Less than three months into the new year, employers across the United States are already navigating significant shifts in federal employment law. None of the changes are all that surprising given the Trump administration’s priorities for its second term; however, the rapid succession in which they came down over the last several weeks caught many people off guard.

These developments significantly affect federal employment law, including the employment relationship between businesses and workers, and compliance with federal statutes such as the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA).

NLRB Reverts to 2020 Standard for Joint Employer

The National Labor Relations Board (NLRB) announced that it is ditching the 2023 standard for determining joint employment status, published during the Biden Administration, and returning to the 2020 standard adopted during the first Trump Administration.

The 2023 standard faced legal challenges by business groups and was eventually vacated by a federal judge in 2024. While there was some speculation that the decision might be appealed, no action was taken during the last months of the Biden administration, and the standard all but died.

The NLRB adopted the 2020 standard without prior notice or opportunity for public comment, which is the typical process for updating governing regulations. They reasoned that because the 2023 standard had previously been vacated, their rule reinstating the 2020 standard was merely implementing the Court’s decision, and no notice or comment period was necessary.

The 2023 Standard for Joint Employer

Under the 2023 standard, an entity would be considered a joint employer of another entity’s employees if it “possesses the authority to control (whether directly, indirectly, or both), or to exercise the power to control … one or more of the employee’s essential terms and conditions of employment.” Whether the entity actually exercised direct or indirect control was irrelevant. Simply having the ability to do so was sufficient.

Under the 2023 standard, essential terms and conditions of employment included:

• Wages, benefits, and other compensation
• Hours of work and scheduling
• Assignment of duties to be performed
• Supervision of the performance of duties
• Work rules and directions governing the manner, means, and methods of performance, and grounds for discipline
• Tenure of employment, including hiring and discharge
• Working conditions related to the safety and health of employees

This broader definition increased exposure for private employers involved in staffing arrangements, subcontracting, or franchise relationships. Businesses that did not view themselves as the primary employer but could nonetheless be drawn into disputes involving wrongful termination, discrimination, and harassment.

The 2020 Standard for Joint Employer

Under the reinstated 2020 standard, an entity must possess and exercise substantial direct and immediate control over one or more essential terms and conditions of employment to be considered a joint employer of the second entity’s employees. Control must have a regular or continuous consequential effect, not merely sporadic, isolated, or de minimis influence.

Under the 2020 standard, essential terms and conditions of employment are limited to: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

This narrower approach reduces the likelihood that businesses will be swept into joint employer liability under federal employment laws and provides greater predictability for businesses.

Is the Joint Employer Standard Permanent?

Because the NLRB is a five-member quasi-judicial body that is appointed by the President to 5-year terms, with the term of one member expiring each year, there is fluctuation in the board and the board’s approach to these issues with each administration.

As such, employers should expect to see changes in this rule in the future, especially as administrations change from one political party to another.

DOL Proposes “New” Rule on Classifying Workers as Independent Contractors

In the same week as the NLRB announced the change in the joint employer standard, the Department of Labor (DOL) announced that it would take steps to rescind the Biden administration’s independent contractor rule. Similar to the NLRB, the DOL is reviving a rule from the first Trump administration. The proposed rule, if finalized as written, would revive the 2021 rule with a few modifications.

Is the Individual in Business for Themselves or Economically Dependent on the Employer?

Central to the proposed rule is the economic realities test. Whether a worker is considered an independent contractor or an employee comes down to the level of economic dependence they have on the employer.

In making this determination, the 2021 rule (and the 2026 proposed rule) states that there are two primary or core factors that are most probative in this analysis and should be considered first. Those core factors are:

• The nature and degree of control over the work, and
• The worker’s opportunity for profit or loss, based on initiative and/or investment

If both of these factors point towards the same classification, either independent contractor or employee, then there is a substantial likelihood that that classification is the correct classification for the worker.

However, there are three additional factors the DOL proposes as helpful in determining the economic dependence question. While these factors are relevant, they are less probative than the two core factors. Those factors include:

• The amount of skill required for the work,
• The degree of permanence of the working relationship, and
• Whether the work is part of an integrated unit of production

The Current (2024) Rule

While the current rule on defining independent contractors vs. employees is still in effect, the DOL is not enforcing it. In Field Assistance Bulletin No. 2025-1, the DOL states that while conducting FLSA investigations, they will no longer use the analysis under the 2024 rule. Instead, they will rely on older guidance regarding this determination.

The 2024 rule focuses on a totality of the circumstances analysis, which looks at six factors, all of which have the same weight in the analysis. Those factors include:

• The worker’s opportunity for profit or loss
• Investments by the worker and the company
• The degree of permanence of the work relationship
• The nature and degree of control over how the work is performed
• The extent to which the work is an integral part of the company’s business, and
• The worker’s skill and initiative

What Happens Next?

Unlike the NLRB standard, there will be no immediate change to the independent contractor rule. However, because the DOL hasn’t been enforcing the 2024 rule since at least May 2025, even when the rule is finalized, there won’t be much change in enforcement.

Like with the NLRB standard, in recent years, there has been a shift in the independent contractor vs. employee analysis any time there has been a change in who occupies the White House. Therefore, employers should anticipate this to remain an area where they may see change in the future.

Key Takeaway

While 2026 represents a return to prior regulatory frameworks, it does not signal a retreat from enforcement. Instead, it emphasizes that federal employment law remains dynamic, particularly where political transitions influence agency priorities.

Ultimately, the pendulum will continue to swing. What remains constant is the obligation to comply with the law. Employers who treat compliance as an ongoing process, proactively monitoring developments and adjusting policies accordingly, will be far better positioned to adapt smoothly to future shifts in agency interpretation and enforcement priorities.

By: Audra L. Parton, JD

• Previous