If you’ve been using independent contractors to staff your routes, fill shifts, or run your delivery network, you’ve probably had to keep one eye on the law for the last few years. And honestly? That’s the right instinct. Worker classification rules have been a moving target, and they just moved again.
On February 26, 2026, the U.S. Department of Labor (DOL) published a proposed rule that would officially scrap the Biden administration’s 2024 independent contractor standard and replace it with a framework that’s a lot friendlier to businesses that rely on contract workers. On the surface, that sounds like good news if you run a staffing firm, labor marketplace, taxi fleet, or a last-mile delivery company.
But before you exhale, there’s a catch. Here’s what’s changing, what it means for your business, and where the real risk still lives.
What actually changed (and why it matters)
To understand the 2026 rule, you need a quick bit of history. Under the Biden DOL’s 2024 rule, companies had to weigh six different factors equally when deciding whether someone was an employee or an independent contractor. No single factor was more important than the others. That all-factors-considered approach made it harder to justify contractor classifications, and easier for agencies and plaintiffs to argue workers had been misclassified.
The 2026 proposed rule rolls that back. It reinstates a version of the standard from the first Trump administration (2021), which focuses on two core factors above all others:
- Control: Does the worker set their own schedule, choose their own projects, and work for other clients? If so, that weighs toward independent contractor status.
- Opportunity for profit or loss: Can the worker make more money by investing in their business or taking on more clients, or lose money if they make bad decisions? That also weighs toward contractor status.
Under the new framework, if both of those factors point in the same direction, there’s a strong likelihood that’s the correct classification. Three additional factors: skill required, permanence of the relationship, and whether the work is integral to your business can still come into play, but they carry less weight.
What does this mean practically? It’s a more predictable framework. If your contractors genuinely control how and when they work, and they have real opportunities to grow or lose their own business, you’re in a stronger position at the federal level.
One important note: the proposed rule also clarifies that requiring contractors to follow safety standards, insurance requirements, or quality standards doesn’t automatically make them employees. That’s a meaningful detail for industries where compliance requirements are non-negotiable.
This rule isn’t final yet — here’s the timeline
The DOL is collecting public comments on the proposed rule through April 28, 2026. After reviewing those comments, the agency could modify the rule before issuing a final version. The timing of any final rule is still uncertain.
Until a final rule is published, the 2024 Biden-era rule technically remains the official standard on the books, though the DOL has already instructed its enforcement staff to stop applying it and revert to the older framework. So in practice, enforcement has already shifted even before the rulemaking is complete.
Bottom line: the regulatory direction is clear, but the final rule isn’t locked in. Build your classification practices on your actual worker relationships, not just on what the current rule says.
What this means for staffing companies
Staffing firms walk a unique line in the classification conversation. You’re often placing workers with client companies, which means the question of who controls the work isn’t always straightforward. Under the new core-factor approach, that question of control is front and center.
If you’re placing contractors, not just W-2 employees, your strongest protection is documentation that shows those workers are genuinely running their own show. They should have real flexibility in how they do the work, the ability to work with other clients, and some skin in the game when it comes to profit and loss. If you’re scheduling their every hour, dictating their methods, and they have no other clients, that looks a lot more like employment regardless of what the contract says.
The rule also clarifies that classification should be based on actual practice, not just what’s written in the contract. A contractor agreement that says “independent contractor” doesn’t protect you if the day-to-day reality looks like employment.
One more thing worth watching: the proposed rule expands its scope beyond just the FLSA, applying the same framework to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). If your staffing firm places agricultural or seasonal workers, that’s directly relevant.
What this means for transportation and delivery companies
For trucking, logistics, and last-mile delivery companies, worker classification is one of the most scrutinized areas of employment law. The industry has faced significant enforcement activity and litigation over the past decade, and that attention isn’t going away just because the federal framework is shifting.
The good news is that many independent owner-operators genuinely check the boxes under the new core-factor test. If a driver owns or leases their own truck, sets their own routes, works for multiple carriers, and takes on the financial risk of owning and operating their rig, those facts point strongly toward independent contractor status.
The trickier scenarios involve drivers who work exclusively for one company, use company-provided equipment, and operate on a set schedule with minimal flexibility. Even under the more employer-friendly 2026 framework, that arrangement is harder to defend as a legitimate contractor relationship.
For delivery companies operating in the gig economy model, think courier networks, same-day delivery platforms, the analysis is similar. If workers can log in and out as they choose, accept or decline deliveries, and work for competing platforms simultaneously, the core factors likely favor contractor status. If you’re running a tightly managed operation with set shifts and rigid requirements, the risk is higher.
Don’t get too comfortable: states are still coming for misclassification
Here’s where a lot of businesses make a costly mistake: they hear that the federal rules are getting more flexible and assume the problem is solved. It isn’t. The DOL’s 2026 proposed rule only covers federal law — the FLSA, FMLA, and MSPA. It has zero effect on state-level worker classification laws, and many states are applying a much stricter standard.
California: The strictest standard in the country
California uses the ABC test under AB 5, and it remains one of the toughest classification frameworks anywhere. To classify someone as an independent contractor in California, you have to show all three of the following: the worker is free from your control and direction; the work they perform is outside your usual business; and the worker is independently established in that trade or occupation. The second prong is especially difficult for staffing and delivery companies, if the work is core to your business, you’re going to have a hard time clearing that bar. In May 2025, a federal appeals court upheld California’s right to enforce this standard, and enforcement isn’t slowing down.
New York, New Jersey, and Massachusetts
New York’s legislature passed a bill in 2025 that gives the state’s Department of Labor the power to issue stop-work orders to companies that misclassify employees, a significant escalation in enforcement tools. New Jersey has also stepped up enforcement activity, with the Department of Labor & Workforce Development actively pursuing misclassification cases and issuing substantial penalties. Massachusetts has long maintained a strict ABC test of its own, and enforcement there remains aggressive.
The cost of getting it wrong
Misclassification penalties aren’t theoretical. They include back pay for minimum wage and overtime violations, unpaid payroll taxes, interest, and penalties — and in some states, the exposure is substantial. A misclassified truck driver can represent $20,000 or more in annual lost wages and benefits, according to recent labor policy research. A staffing firm that misclassifies workers at scale can face seven-figure liability in a single enforcement action.
The federal rules got friendlier. State rules didn’t. If you operate across multiple states, which most staffing, transportation, and delivery companies do, you need to know what standard applies in each jurisdiction.
What you should do right now
The proposed rule is still going through the comment process, but the direction is clear enough to act on. Here’s where to focus:
- Audit your actual practices, not just your contracts. Classification is based on how your workers actually operate day-to-day. If the paperwork says “contractor” but the reality looks like employment, the paperwork won’t protect you.
- Know your state exposure. If you have workers in California, New York, New Jersey, Massachusetts, or other ABC-test states, federal flexibility doesn’t help you there. Evaluate those relationships under the applicable state standard.
- Document the factors that support contractor status. For workers you classify as contractors, keep records that demonstrate they set their own schedules, work for other clients, and have real opportunities for profit or loss.
- Don’t wait for the final rule to review your workforce. The enforcement posture has already shifted at the federal level, and your state obligations aren’t going anywhere. Now is a good time to get ahead of it.
How payroll fits into the classification picture
One thing that doesn’t change regardless of which rule is in effect: how you pay workers matters. Paying contractors through 1099 when they should be W-2 employees is one of the clearest indicators of misclassification, and one of the first things agencies look at. And if you have a mix of W-2 employees and legitimate independent contractors, your payroll system needs to handle both cleanly.
That’s where companies like Everee can help. Whether you’re running weekly payroll for your full-time staff, daily pay for hourly workers, or payments for a network of independent contractors, having a payroll infrastructure that’s built for workforce flexibility, and that keeps your compliance obligations in order while taking one major piece of risk off the table.
Classification rules will keep changing. (Seriously, they always do.) But your payroll doesn’t have to be the thing that creates the liability. Get that part right, and you’ve eliminated one of the most common triggers for a misclassification audit.
The bottom line
The DOL’s 2026 proposed rule is a meaningful shift in the federal approach to worker classification, and for staffing, transportation, and delivery companies, it’s a development worth understanding. The two-factor framework is more predictable and generally more business-friendly than what came before it.
But this isn’t a green light to reclassify everyone as a contractor or stop thinking carefully about how your workforce is structured. The rule isn’t final yet. State laws haven’t changed. And the IRS has its own classification standards that run parallel to all of this.
The companies that navigate this well aren’t the ones who wait for the rules to settle. They’re the ones who build classification practices, and payroll infrastructure, that can hold up to scrutiny no matter which way the regulatory wind is blowing.
Want to see how Everee helps staffing and logistics companies manage payroll for mixed workforces? Book a quick call.