andrew Rogers said in a press conference announcing the proposed rule.
The proposed rule would restore a framework substantially similar to the 2021 independent contractor rule issued during the first Trump administration. Under that approach, two factors out of five total would carry the greatest weight when determining whether a worker is economically dependent on their employer:
 

If both core factors point toward the same classification, DOL says there is a substantial likelihood that the classification is correct. However, if these core factors point to different conclusions, the following other factors can help guide the analysis:

 

The proposed rule further differentiates itself from the 2024 rule by emphasizing that “the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible” when evaluating an individual’s economic dependence on an employer. The 2024 rule provided that “reserved contractual rights"—which refers to control retained by an employer through a contract (i.e. the right to supervise, discipline or set schedules)—may be equally or even more indicative of the economic reality of the parties’ relationship.

Reactions from Industry Stakeholders & Policymakers

“The proposed rule reverses the damage caused by Biden-era policy and returns to a common-sense framework, equipping businesses, especially small businesses, contractors and franchisees, with the much-needed clarity they need to grow.” – U.S. Chamber of Commerce

“Elevating certain factors over others conflicts with the Supreme Court’s instruction that employment does not turn on “isolated factors” but rather on ‘the circumstances of the whole activity.’ By narrowing employee status under the FLSA, the FMLA and the MSPA, the proposed rule undermines these laws and incentivizes employers to improperly change their workers’ classification from ‘employee’ to ‘independent contractor’ or hire workers as independent contractors where they would otherwise be classified as employees.” – Service Employees International Union

“While 60% of Americans are living paycheck to paycheck, it is unacceptable that the administration is focused on making it easier to exploit workers, rather than making life more affordable for working families. Instead of protecting America’s workers, this proposed rule would be a disaster for workers across the country, especially the workers most vulnerable to exploitation.” – Letter to Acting Secretary of Labor Keith Sonderling from U.S. Senators John Hickenlooper (D-Colo.), Bernie Sanders (I-Vt.), and 19 democratic senators.

National Club Association Outlook and Considerations

The proposed rule is widely considered as a more business-friendly approach than the 2024 rule. If finalized, the rule would most likely make it easier for businesses to classify workers as independent contractors, as well as reduce the risk of federal enforcement actions.

The National Club Association submitted joint comments with the Club Management Association of America and the National Golf Course Owners Association in response to the proposed rule. DOL’s latest proposed independent contractor rule. NCA encouraged DOL to finalize a rule that provides clarity, supports compliance, and preserves the flexibility necessary for seasonal, service-based industries.