Trump Labor Department Pauses Gig Worker Rule, Plans Repeal

The US Department of Labor will no longer enforce a Biden-era rule that makes it harder for companies to use independent contractors, as it works to cancel the regulation.

The announcement, made in an enforcement guidance May 1, brings to fruition plans to rescind the rule—which the Trump administration has signaled in response to pending litigation over the policy.

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

The decision is a major win for business groups that opposed the rule. They’ve pushed the administration to move faster in repealing the rule, arguing that the agency is leaving businesses in the lurch while it remains in effect.

“Plaintiffs and their members continue to be saddled with increased costs, reduced flexibility, legal uncertainty, and rising litigation costs from the Rule,” the Coalition for Workforce Innovation, a business group that represents dozens of companies that rely on independent contractors like gig-economy giants Uber Technologies Inc. and Lyft Inc., said in a legal filing April 23.

The DOL’s move to drop enforcement of the rule comes as it is navigating five pending lawsuits against the previous administration’s 2024 worker classification rule.

The regulation changed how the agency determines whether a worker is an employee or an independent contractor for purposes of the federal minimum wage and overtime law.

The rule expanded the instances where a worker could be deemed an employee, which drew concerns from businesses and freelancers that they would lose businesses opportunites or that independent contractors on staff would be reclassified as employees.

The distinction can create a host of legal responsibilities for employers. Workers who are considered employees are owed minimum wage, overtime pay, and other protections under the law, while independent contractors are not.

Instead of the 2024 rule, the DOL has instructed businesses to utilize “longstanding principles” outlined in older agency guidance documents, according to the press release.

“The department may still exercise enforcement authority in individual cases deemed appropriate by the Wage and Hour Administrator or a designee,” the agency said.