The U.S. Department of Labor, under the Donald Trump administration, has announced plans to repeal a 2024 rule that required companies to classify workers as employees if they were economically dependent on them.
What the independent contractor rule established
The regulation, introduced during the Joe Biden administration, aimed to redefine worker classification based on economic dependence, requiring companies to provide full employee benefits.
Under federal wage law, employees are entitled to minimum wage, overtime pay, unemployment insurance, and other benefits, which can increase business costs by up to 30%, according to Reuters.
Impact on key industries like transportation and direct selling
Although the rule was in effect briefly before being blocked in Congress by Republican lawmakers, it was expected to significantly impact industries that rely heavily on independent contractors.
Most affected sectors
- Trucking
- Delivery services
- Ride-sharing platforms
- Direct selling
In particular, the direct selling industry could have been forced to reclassify distributors as employees, increasing operational costs.
Business reaction and implications
Opponents argued that the rule made it harder to classify workers as independent contractors, forcing companies to take on higher costs without proportional productivity gains.
Direct selling companies warned that the regulation could negatively impact revenues without delivering real value in return.
Next steps: public comment period
The repeal proposal will open a 60-day public comment period before a final decision is made.
