Three Different Independent Contractor Tests Are Active Right Now. Here's Which One Applies to You.
If you pay anyone as a 1099 contractor, the test for whether that classification holds up just split into three pieces, and the pieces do not agree with each other.
A "final" rule from 2024 is still on the books. The Department of Labor's own investigators stopped using it a year ago. A brand new rule is proposed but not finished. All three are live at the same time, and which one applies to you depends on whether you are being audited or being sued.
The rule on the books is not the rule being enforced
In January 2024, the DOL published a final rule that judges contractor status with an unweighted, six-factor "totality of the circumstances" test. No single factor decides the outcome. It took effect that March and is, technically, still the rule.
Then, in a Field Assistance Bulletin dated May 1, 2025, the DOL's Wage and Hour Division told its own investigators to stop applying that 2024 rule in enforcement matters. Instead, auditors went back to the older economic-realities approach from a 2008 fact sheet and a 2019 opinion letter, a test built around the same general factors (control, investment, opportunity for profit or loss, permanence) but weighed differently.
The 2024 rule was never withdrawn. It was just benched for one audience. The DOL has said the rule still applies in private lawsuits, which means a contractor who sues you directly can point a court at the 2024 standard even while a DOL investigator in your office that same week would use the 2008 one.
A fourth test is waiting in the wings
On February 26, 2026, the DOL proposed a replacement rule (published in the Federal Register as a notice of proposed rulemaking, comments closed April 28, 2026). It would scrap the unweighted 2024 test and bring back a framework closer to a short-lived 2021 rule: two factors (how much control you exert, and how much the worker can profit or lose from their own management decisions) carry most of the weight, with skill, permanence, and whether the work is part of your core production treated as secondary.
As of this writing, that proposal has not been finalized. There is no announced date for a final rule, and employment lawyers tracking the docket expect legal challenges whenever it lands. So for now: a 2024 rule still on the books, a 2008-era standard investigators actually use, and a 2026 rule that does not exist yet. Three tests, one classification decision.
What to actually check before year-end
You do not need to pick a side in a rulemaking fight. You need your contractor relationships to hold up under whichever test a court or an auditor reaches for.
- Pull every active 1099 agreement and note who sets the hours, the process, and the tools. Heavy control over how work gets done is the one factor every version of this test, past and future, weighs against contractor status.
- Check whether the person can actually profit or lose based on their own choices (pricing their own services, hiring their own help, working for other clients) or whether they just get paid for hours like an employee would.
- Flag anyone who has been treated as a long-term, full-time-equivalent contractor for over a year. Permanence is a factor in every test on the table.
- Do not wait for the 2026 rule to finalize before fixing a relationship that looks like misclassification under the current, enforced standard. The exposure is live today, not on some future effective date.
This is exactly the kind of recurring compliance check that is easy to let slide because none of the deadlines are fixed. An AI agent can read your contractor files and HR records on a schedule, flag the agreements worth a second look against the current factors, and draft a plain-language summary. A person still decides what, if anything, changes about a worker's classification. See how the review loop works or look at what we set up for offices like yours if you want that check running in the background instead of on your to-do list.
Sources: U.S. Department of Labor, independent contractor rulemaking status page; Foley & Lardner, "DOL Alters Enforcement Position on Independent Contractors" (May 2025).