Why smart businesses focus on legal fundamentals rather than regulatory rhetoric
The Trump administration’s recent announcement to rescind the Biden-era independent contractor rule has sparked renewed discussion about IC classification standards. According to Staffing Industry Analysts, the Department of Labor’s semiannual regulatory agenda includes plans to undo the 2024 rule and potentially establish new guidance on independent contractor classification under the Fair Labor Standards Act.
But for businesses focused on sustainable compliance, the question isn’t which rule is in effect—it’s understanding the legal fundamentals that remain constant across administrations.
While political parties may influence enforcement tone and regulatory emphasis, the fundamental legal standards for independent contractor classification remain largely unchanged. Whether under Republican or Democratic leadership, the core inquiry continues to focus on the same reality: control. Is the independent contractor independent of control of the user of their services? The emphasis on control factors and the number of factors may shift, enforcement may ramp up or ramp down, but the core remains the same.
A Familiar Cycle of Regulatory Shifts
This isn’t the first time we’ve witnessed regulatory changes around independent contractor classification. The pattern has become predictable across multiple administrations. Let’s focus on the last four:
- Obama Administration (2009–2017) emphasized a broad interpretation of the Fair Labor Standards Act (FLSA), favoring employee classification through the comprehensive “economic realities” test that considers multiple factors without prioritizing any single element.
- Trump Administration (2017–2021) introduced a simplified rule in January 2021 that prioritized two key factors: control over work and opportunity for profit or loss. This approach de-emphasized other factors in the economic realities test, providing what many employers viewed as greater clarity and flexibility.
- Biden Administration (2021–2025) attempted to withdraw the Trump rule early in the term. After legal challenges, they implemented a new rule in March 2024 that reinstated the full six-factor economic realities test, emphasizing a “totality-of-the-circumstances” approach that made it harder to classify workers as independent contractors.
- Current Trump Administration (2025–Present) has now signaled intent to rescind the Biden rule, with the Department of Labor halting enforcement in May 2025 and directing regional administrators to stop applying the current rule in worker misclassification investigations.
Why the Legal Framework Remains Constant
Despite this political ping-pong, the core classification risks remain fundamentally unchanged. Here’s why:
- Courts shape the law, not agencies. Federal agency rules influence enforcement priorities and provide guidance, but they don’t override established judicial precedent. The economic realities test, IRS common law factors, and state-specific tests continue to be the operative legal standards or guidelines regardless of which administration’s rule is in effect.
- State requirements often override federal flexibility. States like California and Massachusetts apply stricter classification tests—such as California’s ABC test under AB5—that remain in effect regardless of federal regulatory changes. These state-level requirements often provide the strongest worker protections and highest misclassification risks if not applied.
- The substance of working relationships matters most. Regardless of the regulatory framework, contracts and labels don’t protect against misclassification if the actual working relationship resembles employment. The day-to-day realities of control: financial, relationship and behavioral continue to be the determining factors of who qualifies as an independent contractor.
Strategic Compliance Beyond Political Winds
The most effective compliance professionals have maintained consistent approaches to independent contractor classification across multiple administrations. Sound classification processes don’t change based on political rhetoric—because the legal fundamentals don’t change.
When actual laws change—such as California’s AB5 and AB2257 coming out of the Dynamex ruling—experienced practitioners adjust their compliance processes and advice to incorporate those new legal requirements. But a change in enforcement rhetoric doesn’t warrant a change in sound compliance strategy.
The best approach focuses on confirming that genuine independent contractor relationships and businesses are in place, that can withstand scrutiny under any administration’s enforcement priorities. This means emphasizing:
- Substance over form: Ensuring the actual working relationship reflects true independence
- Comprehensive documentation: Maintaining audit-ready files that demonstrate compliance
- Regular reassessment: Reviewing long-term IC relationships to ensure they remain appropriately classified
- Multi-jurisdiction awareness: Understanding both federal and state requirements
What Smart Businesses Focus On Instead
Rather than adjusting strategies based on political changes, experienced compliance professionals focus on the legal constants that transcend administrations:
- The realities of the relationship remain central. Whether an administration emphasizes two factors or six, the underlying question remains the same: Is this person economically independent and operating as an independent business or dependent and under the control of an employer?
- Control analysis persists. Every classification framework examines who controls how, when, and where the work is performed. This fundamental inquiry doesn’t change based on political priorities.
- State law continues to matter. Federal regulatory changes don’t affect state-level classification requirements, which often provide stricter standards and higher penalties for misclassification.
- Documentation requirements remain critical. Regardless of the enforcement approach, businesses need comprehensive documentation to defend their classification decisions during audits or disputes.
Building Compliance That Lasts
The most successful businesses build their independent contractor programs around these legal constants rather than political variables. This approach provides several advantages:
- Stability across administrations. Compliance programs built on sound legal foundations don’t require constant adjustment based on political changes.
- Genuine risk reduction. Focusing on creating truly independent relationships reduces classification risks regardless of enforcement priorities.
- Operational efficiency. Consistent compliance processes are easier to implement and maintain than constantly shifting approaches.
- Strategic advantage. Companies with robust compliance programs can confidently engage independent contractors while competitors worry about regulatory uncertainty.
Looking Forward
Political rhetoric around independent contractor classification will continue to shift with each administration. Enforcement priorities will ebb and flow. But the legal tests that determine proper classification—and the business benefits of getting it right—remain constant.
Smart businesses recognize that sustainable compliance isn’t about predicting political winds or adjusting to every regulatory announcement. It’s about understanding the enduring legal principles that govern worker classification and building IC programs that honor those principles regardless of who occupies the White House.
Experienced compliance professionals focus on what matters most: creating compliant, defensible independent contractor relationships based on sound legal foundations. While political winds will continue to shift, the legal fundamentals that protect businesses remain constant.
