Independent Contracting: What You Need to Know Now

By: Jim Willshier, Director of Government Affairs

There is continued activity around independent contractor regulations, but one key point remains: the Biden-era Independent Contractor Rule that took effect in 2024 is still in effect today.

The 2024 rule uses a six-factor “economic reality” test to determine whether a worker is an employee or an independent contractor. ABC believes this approach is ambiguous and difficult to apply, creating added complexity and potential financial risk for contractors.

Earlier this year, the Trump administration proposed a new Independent Contractor Rule that would rescind and replace the 2024 rule. The proposed rule is intended to provide clearer guidance by emphasizing factors such as control over the work, ownership of tools and equipment, and the opportunity for profit or loss. ABC supports this proposed change; however, it is still under review and not yet finalized.

The proposed rule is currently open for public comment, which is the first step in a lengthy rulemaking process. We encourage members to review and submit feedback by scanning the QR code included in this article.

Clear classification standards are critical for both employers and independent contractors. They help define tax responsibilities, clarify expectations and reduce the risk of misclassification. Under existing law, key considerations still include control over how work is performed, who provides tools and equipment, financial risk and the nature of the working relationship.
ABC will continue to provide updates as the rulemaking process evolves. Once finalized, education sessions will be offered to help members understand and comply with any new requirements.