Federal Independent Contractor Classification Enforcement Changes Do Not Impact NYS Employers
By Catherine A. Gaziose, Esq.
The United States Department of Labor Wage and Hour Division (the “Division”) issued on May 1, 2025, a Field Assistance Bulletin (the “Bulletin”) providing guidance on how to determine employee or independent contractor status when enforcing the Fair Labor Standards Act (the “FLSA”). While this Bulletin is potentially significant in some states, it will not impact the operations of New York State-based employer obligations – including New York-based CHHAs, LHCSAs, hospices and managed long-term care plans (collectively, “Agencies”) given that more stringent New York State case law will continue to control whether a person is properly classified as an employee or independent contractor.
On matters of independent contractor classification, Agencies should continue to follow New York case law, which continues to require consideration of the following four elements: (1) whether the principal (employer) retains the power to select and engage the servant; (2) the principal’s methods of payment for services rendered by the servant; (3) whether the principal has the power to dismiss the servant; and (4) the extent of the principal’s power of direction and control over the servant’s activities. The right to control is the key factor in this determination.
Even so, the Bulletin reflects a loosening of federal standards for independent contractor classification. In issuing its Bulletin, the Division stated the following: that it was reviewing the Biden Administration’s 2024 rule “Employee or Independent Contractor Classification Under the Fair Labor Standards Act,” that this rule is also being challenged in federal court, and that agency investigators are directed not to apply the 2024 rule’s analysis for current enforcement matters while this challenge is pending.
The Division uses Field Assistance Bulletins to provide agency investigators and staff with guidance on enforcement positions and clarification of policies or changes in the policy of the Division. These bulletins are developed under the general authority to administer the various laws enforced by the Division, and they typically reflect changes or clarifications in the administration of these laws and related regulations based upon court decisions, legislative changes, and opinions of the Division Administrator. The Bulletin applies only to the federal agency itself.
However, as noted, the New York State Department of Labor Wage and Hour Division will be largely unimpacted by this Bulletin. The Bulletin states the Division’s intent to use a different standard in FLSA investigations, a federal statute, and that the Division’s enforcement will follow older standards. Indeed, the Bulletin serves as insight into how the federal Wage and Hour Division will prioritize and process specific matters in enforcement actions relating to federal law. New York, on the other hand, takes a more expansive view towards classifying workers as employees, rather than independent contractors. This effectively means that the FLSA sets the floor for worker classifications, and New York consistently goes above and beyond this floor to lean towards affording employment protections and benefits. Further, New York employers, including those that operate as Agencies, should continue to follow New York’s test for determining independent contractor status for purposes of state wage and hour laws.
Questions and Additional Information
If you have any questions about these or any other developments, please contact Catherine Graziose at (518) 487-7789,
The information contained in this article is for informational purposes only, and should not be construed as legal advice on any subject matter or create an attorney-client relationship.