The Streaming Arrangement

The plaintiff is an adult entertainer that livestreams her own performances on Streamate.com, a hosting platform managed and operated by defendant ICF Technology, which is owned by co-defendant Accretive Technology Group, both of which are Washington state corporations. Streamate permits performers to access and stream their performances on the platform from literally any location with internet access.

Potential customers view the performers’ livestream or uploaded content and then chat with performers before choosing to purchase their pre-recorded content. Performers and Streamate share in the fees paid by a particular customer. 

The Class and Collective Action Lawsuit

The plaintiff, who resides in New Jersey, filed a class and collective action complaint under New Jersey state law and the FLSA, claiming that by retaining a portion of the online “tips” received from customers, the plaintiff and other performers on the platform receive less than the state minimum wage for hours worked.

The court certified the case as a class action under state law and a collective action under the FLSA for approximately 385 New Jersey performers. Following discovery, both the plaintiffs and defendants filed competing motions for summary judgment. On May 29, 2026, the court issued its decision on the motions. Tomasello v. ICF Technology, Inc., No. 23-3759 (D.N.J. May 29, 2026).

The Court’s Decision on the FLSA Claim

The district court first addressed the FLSA claim and applied the six-factor economic realities test governing courts in the Third Circuit.

The court concluded that three factors favored IC status and three factors favored employee status. Those favoring IC status were:

• The degree of the company’s right to control the manner in which the work is to be performed;
• The worker’s opportunity for profit or loss depending on the amount of their investment and management skills; and
• The degree of permanence of the working relationship.

The factors favoring employee status were:

• The parties’ relative investments in equipment or materials required for the work or the employment of helpers;
• The level of special skill of the worker; and
• Whether plaintiffs’ services are an integral part of defendants’ business.

With an equal number of factors favoring each status, the court examined the totality of the circumstances and concluded that the performers “operate as independent economic entities in business for themselves, rather than as dependent employees.” In particular, the court focused on the fact that the performers “generally exercise comprehensive control over all meaningful aspects of their work, independently dictating the specific timing, location, and manner of their broadcasts.” It further noted that the performers “actively leverage their personal business acumen to manage critical commercial operations … [including] independently directing their own digital marketing strategies, choosing third-party advertising venues, setting individualized pricing thresholds, and selecting the distinct content features integrated into their live broadcasts.” In the court’s view, this constituted a “lack of economic dependence.”  It therefore held that under the FLSA, plaintiffs “function as independent contractors rather than statutory employees entitled to FLSA protections.”

The Decision Under the New Jersey ABC Test

The court noted that, “[u]nlike the flexible, multi-factor federal framework, the [New Jersey Wage and Hour Law and the Wage Payment Law] command the application of the unyielding, statutory ABC test,” where all three prongs of the test must be established by the business to establish IC status.

The first prong of the ABC test is whether the “individual has been and will continue to be free from control or direction over the performance of such service, both under his [or her] contract of service and in fact.” The court concluded that “because Plaintiffs operate free from control both on paper and in practice, Defendants have successfully satisfied Prong A.”

The second prong of the ABC test is two-part, and a business needs to satisfy only one part of the following: “such service is either outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed.” The court concluded that the first part cannot be established by the defendants, determining that “performers are integral to Defendants’ business, rendering operations impossible without them.”

As to the second part of the B prong, the court began its analysis by stating:

[U]nder New Jersey law, an enterprise’s ‘place of business’ is not bounded by brick-and-mortar walls; it extends to any proprietary digital infrastructure that serves as the primary commercial venue for the company’s operations. See Portillo, 606 F. Supp. 3d at 93 (“where [the defendant] ‘conducts business’ necessarily extends beyond the walls of its own facilities”). Thus, an enterprise’s “place of business” under Prong B includes any location where the company’s core commercial services are actively being executed, meaning physical brick-and mortar headquarters do not define the limits of the workplace.

The court further stated that the Streamate website “is not a passive internet utility; it is a highly integrated, proprietary virtual workplace where customers are aggregated, financial transactions are executed, and live content is distributed and policed.”  The court concluded that the defendants had failed to satisfy the second part of the B prong, stating: “Because the digital platform functions as the indispensable commercial venue where the business operates, the services are not performed ‘outside of all places of business’ of the enterprise; by logging into Streamate, Plaintiffs are effectively performing their services within the virtual footprint of the enterprise.”

The court noted that because Prong B was not met, it need not examine Prong C (whether the worker is customarily engaged in an independently established trade, occupation, profession or business).

Analysis of the Court’s Holding Under Prong B

The district court decision appears to be at odds with a governing New Jersey Supreme Court decision on the second part of the B Prong: Carpet Remnant Warehouse, Inc. v. New Jersey Department of Labor, 126 N.J. 567 (1991). In that oft-cited case, the Supreme Court analyzed the Labor Commissioner’s argument that the defendant’s places of business “may broadly be said to extend to every geographic point of [carpet] installation” where a customer is located. The Court stated that “[u]nder that definition of ‘places of business,” for a person to satisfy the B standard’s second alternative would be practically impossible.”  The Court concluded: “In our view, that phrase refers only to those locations where the enterprise has a physical plant or conducts an integral part of its business.”

In a November 12, 2025, blog post, we pointed out that an October 2025 decision by the Appellate Division of the New Jersey Superior Court, relying on the Carpet Remnant Warehouse opinion, rejected the labor commissioner’s finding that that client venues where disk jockeys provided their services were each a “place of business” of the company that booked weddings, proms, and other events. The court stated that the commissioner’s reasoning — that client venues were equivalent to the booking agency’s “places of business” because an integral part of the booking agency’s business was the performance of services by the DJs at client venues — was an overly expansive interpretation that would make it “practically impossible” for the booking agency to satisfy the second part of the B prong of the ABC test.  

Many businesses today use an electronic program or platform to facilitate services by legitimate ICs. This new federal court decision not only seems to deviate from governing judicial authority in New Jersey but also, if not reversed, would likely open the door to protracted litigation over whether an electronic system in use by a business is the functional equivalent of a place of business. We anticipate that the defendants will appeal this decision in due course to the U.S. Court of Appeals for the Third Circuit, as there may well be valid grounds supporting reversal.

The Court noted, however, that the Section 1 exemption from arbitration might not be applicable where (1) the worker is an IC performing services pursuant to a distribution agreement between the manufacturer and the worker’s own independently operated company, or (2) where the worker or his company purchases the goods from the manufacturer and takes title to the goods before selling them to retail stores. Those facts are commonplace for many distribution agreements between manufacturers and distributors. The opinion notes, though, that those facts were not before the Court for decision.

In addition, the opinion references cases with other types of facts that may bear on whether the Section 1 arbitration exemption applies, such as whether a product “has reached its ‘intended destinatio[n].’”

These and other facts may lead federal courts (and perhaps the Supreme Court in a future case) to conclude that the FAA arbitration exemption for interstate transportation workers does not apply to certain independent distributors, who may well be subject to arbitrating their claims on an individual basis instead of litigating them in court including in a class action.

In sum, the Supreme Court’s decision today eliminates one of the many arguments that have been raised to counteract the interstate arbitration exemption under the FAA. Manufacturers that use distributors operating on an IC basis, however, should regard this opinion as providing legal support for advancing counterarguments in response to plaintiff-distributors seeking to escape arbitration agreements they have signed.  Flowers Foods, Inc. v. Brock, U.S. Sup. Ct. No. 24-935 (May 28, 2026).

In the Courts (4 cases)

SECURITY COMPANY SUED BY GUARD IN CLASS ACTION LAWSUIT FOR IC MISCLASSIFICATION IN NEW YORK. A security company and its owner have been sued by a guard in a proposed class and collective action lawsuit filed in a New York federal district court. The plaintiff claims that the company, Pinder Security Systems, Inc. and a related firm, which hired him and other security guards to provide security services at retail stores and restaurants throughout New York City, improperly treated him and other security guards as “self-contractors” instead of employees and failed to pay them minimum wage or overtime for hours worked over 40 in a workweek. The complaint, which is short on details, alleges that the companies set the security guards’ schedules each week, required them to wear a uniform bearing one of the companies’ logos, and mandated that they clock in and out of assignments by texting to the companies specific photos of the restaurants or retail stores to which they were assigned. Ingram v. Pinder Security Systems, No. 1:26-cv-02712 (S.D.N.Y. Apr. 2, 2026). We previously published a blog post about a key IC misclassification case involving off-duty police officers serving as security guards.

HOME IMPROVEMENT COMPANY IN COLORADO SUED BY DIRECT SELLERS IN IC MISCLASSIFICATION CLASS ACTION. A group of door-to-door and in-home sales representatives have filed a class and collective action lawsuit in federal district court in Colorado against a home improvement company, DaBella Exteriors LLC, which engaged them as direct sellers. The company markets, sells, and arranges for the installation of products including roofing, windows, siding, gutters, and bath systems. The complaint contends that the defendant company misclassified the sales representatives as ICs instead of employees, and failed to pay them minimum wage and overtime compensation in violation of the federal Fair Labor Standards Act (FLSA) and Colorado state wage and hour laws. The complaint claims that the company required the sales representatives personally to incur certain business expenses, which depressed their wage rates below lawful minimums, failed to pay weekly overtime under the FLSA and daily overtime under Colorado law, failed to maintain accurate pay and time records, and retaliated against workers who raised concerns. The plaintiffs further allege that the company compels attendance at mandatory morning meetings, requires adherence to scripted sales methods, directs the manner in which the representatives schedule and manage in-home appointments, imposes financial consequences for any deviation from company directives, and imposes on the representatives substantial operating expenses, including unreimbursed miles of driving. The sales representatives also claim that they have no meaningful opportunity for profit or loss and need no specialized skill to perform their services. Gough v. DaBella Exteriors LLC, No. 1:26-cv-01705 (D. Colo. Apr. 21, 2026).

We previously published a blog post in July 2025 about another IC misclassification lawsuit involving a company in the home improvement industry, and a blog post in June 2021 about an IC misclassification lawsuit involving door-to-door salespeople and direct sellers. While direct sellers enjoy a special IRS exemption if they are paid on a 1099 basis and receive substantially all their compensation in the form of commissions, there is no such exemption for companies from state or federal wage and hour laws for such workers if they do not meet the applicable tests for IC status.

BLACK CAR COMPANY IN NEW YORK LOSES BID TO OVERTURN JURY VERDICT THAT DRIVERS WERE MISCLASSIFIED. A New York federal court has denied a black car company’s motion to set aside a $236,000 jury verdict that the company misclassified drivers as ICs and not employees. The court denied the company’s motion for judgment as a matter of law because the jury verdict failed to present any “manifest injustice.” The court found that the jury permissibly concluded that plaintiffs were employees and not ICs. The court also ruled that “Defendants did not properly preserve their issue with the employer relationship at trial.” In re Wang Litigation, No. 1:20-cv-05410 (E.D.N.Y. Apr.17, 2026). While many lawsuits about black car drivers involve the ride-share industry, this lawsuit is similar to a case involving Alabama limousine drivers that was the subject of a prior blog post.

COURT FINDS BLAKE LIVELY TO BE AN IC, DISMISSING HER SEXUAL HARASSMENT AND RETALIATION CLAIMS UNDER EMPLOYMENT LAWS. A federal court in New York has dismissed actor Blake Lively’s claims of sexual harassment and retaliation under Title VII of the federal Civil Rights Act and the California Labor Code. The actor claimed that her rights were violated while filming the movie “It Ends With Us” because she qualified as an employee under the federal discrimination law. The court disagreed and granted defendants’ motion for summary judgment on the discrimination and retaliation claims, finding that the actor was an IC and not an employee. In addition to her Title VII claims, the lawsuit involved multiple causes of action against various parties including the production company, Wayfarer Studios LLC, and Jason Baldoni, the co-lead in the movie and co-chair of the production company. In granting summary judgment in favor of the production company and others on the sexual harassment and retaliation claims, the court concluded that the undisputed facts demonstrated that Blake Lively had a degree of economic independence sufficient to make her an IC, thereby precluding her from bringing her employment discrimination claims, which are limited to those classified as employees. The court noted that the factors favoring IC status included that Blake Lively had extensive control over the manner and means by which the film was produced; she is a highly skilled actress; she played a role in sourcing instrumentalities and tools needed for production of the film; she had no obligation to participate in any other projects for the company; and she was paid by the project, rather than hourly, to her own business entity. As to her retaliation claim under the California Labor Code, the court concluded that defendants established that their relationship with the actress met the business-to-business (B2B) exception as well as the test for IC status under the Borello case, thereby precluding her from pursuing those claims as well. Other retaliation claims remained, but it has been reported that the parties reached a settlement of the lawsuit. Blake Lively v. Wayfarer Studios LLC, No. 24-cv-10049 (S.D.N.Y. Apr. 2, 2026).

Regulatory Initiatives (2 matters)

CALIFORNIA HOME CARE AGENCY AND ITS OWNERS ASSESSED $4.4 MILLION FOR IC MISCLASSIFICATION OF HOME HEALTH AIDES. A Los Angeles-based home care agency and its principals were assessed $4,423,450 in damages and penalties by the California Labor Commissioner’s Office (LCO) due to their alleged misclassification of 144 caregivers as ICs instead of employees while the aides were working in private homes. Hart Placement Agency, Inc. is a homecare company providing nonmedical personal care services including bathing, dressing, companionship, meal preparation, light housekeeping, transportation to appointments, and respite care. According to a news release issued by the California Department of Industrial Relations on April 23, 2026, an investigation by the LCO found that the company had misclassified caregivers, required them to obtain business licenses and file fictitious business name statements, maintained control over caregivers’ schedules, duties, and compensation, required caregivers to sign IC agreements without providing copies, instructed caregivers to falsify timesheets or sign documents to conceal shifts exceeding 12 or 24 hours, and did not provide paid sick leave as required under California labor law. The agency and its principals have appealed, and a hearing date is pending. If the assessment is ultimately upheld, each caregiver will receive on average over $30,000. We have published numerous blog posts on lawsuits alleging misclassification of home health workers, the last one in a post this past February, where the U.S. Department of Labor is seeking $12 million in damages.

PROPOSED JOINT EMPLOYER RULE INTERSECTS WITH PROPOSED IC RULE; CONFUSION IS LIKELY FOR SOME BUSINESSES USING CONTRACTORS. On April 23, 2026, the DOL issued a proposed joint employer rule under the FLSA. The first Trump administration’s 2020 rule on joint employer status had been rescinded by the Biden administration in 2021. The new proposed rule sets forth four factors that should be considered when determining whether a second company, which benefits from the work of one or more employees of an employer, is a joint employer under the FLSA. Those four factors are the same that were specified in the 2020 rule: whether the second company hires or fires the employee, supervises or controls the employee’s work schedule or conditions of employment, determines the employee’s pay rate and method of payment, and maintains the employee’s employment records.

Some companies that engage ICs are likely asking, does this new proposed joint employer rule have any impact on ICs? The 2020 rule answered that question with an unequivocal “no,” stating that the test for IC status, which focused on “whether the employer is economically dependent on the potential joint employer,” was not relevant for determining potential joint employer liability under the FLSA. Under the new proposed joint employer rule, however, the answer to that question is now “yes, to a certain degree.” Proposed new section 791.115(e) of the rule states that additional factors, including “[i]ndicia of whether the [worker] is economically dependent on the potential joint employer for work may also be relevant.” The rule then identifies two such factors in particular: whether the worker has a continuous or repeated relationship with the joint employer, and if he or she works at a location or facility that is owned or controlled by the potential joint employer. That first additional factor is similar to one of the factors (permanence) that is pertinent to IC status under the current proposed IC rule under the FLSA issued on February 26, 2026. The second additional factor is similar to a factor found in many ABC tests for IC status (whether the worker provides services at any of the places of business of the alleged employer). But the proposed joint employer rule then provides that three other factors mentioned in the current proposed IC rule are not relevant to joint employer status. Those three factors deal with skill, profit and loss, and investment. This partial intersection of the proposed joint employer rule and the proposed rule addressing IC status may well create considerable confusion and concern for some businesses using an IC model.

The Two Key Objections We Identified and How the Department Changed Its Regulations

Our first objection: compliance with law to be treated as a form of control

The ABC test states that a worker is presumed to be an employee, and not an IC, if the alleged employer cannot establish all three prongs of the ABC test. Prong A requires that the worker will be deemed an employee and not an IC unless the alleged employer can establish that the worker “has been and will continue to be free from control or direction over the performance of … service[s], both under his contract of service and in fact.”

The proposed regulation stated: “When evaluating under Prong A of the ABC test whether an individual has been and will continue to be free from control or direction over the performance of services, any control or direction that the putative employer has exercised, or has reserved the right to exercise, in order to be in compliance with a law or rule shall be considered; that is, it shall be given equal weight to what would be given any other control or direction that the putative employer has exercised or has reserved the right to exercise.” N.J.A.C. 12:11-1.3(f) (Emphasis added).

We summarized in our formal Comments our first objection to the proposed regulations, stating:

“The Department’s proposed regulation as to Prong A … state[s] that an independent contractor agreement including language that the IC comply with all applicable laws is to be deemed as a form of direction and control over the service provider, notwithstanding the fact that that all service providers … are of course required to comply with applicable laws, and despite the fact almost all independent contractor agreements in this and every other state in the U.S. contain such language. Unless this part of the regulation is corrected, it will foster the elimination of almost all independent contractors in this State.”

The Department’s final regulation accepts the position articulated in our first objection to the proposed regulations. It deletes the objectionable language and substitutes the following new wording: “Actions taken by a putative employer solely to comply with federal, state, or local, laws or regulations shall not, standing alone, be considered evidence of control or direction under Prong A.” (Emphasis added.)

Other significant changes in the final regulation regarding Prong A include the removal of language that an alleged employer’s requirement that a worker use a digital app or software that is primarily controlled by the company is evidence of control under Prong A.

While these changes considerably lessen the harshness of the final regulation on the “control” prong, it remains objectionable in many ways including its focus on “control” factors that tend to demonstrate employee status and the near universal absence of factors tending to show IC status.

Our second objection: off-site locations to be treated as if they were part of the alleged employer’s places of business

The B Prong of the ABC test requires that the worker shall be presumed an employee and not an IC unless the alleged employer can establish either of the two alternatives in Prong B: that the worker’s service is “outside the usual course of the business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed.”

Our second objection in our formal Comments to the proposed regulations addressed the second part of Prong B. We stated:

“The proposed regulation takes an extraordinarily expansive view of the second part of the B Prong. It states that a hiring party’s ‘places of business’ not only include ‘locations where the enterprise has a physical plant or conducts an integral part of its business,’ but may also include ‘locations outside of the putative employer’s physical plant, where the services performed by the individual [worker] are an essential component of, rather than ancillary to, the putative employer’s business.’ … It is unclear what those words ‘essential’ or ‘ancillary’ mean in the context of the proposed regulation, then gives illustrations that do little more than create an enormous amount of uncertainty – even for lawyers, let alone businesspersons, contractors, and workers – and will lead to years of prolonged litigation over two otherwise meaningless words that appear nowhere in the ABC test. …But even more problematic is that this part of the proposed regulation appears to be directly contrary to one of the two main New Jersey Supreme Court cases cited in the … proposed regulation: Carpet Remnant Warehouse.”

The Department’s final regulation accepts the point made in our second comment to the proposed regulations. It deletes in its entirety the objectionable language in the proposed regulation, including the reference to places outside the alleged employer’s physical plant as being equivalent to the alleged employer’s places of business for purposes of the second part of Prong B, and also deletes the confusing references to off-site locations that are “essential” or “ancillary” components of the company’s business.

Notably, three months after we submitted our formal Comments, we published a blog post about a new judicial decision issued by the New Jersey Appellate Division that echoed the same argument we made in our objection dealing with the second part of the B Prong. The post was titled, “New Jersey Courts May Be Limiting the Labor Commissioner’s Effort to Curtail Independent Contractors in That State,” and it noted that the court concluded, consistent with our second main comment, that off-site client venues where a disc jockey performed services were not equivalent to the alleged employer’s place of business, citing to the same New Jersey Supreme Court case upon which we relied in our second objection: Carpet Remnant Warehouse.

Other Meaningful Changes in the Final Regulations

In addition to removing the objectionable language in the second part of Prong B about off-site locations being equivalent to the alleged employer’s places of business if they are “essential” to the company’s business, the final regulation made other notable changes to this part of the B Prong. One of the most important is the addition of a new subsection stating: “An individual’s personal residence where they perform remote work, i.e., performing services from a location other than a location operated by the [alleged] employer, shall not be considered among the putative employer’s places of business.” (Emphasis added.)

The Department also made a meaningful change to the C Prong, which presumes a worker is an employee and not an IC unless the alleged employer can establish that the worker “is customarily engaged in an independently established trade, occupation, profession or business.” The final regulation deletes the following language: “Under Prong C, what is relevant is not whether an individual was free to work for others, but rather, whether the individual did perform services for, and receive remuneration for the performance of such services from, others during the relevant period ….” By so doing, the final regulation implicitly recognizes that a legitimate IC may choose to provide services only to one company without impairing their status as an IC in New Jersey.

The press release issued by the Department indicates that the final regulation will be effective October 1, 2026. It is anticipated that one or more lawsuits will be filed seeking to invalidate the regulation, and some business groups and legislators opposed to the new regulations have stated they plan to seek legislative action to block its implementation.

COMMENTS BY RICHARD REIBSTEIN, PUBLISHER OF
INDEPENDENT CONTRACTOR MISCLASSIFICATION AND COMPLIANCE LEGAL BLOG

(as filed with U.S. Department of Labor on April 27, 2026)

The comments below are submitted in response to the “Notice of Proposed Rulemaking: Independent Contractor Status under the Fair Labor Standards Act,” 91 Fed. Reg. 9932 (Feb. 27, 2026). They are being submitted by Richard Reibstein, Esq., as the publisher of the legal blog “Independent Contractor Misclassification and Compliance.” Since its inception in 2010, the blog has provided readers with original content dedicated solely to this narrow but important area of the law, including posts with detailed comments on hundreds of FLSA cases involving the status of workers as independent contractors or employees. Reibstein also has published over 65 articles and videos on independent contractor compliance and misclassification matters and is regularly quoted on the subject in leading newspapers and business and legal media outlets.

Reibstein is a partner in the law firm of Troutman Pepper Locke LLP, where he co-chairs the firm’s independent contractor misclassification and compliance practice and represents businesses that seek to enhance their independent contractor compliance or need to defend against individual or class action lawsuits or administrative agency audits, investigations, or claims alleging independent contractor misclassification.

The eight comments below are attributable solely to Reibstein and are not intended to reflect the views of Troutman Pepper Locke LLP, other lawyers at the firm, or clients of the firm. All of the eight comments are listed in summary fashion below, followed by the reason for each comment.

SUMMARY OF COMMENTS

Comment 1. The first “core factor” should be drafted in a manner that focuses attention on control over the manner and means by which the work in question is performed. As drafted, the first core factor is ambiguous at best and may be misleading at worst, in a number of different ways.

Comment 2. The second of the two “core factors” focuses on the individual’s opportunity for profit or loss, but the text only mentions how the worker can generate “profit.” This core factor should give more than passing attention to “risk of loss.”

Comment 3. The first of the three “other factors” pertaining to skill overstates the importance of the factor. Skill can be a meaningful factor in determining independent contractor status, but often it is simply not relevant.

Comment 4. The proposed rule oversimplifies the second of three “other factors” pertaining to permanence of the working relationship.

Comment 5. The third and last “other factor,” which relates to the nature of the work in relation to the potential employer’s business, is unclear, vague, and uses words that are not terms of art and, as such, is not likely to provide meaningful guidance.

Comment 6. The proposed rule only lists five specific factors to be considered in determining independent contractor vs. employee status, yet notes that those factors are not exhaustive. It adds a provision that “Additional factors may be relevant in determining whether an individual is an employee or independent contractor for purposes of the FLSA,” but fails to list any examples. We have identified dozens of additional factors that the courts have regarded as relevant to a worker’s classification, and it would be useful to the public if the final rule listed some specific additional factors.

Comment 7. The reference to “training” in the proposed rule needs clarification that not all types of training weigh in favor of employee status.

Comment 8. Unless the Department makes the changes to the proposed rule that are urged above in these comments, the wording of the final rule will create uncertainty and misunderstanding about the law under the FLSA, and may be misused by those seeking to challenge otherwise lawful independent contractor arrangements.

REASON FOR EACH COMMENT

Comment 1. The first “core factor” should be drafted in a manner that focuses attention on control over the manner and means by which the work in question is performed. As drafted, the first core factor is ambiguous at best and may be misleading at worst, in a number of different ways.

Reason for this comment:

In proposed § 795.105 titled “Determining employee and independent contractor classification under the FLSA,” paragraph (d)(1)(i) currently provides: “(d) Economic reality factors — (1) Core factors — (i) The nature and degree of control over the work.” (Emphasis added.)

The courts uniformly have focused on control over the manner and means of performance; i.e., how the work is to be performed. It is a given that the party that engages the worker always controls “what” work is to be performed and often when and where the work is to be performed. An independent contractor plumber retained by a managing agent of an apartment complex to unclog a drain or install a new toilet, for example, has to be told “what” to do and of course, when and where to perform his/her task. Thus, control over what, where, and when are not necessarily meaningful to an independent contractor analysis. If the potential employer, on the other hand, controls how the work is done or retains the right to do so, that factor would favor employee status. Thus, the wording of the proposed rule regarding control by a potential employer “over the work” is not particularly meaningful and may lead to erroneous conclusions as to whether workers are employees or independent contractors.

If the language change suggested in the second comment above is adopted, the first “core factor” should be revised to read as follows: “Economic reality factors — (1) Core factors — (i) The nature and degree of control over the performance of the work, particularly on the manner and means of performance, i.e., how the work is to be performed.” (Emphasis added.)

This focus on control over the performance of the work, particularly how the work is to be performed, should also prompt the DOL to revise the language relating to this core factor of control to the extent it currently includes words that often have little or nothing to do with how the work is to be performed. For example, the proposed rule states in part:

“In contrast, this factor weighs in favor of the individual being an employee under the Act to the extent the potential employer, as opposed to the individual, exercises substantial control over key aspects of the performance of the work, such as by controlling the individual’s schedule or workload and/or by directly or indirectly requiring the individual to work exclusively for the potential employer. Requiring the individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) does not constitute control that makes the individual more or less likely to be an employee under the Act.” (Emphasis added.)

While control over scheduling can in some situations weigh in favor of employee status, it has nothing to do with a worker’s classification where, for example, a business dictates that services be performed at times that are consistent with a customer’s service requirements or at times when the company is open for business, such as where a distribution warehouse of a company may only be open between 6 a.m. and 4 p.m.

Similarly, a company’s control over workload is equally common in many instances for both employees and independent contractors, such as where a business engages an independent distributor to service a geographic territory that has a certain number of stores to which the distributor mutually agrees to distribute products.

For these reasons, the words highlighted above dealing with “schedule or workload” should be deleted in the final rule. In addition the words relating to scheduling and workload (the latter also referred to by businesses as “service requirements”) should be added to the final sentence of proposed § 795.105(d)(1), as follows: “Requiring the individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed-upon service requirements, deadlines or quality control standards or meet customer requirements, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) does not constitute control that makes the individual more or less likely to be an employee under the Act.” (Emphasis added.)

Comment 2. The second of the two “core factors” focuses on the individual’s opportunity for profit or loss, but the text only mentions how the worker can generate “profit.” This core factor should give more than passing attention to “risk of loss.”

Reason for this comment:

The second of the two “core factors” reads as follows in the proposed rule at § 795.105(d)(1)(ii):

“(ii) The individual’s opportunity for profit or loss. This factor weighs towards the individual being an independent contractor to the extent the individual has an opportunity to earn profits or incur losses based on his or her exercise of initiative (such as managerial skill or business acumen or judgment) or management of his or her investment in or capital expenditure on, for example, helpers or equipment or material to further his or her work. While the effects of the individual’s exercise of initiative and management of investment are both considered under this factor, the individual does not need to have an opportunity for profit or loss based on both for this factor to weigh towards the individual being an independent contractor. This factor weighs towards the individual being an employee to the extent the individual is unable to affect his or her earnings or is only able to do so by working more hours or faster.”

The above language focuses on opportunity for profit and fails to give any attention to or description of the types of losses that bear on the independent contractor status of the worker. Many factors can create risk of loss. A worker can be subject to loss if, for example, he or she has to re-do work that is not consistent with industry standards or does not meet a customer’s expectations; is potentially liable to the potential employer in the event his or her actions or inactions cause harm or legal expense to the potential employer; or fails to render services in a cost-efficient manner by not managing expenses or investing far too much time on activities that are unproductive.

Examples of these and other types of risk of loss should be identified in this “core factor” discussion so it is clear it does not focus predominantly on profit.

Comment 3. The first of the three “other factors” pertaining to skill overstates the importance of the factor. Skill can be a meaningful factor in determining independent contractor status, but often it is simply not relevant.

Reason for this comment:

The first of the three “other factors” in the proposed rule pertains to skill. Proposed § 795.105(d)(2)(i) provides as follows:

“Other factors—(i) The amount of skill required for the work. This factor weighs in favor of the individual being an independent contractor to the extent the work at issue requires specialized training or skill that the potential employer does not provide. This factor weighs in favor of the individual being an employee to the extent the work at issue requires no specialized training or skill and/or the individual is dependent upon the potential employer to equip him or her with any skills or training necessary to perform the job.”

This factor, as drafted, overstates the importance of skill. Highly skilled physicians can be either employees or independent contractors. The same is true with many others including lawyers, architects, and engineers. Likewise, a limousine or “black car” driver may have less skills than those in the so-called learned professions, but can (according to court decisions) be an independent contractor if, for example, he or she purchases a right to be offered engagements for private rides, exercises his or her contractual rights in a manner that turns a profit, and is not subject to any control by the potential employer over how the driver performs his or her work. Similarly, an individual that has an odd-jobs business, advertises his or her services, engages his own helpers, and works for many different clients each month should not be deemed an employee simply because he or she has little or no special skills or training.

Thus, the proposed rule as drafted gives too much emphasis on whether the position requires specialized training or skill. At a bare minimum, the final rule should at least indicate that this may be a relevant factor in some but certainly not all instances.

It is also suggested that the last sentence be changed by substituting the word “and” for the words “and/or” (i.e., deleting the “/or” from the sentence), as follows: “This factor weighs in favor of the individual being an employee to the extent the work at issue requires no specialized training or skill and the individual is dependent upon the potential employer to equip him or her with any skills or training necessary to perform the job.” (Emphasis added.) The use of the words “and/or,” which can mean “or,” would lead to a finding of employee status simply because the worker requires no specialized training or skill.

Comment 4. The proposed rule oversimplifies the second of three “other factors” pertaining to permanence of the working relationship.

Reason for this comment:

The second of the three “other factors” in the proposed rule states as follows at § 795.105(d)(2)(ii):

“(ii) The degree of permanence of the working relationship between the individual and the potential employer. This factor weighs in favor of the individual being an independent contractor to the extent the work relationship is by design definite in duration or sporadic, which may include regularly occurring fixed periods of work, although the seasonal nature of work by itself would not necessarily indicate independent contractor classification. This factor weighs in favor of the individual being an employee to the extent the work relationship is instead by design indefinite in duration or continuous.” (Emphasis added.)

This factor, as drafted, reads as if the only type of independent contractor engagement contemplated by the proposed rule is project-based. There are many other legitimate independent contractor relationships and a host of them are indefinite in duration. Some examples include an independent gardener who has provided service weekly to a homeowner for 20 years; an independent distributor who has chosen to operate his or her own business exclusively distributing a single company’s products; and an independent tutor who has provided frequent tutoring services to the same family’s children throughout their school years.

This “other factor” dealing with permanence should acknowledge that while permanence may indicate employee status, a worker’s decision to continue a profitable continuous relationship with the same service recipient does not by itself suggest employee status.

Comment 5. The third and last “other factor,” which relates to the nature of the work in relation to the potential employer’s business, is unclear, vague, and uses words that are not terms of art and, as such, is not likely to provide meaningful guidance.

Reason for this comment:

The language of the proposed rule relating to the third of the three “other factors” states at § 795.105(d)(2)(iii):

“(iii) Whether the work is part of an integrated unit of production. This factor weighs in favor of the individual being an independent contractor to the extent his or her work is segregable from the potential employer’s production process. This factor weighs in favor of the individual being an employee to the extent his or her work is a component of the potential employer’s integrated production process for a good or service. This factor is different from the concept of the importance or centrality of the individual’s work to the potential employer’s business.” (Emphasis added.)

This final “other factor” recasts what the DOL currently states in its Fact Sheet 13 as the “Extent to which the work performed is an integral part of the employer’s business.” In the proposed rule, this factor is now characterized as whether the work “is part of an integrated unit of production.” As the proposed rule states: “This factor is different from the concept of the importance or centrality of the individual’s work to the potential employer’s business.”

The meaning of the words in bold type in the third “other factor” are at best unclear. Production connotes manufacturing. Many businesses do not engage in “production” but rather provide services and, hence, do not have an “integrated unit of production.” This final other factor should be explained and the DOL should use terms of art or words that are commonly understood by the public, lawyers, and courts — words that include businesses that provide services.

It should also be noted that this final “other factor,” which in the past was referred to as whether the services provided by the worker are “integral to the principal’s business,” has historically been given little weight by the courts, especially because it has, at times, been viewed so expansively that it almost always weighs in favor of employee status. The classic misapplication of this factor is when it is limited to situations such as a landscaper that mows the lawn on a company’s suburban headquarters. The final rule should make clear that this factor weighs in favor of independent contractor status where a worker provides services that no one else at the company provides, such as where a company does not have employees that perform the work performed by the workers in question or do little more than refer workers to clients that are seeking that type of service.

Comment 6. The proposed rule only lists five specific factors to be considered in determining independent contractor vs. employee status, yet notes that those factors are not exhaustive. It adds a provision that “Additional factors may be relevant in determining whether an individual is an employee or independent contractor for purposes of the FLSA,” but fails to list any examples. We have identified dozens of additional factors that the courts have regarded as relevant to a worker’s classification, and it would be useful to the public if the final rule listed some specific additional factors.

Reason for this comment:

In proposed § 795.105, titled “Determining employee and independent contractor classification under the FLSA,” subsection (c) addresses how economic dependence is to be determined. It states in part:

“(c) Determining economic dependence. The economic reality factors in paragraph (d) of this section guide the determination of whether the relationship between an individual and a potential employer is one of economic dependence and therefore whether an individual is properly classified as an employee or independent contractor. These factors are not exhaustive, and no single factor is dispositive.” (Emphasis added.)

As noted above, subsection (d) then addresses two “core factors” (the nature and degree of control over the work, and the individual’s opportunity for profit or loss), and three “other factors” (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). § 795.105(d)(2)(iv) states:

(iv) Additional factors. Additional factors may be relevant in determining whether an individual is an employee or independent contractor for purposes of the FLSA, but only if the factors in some way indicate whether the individual is in business for him- or herself, as opposed to being economically dependent on the potential employer for work.

Nowhere does the proposed regulation specify any such additional factors pertinent to the determination of independent contractor vs. employee status. The courts have, however, considered dozens of other factors that bear on the question of a worker’s independence, including (to name just a few) whether the potential employer has the right to terminate the worker for any reason at any time; whether the worker has the right to accept or decline engagements; whether the parties are subject to an agreement indicating an intent to establish an independent contractor relationship; and whether the worker operates in the form of a corporate entity, including as a limited liability company.

The final rule should mention at least some of these or other additional factors the DOL deems relevant; otherwise, many pertinent factors bearing on a worker’s classification are far less likely to be considered.

Comment 7. The reference to “training” in the proposed rule needs clarification that not all types of training weigh in favor of employee status.

Reason for this comment:

The language of the proposed rule relating to the fourth of the eight examples states at § 795.115(b)(4)(i):

(i) Example. An individual worker works for a commercial construction company and is assigned to the crew that installs roofs on buildings. The company required no roofing skills when he started working for it, and he had no roofing skills when he started. Over his time working for the company, the individual has developed skills through on-the-job experience and training provided by the company.

(ii) Application. The work performed by this individual requires no specialized training or skill, and the individual relies on the construction company to provide any training necessary to perform the work. Accordingly, the skill factor weighs in favor of the individual being an employee. The fact that the individual has developed skills over his time at the company does not change that outcome because those skills resulted from on-the-job experience and training provided by the company.” (Emphasis added.)

The proposed example refers to “training” but fails to distinguish between training on the manner and means of performing services (i.e., how the work is to be performed) in contrast to training that has little or nothing to do with how the work is to be performed, such as training or instructions on electronic systems, programs, or platforms. While this particular example involving a construction worker connotes a type of training that is consistent with instructions as to how to perform the work, the explanation for this example should clarify that not all types of “training” weigh in favor of employee status. As an illustration, training a worker on the use of customer relationship management (CRM) software does not train him or her as to how to perform sales. Likewise, training as to how to use an app as well as instructions or training on software used by a particular company or industry is not training as to “how” to render services.

Comment 8. Unless the DOL makes the changes to the proposed rule that are urged above in these Comments, the wording of the final rule will create uncertainty and misunderstanding about the law under the FLSA, and may be misused by those seeking to challenge otherwise lawful independent contractor arrangements.

Reason for this comment:

Once this rule is published in final form, selected language in the rule will undoubtedly be used by workers and business as well as their lawyers to understand the law affecting independent contractor status under the FLSA and/or to advance their respective interests. Absent the changes pointed out in the comments above, the final rule’s treatment of (a) control, (b) risk of loss, (c) skill, (d) permanence, (e) integrated production process, and (f) training will likely cause uncertainty about these seven key matters. In addition, the wording in the final rule may also be misused by those seeking to challenge otherwise legitimate and lawful independent contractor relationships under the FLSA.

Respectfully submitted by:

/s/ Richard Reibstein

April 27, 2026

In the Courts (4 cases)

COMPANY ENGAGING PARKING SPOTHOLDERS FOR UTILITY TRUCKS LIABLE FOR $6 MILLION IN IC MISCLASSIFICATION DAMAGES. A federal court in New York concluded after a non-jury trial that a company engaging parking “spotholders,” who locate and “hold” parking spots for trucks used by a large utility company making repairs in New York City, had misclassified those workers as ICs instead of employees under the federal Fair Labor Standards Act (FLSA). In 2019, the U.S. Department of Labor (DOL) investigated the classification of those workers, who would drive to job sites, park, and place traffic cones to keep others from parking near utility structures in need of repair. In its 2021 lawsuit, the DOL asserted that the spotholders had no opportunity for profit or loss; had no special skills; did not use independent initiative; and were supervised by the company’s dispatch office, monitored by “spot checkers,” required to follow company rules, and disciplined for rules violations. In ruling for the DOL, the court assessed the company a total of $6 million: $3 million in back wages for unpaid overtime, and an additional $3 million in liquidated damages. In addition, the court issued an injunction permanently preventing the company from treating the spotholders as ICs in the future. Chavez-DeRemer v. CE Security LLC, No. 1:21-cv-00057 (E.D.N.Y. Mar. 6, 2026).

ADULT ENTERTAINMENT WEBSITE UNABLE TO PREVENT VIDEO CHAT PERFORMER FROM CERTIFYING IC MISCLASSIFICATION LAWSUIT AS A CLASS ACTION. A federal district court in Connecticut granted class action status to a performer and similarly situated video chat performers providing services to an adult video chat website. The workers allegedly perform live video content for customers of ICF Technology, Inc. and Accretive Technology Group, Inc. on Streamate.com, an adult entertainment website owned by the two companies. The plaintiff contends that the companies misclassified the performers as ICs in violation of the FLSA and Connecticut wage and hour law by failing to pay them for the entire time spent live-streaming. She also claims that the companies committed wage theft under state law by retaining 65% of discretionary tips paid by customers during the performers’ livestream sessions. The parties have now filed cross motions for summary judgment regarding the IC or employee status of the performers. Nizeul v. ICF Technology Inc., No. 3:24-cv-01393 (D. Conn. Mar. 18, 2026).

MARKETING COMPANY SUED BY ADMINISTRATIVE AND HOME STAFF FOR IC MISCLASSIFICATION. A marketing company was sued for unpaid overtime compensation under the FLSA due to its alleged misclassification of administrative and home office staff as ICs and not employees. The plaintiff, who worked at the property management office belonging to the private residential estate of the company’s owner, contends that she worked as an administrative assistant. She filed her collective action lawsuit in a Connecticut federal court on behalf of herself and others similarly situated who have worked for the company as “administrative employees, house services employees, and other misclassified independent contractors” seeking unpaid overtime wages, liquidated damages, and attorneys’ fees under the provisions of the FLSA. The complaint alleges that the plaintiff was an employee and not an IC because she carried out nonexempt clerical duties; was wholly dependent on the company for earning “her livelihood”; and had no opportunity for profit or loss dependent upon any managerial skill of her own. She also asserts that the company exercised direct and extensive control over the manner in which she was required to perform her work each day, and she did not need any specialized skills to provide her services. Baker v. Market America Inc., No.1:26-cv-22153 (S.D. Fla. Mar. 30, 2026).

MEDICAL COURIER COMPANY SUED FOR IC MISCLASSIFICATION. Lab Logistics LLC operates a courier business for medical laboratories, hospitals, and health care systems to provide specimen pickup and medical delivery services. One of the couriers filed a proposed class and collective action complaint on behalf of herself and others similarly situated, claiming the company misclassified the couriers as ICs and not employees. The lawsuit alleges that the company failed to pay the couriers overtime compensation for all hours worked over 40 in a week, as required by the FLSA and Colorado wage and hour laws. In support of her claim that the couriers were misclassified as ICs, the plaintiff contends, among other things, that the company set the couriers’ schedules and hours of work; created pre-determined operational plans as well as the work assignments to be performed each day; assigned routes and deliveries to the couriers; dictated how each pick-up and delivery was to be performed; required the couriers to wear uniforms; and mandated that the couriers follow specific company guidelines, including what equipment to use, how to store lab specimens, and how to interact with company customers. Garza-Laureles v. Lab Logistics LLC, No. 3:26-cv-00466 (D. Conn. Mar. 27, 2026).

Legislative Developments

STATES ENACT PORTABLE BENEFITS LAWS FOR GIG WORKERS. Last month saw a flurry of legislative activity as a number of states passed gig worker portable benefits bills covering workers classified as ICs. Governors in West Virginia and Wyoming recently signed into law their versions of the legislation (HB 4009 in West Virginia and SF0041 in Wyoming) allowing companies, including those that are internet and app-based, to contribute to gig workers’ portable benefits accounts without affecting the workers’ status as ICs. A similar bill (HB 2602) passed by the Kansas legislature and awaits the governor’s approval. Typically, courts and administrative agencies consider a company’s provision of workplace benefits, such as health insurance, income replacement insurance, disability and life insurance, and retirement benefits, to be indicative of employment status. The legislation in all three of these states provides that contributions to portable benefit accounts shall not be used as a criterion or factor for determining a person’s employment classification. Additionally, the legislation in West Virginia and Kansas (if approved by the governor) provides tax deductions for contributions to the accounts. As noted in the West Virginia statute, “Establishing a portable benefit plan would provide tax incentives for hiring entities as contributions are deductible business expenses, and enhance financial stability for independent contractors, as contributions would not be included in their gross income.” Alabama, Tennessee, and Utah have enacted similar portable benefits laws.

Regulatory Initiative

AUTOMOTIVE PARTS DISTRIBUTOR SETTLES IC MISCLASSIFICATION PROCEEDING IN NEW JERSEY FOR $7 MILLION. The New Jersey Department of Labor and Workforce Development (NJDOL) and the New Jersey Office of the Attorney General announced last month that a last-mile automotive parts distribution company agreed to pay $7 million to settle a worker misclassification case asserting violations involving 1,000 delivery drivers. In addition to the settlement amount, the company, PDX North, Inc., agreed to reclassify its delivery drivers as employees and comply with all state wage, benefit, and tax laws. According to a March 12, 2026 news release from the NJDOL, the agency initiated an audit after a PDX driver filed for unemployment benefits, triggering a comprehensive review of the company’s employment practices. Subsequent audits, prompted by additional claims and ongoing review. The agreement resolves four audits covering the years 2006 through 2019, which determined that PDX improperly classified delivery drivers as ICs rather than employees in violation of the state’s unemployment compensation and temporary disability benefits laws. This is yet another instance where a single unemployment claim filed by a worker classified by a company as an IC can create years of litigation and potentially costly IC misclassification exposure. Companies facing unemployment claims by workers paid on a 1099 basis should take heed not to disregard benefit claims by any such workers – and to vigorously challenge such claims with a comprehensive defense. Otherwise, administrative agencies can turn any such isolated claim into a form of mini-class action.

In the Courts (5 cases)

WEIGHT MANAGEMENT AND PRESCRIPTION SERVICES COMPANY SUED BY PHYSICIAN IN CLASS ACTION LAWSUIT FOR IC MISCLASSIFICATION. A California physician has commenced a class and collective action lawsuit in California against a health care company offering weight management and prescription services, alleging the company violated the Fair Labor Standards Act (FLSA) and California wage and hour laws by misclassifying physicians as ICs instead of employees. The complaint seeks relief for the company’s alleged failure to pay the physicians minimum wages and overtime compensation, failure to furnish accurate itemized wage statements, and failure to reimburse business expenses. As to the claim under California law, the plaintiff alleges that the defendant cannot satisfy any components of the three-part ABC test. That test, however, may be inapplicable to the extent one of the many exemptions from the ABC test applies to doctors, who may also be exempt from the FLSA’s provisions as a learned professional. Cioppettini v. Mochi Medical CA, PC, No. 3:26-cv-01260 (N.D. Cal. Feb. 11, 2026).

WASTE REMOVAL COMPANY SUED FOR IC MISCLASSIFICATION IN CLASS ACTION BY TRASH COLLECTORS. A waste and snow removal company faces a class and collective action complaint brought in a Pennsylvania federal court by a worker claiming wage and hour violations under the FLSA and Pennsylvania state law due to the company’s alleged misclassification of trash collectors and snow removal workers. The plaintiff collected trash and performed snow removal and hauling for Metropolitan Waste Systems, Inc. He alleges that the company intentionally misclassified him and other similarly situated workers as ICs in an effort to avoid its overtime and minimum wage obligations under the FLSA and Pennsylvania Minimum Wage Act, including training time. According to the complaint, the workers were allowed little or no discretion or independent judgment in the method or manner as to how they performed their work, were supervised by company employees and were subject to discipline, were required to wear uniforms and identify themselves as company employees, and had to follow company guidelines. Johnson v. Metropolitan Waste Systems Inc., No. 2:26-cv-01056 (E.D. Pa. Feb. 19, 2026).

INSURANCE COMPANY AND ITS PRESIDENT SUED IN FLORIDA BY SALES REPRESENTATIVES IN IC MISCLASSIFICATION LAWSUIT. EZ Health IQ, Inc. and its president have been sued by sales representatives under the FLSA in a collective action complaint in a Florida federal court lawsuit alleging the company misclassified the sales reps as ICs and failed to pay them overtime for hours worked as employees over 40 hours in a week. The complaint claims that the sales reps followed sales scripts provided by the company, received a flat rate per week plus commissions regardless of the number of hours worked, and were paid through a cash app. The plaintiff asserts in the complaint that the company set the sales reps’ hours, required them to adhere to a strict schedule, controlled the way they performed their work, provided all materials necessary for the job, required them to undergo training, and closely oversaw the manner in which the reps performed their jobs on a daily basis. Frater v. American Work Health and Life Inc., No. 0:26-cv-60398 (S.D. Fla. Feb. 12, 2026).             

HOME HEALTH COMPANY LIABLE FOR UP TO $12 MILLION DUE TO IC MISCLASSIFICATION ‎OF NURSES AND HOME HEALTH AIDES. A federal district court in Pennsylvania entered summary judgment against a home health company, Amazing Care Home Healthcare Services LLC, as well as its owner and one of its senior managers, in a lawsuit brought by the DOL, finding the defendants liable for misclassifying both licensed practical nurses (LPNs) and home health aides (HHAs) as ICs instead of employees. As detailed in our blog post of February 18, 2026, the court held that the IC relationships with LPNs (and HHAs) failed to satisfy the applicable six-part test for IC status under the federal FLSA because all but one of the factors favored employee status. As a result, the DOL is seeking nearly $12 million in unpaid overtime and statutory liquidated damages from the corporate and individual defendants, personally. The five factors supporting employee status were the degree of the alleged employer’s right to control the manner in which the work is to be performed, whether LPNs had an opportunity for profit or loss depending on each worker’s managerial skill, the use of special skills, the permanence of the working relationship, and whether the services provided by the workers are integral to the alleged employer’s business. The only factor supporting IC status was the workers’ investment in required equipment or materials and the workers’ employment of helpers. The court also considered additional facts, but found most of them favored employee status, such as the fact that the company gave the LPNs performance reviews like employees, directed LPNs to use the same time sheets as employees, subjected LPNs to Amazing Care’s employee handbook, and used workplace forms that referred to all LPNs as “employees” even those paid on a 1099 basis. The court also determined that the owner, who served as president and administrator, and the director of nursing were also “employers” under the FLSA and personally liable to the LPNs as well. The issue of damages will be submitted to a jury. Su v. Amazing Care Home Healthcare Servs., No. 2:24-cv-00190 (E.D. Pa. Feb. 13, 2026).

TRUCKING COMPANY SETTLES IC MISCLASSIFICATION CLASS ACTION BY DRIVERS FOR $1.175 MILLION. A Kentucky federal district court has granted final approval of a $1.175 million collective action settlement resolving IC misclassification claims in a class action lawsuit brought by truck drivers against a trucking and freight transportation company. The drivers claimed in their second amended complaint that, among other things, due to their misclassification as ICs and not employees, Paschall Truck Lines, Inc. unlawfully made deductions from the drivers’ pay, thereby “intentionally reducing” their pay below the minimum wage under the FLSA. In support of their misclassification claims, the drivers alleged that they were required to attend a multiday orientation, watch training videos, and complete a drug test; were subject to supervision; were not permitted to use the commercial vehicles leased to them for any carrier other than the company; and could not accept jobs assigned to them by any other carrier. Carter v. Paschall Truck Lines, Inc., No. 5:18-cv-41 (W.D. Ky. Feb. 13, 2026).

Regulatory Initiatives (1 matter)

U.S. Department of Labor Issues a Proposed Rule on IC Status under the FLSA. As discussed in our blog post of February 26, 2026, the DOL in this second Trump administration issued a proposed regulation on that date regarding the classification status of ICs. It was almost a carbon copy of the 2021 regulation issued by the first Trump administration, which was replaced by a 2024 regulation issued by the Biden administration. As we remarked previously about these competing regulations addressing the issue of IC status under the FLSA, the new rule, once finalized, would be “much ado about (almost) nothing.”

The first part of the proposed regulation would rescind all inconsistent or conflicting administrative rulings, interpretations, practices, and enforcement policies of the DOL relating to the classification of ICs and employees. This appears to be a means to override the Biden administration’s 2024 rule on the subject. The next part of the proposed rule recites the time-honored principle under the FLSA that a worker is an IC only if he or she, as a matter of economic reality, is “in business for him- or herself.” The proposed regulation then lists five factors to be examined. Of the five, the DOL’s proposed regulation refers to two as “core factors”: (1) the nature and degree of the individual’s control over their work; and (2) the individual’s opportunity for profit or loss. The proposed regulation states these two core factors “are the most probative as to whether or not an individual is an economically dependent ‘employee,’ … and each is therefore afforded greater weight in the analysis than is any other factor.” The remaining three, referred to as “non-core” factors, are: (1) the amount of skill required for the work; (2) the degree of permanence of the working relationship; and (3) whether the work is part of an integrated unit of production. Finally, the proposed rule also notes that any factor related to the relationship between an individual and potential employer may be relevant. Notably, the courts under the FLSA have considered dozens of factors bearing on IC status, and the proposed regulation therefore validates this type of broad judicial inquiry.

The DOL’s proposed rule has no application to the IC status of workers under most other federal laws, such as ERISA and the National Labor Relations Act, which have different worker classification tests. It also has no application to the classification of workers under state IC tests, most of which vary considerably from the test under the FLSA. This is a key takeaway, because most litigation against companies alleging IC misclassification arises in whole or in part under state laws.

The publisher of this blog was quoted in numerous publications on the proposed rule:

• An article by Parker Purifoy, titled “Labor Agency’s Gig Worker Flip-Flopping Weakens Rules in Court,” in Bloomberg Law Daily Labor Report and Bloomberg Daily Tax Report on March 2, 2026;
• An article by Max Kutner, titled “DOL Contractor Proposal Looks Familiar, With Less Deference,” in Law360 Employment Authority on February 26, 2026;
• An article by John Kingston, titled “Trump’s Independent Contractor Rule Revived, Minimal Difference From Earlier Version.” in Freight Waves on February 26, 2026;
• An article by Michael Cardman, titled “DOL Proposes New(ish) Independent Contractor Rule,” in Brightmine HR and Compliance on February 26, 2026; and
• An article by Nancy Marshall-Genzer, titled “Employee or Gig Worker? Proposed Labor Department Rule Seeks to Clarify,” in Marketplace on March 5, 2026.

Prior to the issuance of the proposed regulation, the New York Law Journal published an article by the author of this blog post on the anticipated proposed regulation in its annual Labor & Employment Special Report, titled “The Upcoming Independent Contractor Regulations,” on February 23, 2026.

Analysis

A review of the proposed regulation issued today has no meaningful differences from the wording of the 2021 rule on IC status issued by the first Trump administration. The only difference is a few of the examples given in the proposed rule dealing with the transportation and the construction industries.

The first part of the proposed regulation would rescind all inconsistent or conflicting administrative rulings, interpretations, practices, and enforcement policies of the Labor Department relating to the classification of ICs and employees. This approach appears to be a means to override the Biden administration’s 2024 rule on the subject.

The next part of the proposed rule recites the time-honored principle under the FLSA that a worker is an IC only if he or she is, as a matter of economic reality, “in business for him- or herself.” The proposed regulation then lists five factors to be examined, but states the five factors “are not exhaustive and no single factor is dispositive.” The proposed rule also notes that any factor related to the relationship between an individual and potential employer may be relevant. Notably, the courts under the FLSA have considered dozens of factors bearing on IC status, and the proposed regulation therefore validates this type of broad judicial inquiry.

Of the five factors, the Labor Department’s proposed regulation refers to two as “core factors”: (1) the nature and degree of the individual’s control over his/her work; and (2) the individual’s opportunity for profit or loss. The proposed regulation states these two core factors “are the most probative as to whether or not an individual is an economically dependent ‘employee,’ … and each is therefore afforded greater weight in the analysis than is any other factor.” While the proposed rule does not create a legal presumption, it does say that if both core factors point toward the same classification, whether employee or IC, “there is a substantial likelihood that is the individual’s accurate classification.”

This is not a new way to analyze IC status under the FLSA; rather, it is consistent with current jurisprudence. As the Department of Labor states in its lengthy supplementary material appearing before the proposed rule, “whenever the control and opportunity factors both pointed to the same classification – whether employee or independent contractor – that was the court’s conclusion regarding the worker’s ultimate classification.” Proposed Rule at note 140.

Under the control factor, the proposed rule restates many of the same conclusions that most courts have already articulated — that several types of activities do “not constitute [the type of] control that makes the individual more or less likely to be an employee under the Act.” Those types of control that are not meaningful include requiring an individual to:

• Comply with specific legal obligations;
• Satisfy health and safety standards;
• Carry insurance;
• Meet contractually agreed-upon deadlines or quality control standards; or
• Satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships).

While the proposed regulation notes that requiring the individual to work exclusively for one company demonstrates control (which is consistent with court decisions), it considerably overstates the law when it says that requiring the individual, directly or indirectly, to work exclusively for a potential employer weighs in favor of the individual being an employee under the FLSA. Many legitimate ICs, for example, commit to one or more projects that require a concentrated, full-time undertaking to produce deliverables within a tight timeframe; that is hardly the type of control that should support employee status.

The profit or loss factor expands the manner in which courts have considered a worker’s investment. Some have examined only the worker’s financial investment. However, the proposed regulation would follow newer court decisions that also have examined the manner in which profits are maximized by the individual’s initiative.

Next, the proposed regulation addresses the three “other” factors: (1) the amount of skill required for the work; (2) the degree of permanence of the working relationship; and (3) whether the work is part of an integrated unit of production.

The amount of skill required factor fails to mention that many legitimate ICs do not have what some may refer to as an elevated skillset, yet they may have little or no economic dependence on a business. While some may think that taxi drivers, for example, do not have a high degree of skill, a number are very skillful and operate their own taxi business as ICs, as the courts have found over the years. Likewise, a doctor working for a hospital has elevated skills, but that does not make him or her an IC if the hospital directs and controls his or her work while he or she works at a fixed salary in a hospital.

The degree of permanence factor in the proposed regulation failed to recognize that many IC relationships are at least semi-permanent by choice of the worker: for example, a gardener who provides service weekly to a homeowner for 20 years; a distributor who chooses to operate his or her own business distributing another company’s products exclusively; and a tutor who provides frequent tutoring to the same family’s children throughout their school years.

The final factor is characterized as whether the work “is part of an integrated unit of production.” As the proposed rule states: “This factor is different from the concept of the importance or centrality of the individual’s work to the potential employer’s business.” In this manner, the Department of Labor is seeking to change the focus of this factor, which historically has been given little weight by the courts anyway.

As noted above, the proposed regulation adds a new subsection with six examples of workers and comments on whether the workers would be properly classified as employees or ICs under the final regulation.

Lastly, the proposed regulation addresses the “primacy of actual practice.” It states that a company’s actual practice is more significant than what is written in a purported IC’s contract.

The formal notice announcing the proposed regulation is likely to be issued tomorrow in the Federal Register, and the public may submit comments to the Labor Department within 60 days thereafter. We expect to submit comments, as we did in connection with the 2021 Trump Rule and the 2024 Biden Rule, both of which quoted comments by the publisher of this blog.

The Labor Department’s proposed rule, like the first Trump administration’s 2021 Rule and the Biden administration’s 2024 Rule, is likely to face lawsuits regarding its enforceability. But because no court has relied upon either of those other rules in determining the IC status of workers, such litigation has limited practical meaning.

Of course, the Labor Department’s proposed rule has no application to the IC status of workers under most other federal laws, such as ERISA and the National Labor Relations Act, which have different worker classification tests. It also has no application to the classification of workers under state IC tests, most of which vary considerably from the test under the FLSA. And most litigation against companies alleging IC misclassification arises in whole or in part under state laws and not exclusively the federal wage and hour law.

Takeaway

IC compliance and misclassification has been front-page news for many years. State workforce agencies and plaintiffs’ class action attorneys have continued to focus on companies that are out of compliance with federal and state IC laws. While this proposed regulation may be construed as favoring IC status, it will likely increase attention on this matter and prompt more class action lawsuits by plaintiffs’ attorneys, as an unintended consequence.

Many companies that utilize a number of ICs may be vulnerable to misclassification liability if they are not in a heightened state of compliance with applicable federal and state laws. Some companies have resorted to a process such as IC Diagnostics (TM) to elevate their level of compliance with IC laws. Companies willing to reevaluate their compliance in this area can, consistent with their current business model, restructure, re-document, and re-implement their IC relationships in a manner that is customized and sustainable.

Publisher’s Note (3/2/26): The publisher of this blog was quoted on the proposed rule in a number of publications: an article by Parker Purifoy, titled “Labor Agency’s Gig Worker Flip-Flopping Weakens Rules in Court,” in Bloomberg Law Daily Labor Report and Bloomberg Daily Tax Report on March 2, 2026; an article by Max Kutner, titled “DOL Contractor Proposal Looks Familiar, With Less Deference,” in Law360 Employment Authority on February 26, 2026; an article by John Kingston, titled “Trump’s Independent Contractor Rule Revived, Minimal Difference From Earlier Version.” in Freight Waves on February 26, 2026; and an article by Michael Cardman, titled “DOL Proposes New(ish) Independent Contractor Rule,” in Brightmine HR and Compliance on February 26, 2026. Prior to the issuance of the proposed regulation, the New York Law Journal published an article by the author of this blog post on the anticipated proposed regulation in its annual Labor & Employment Special Report, titled “The Upcoming Independent Contractor Regulations,” on February 23, 2026. (Subscriptions may be required for the Bloomberg Law, Law360, and New York Law Journal articles.)

Why should businesses that use ICs disregard the legal significance of upcoming regulations? And why should worker organizations take comfort that the anticipated regulations will not alter the legal landscape for IC compliance and misclassification? First, the Labor Department does not decide IC status under federal law; the federal courts do. Each of the federal appellate circuits have, for decades, articulated their own tests for IC status, and each of those tests are roughly similar to each other. Second, the past regulations by both the earlier Trump Administration and the Biden Administration were little more than an interpretation of selected federal appellate court decisions, yet the courts routinely apply their own judicial precedent and do not need an agency to interpret their opinions. If, as expected, the new regulation again is simply an interpretation of court decisions by the current Administration, they too will likely be disregarded by the federal courts. Indeed, no court has yet relied upon any of the prior Labor Department regulations in deciding the merits of an IC misclassification case. Third, most litigation in the U.S. alleging IC misclassification is based at least in part on state laws, and federal regulations have absolutely no impact on the various state law tests for IC status.

The Prior Interpretations and Regulations

Few legal issues have been so blatantly subjected to political ping pong at the federal level over the past ten years than the status of workers as ICs or employees.

The Obama Administration Interpretation

On July 15, 2015, during the tail end of the Obama Administration, the Wage and Hour Administrator of the U.S. Department of Labor issued an “Administrator’s Interpretation” on IC status providing comprehensive guidelines on IC status under the FLSA. As we noted in a blog post[1] that day, the new Interpretation “contains nothing new, different, or dramatic.” We added: “In fact, the new Interpretation does little more than restate the same … factors that have historically been applied by the Labor Department and that can still be found on its website.” We commented that the new Interpretation, however, placed far greater emphasis than do the courts on “a worker’s ‘economic dependence’ on the business that has engaged his or her services,” a factor that favors employee status. We observed that, by doing so, the Interpretation overlooked governing judicial precedent.

The First Trump Administration’s Regulation

In early June 2017, less than five months after the start of the Trump Administration, the Labor Department withdrew that Administrator’s Interpretation and thereafter began working on the issuance of a formal rule on IC status. On January 6, 2021, only two weeks before the conclusion of the first Trump Administration, the Labor Department issued a final rule governing IC status under the FLSA. The 2021 rule noted that the courts typically examine five factors to determine IC status, but expressly stated that two factors should be given greater weight: (1) the nature and degree of the individual’s control over his/her work; and (2) the individual’s opportunity for profit or loss. The regulation referred to those as “core factors” and pronounced that the remaining three factors, referred to as “non-core” factors, should be given less importance: 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.

Notably, the illustrations in the final 2021 rule issued by the first Trump Administration focused on factual scenarios and court decisions that favored IC status. As we observed in a blog post[2] on the day the final regulations were issued, “unlike most regulations with hard and fast rules, th[is] proposed regulation was in the nature of an administrative interpretation comprising the Labor Department’s review of existing court decisions and its articulation of a preferred legal analysis.” We predicted that, as a result, “courts would give little if any deference to it.”

The Biden Administration’s Regulation

In May 2021, only four months after the start of the Biden Administration, the U.S. Department of Labor issued a rule that withdrew the Trump Administration’s regulation on IC status. That rule was immediately challenged in court. Meanwhile, the Biden Labor began its own version of a regulation governing IC status. On January 9, 2024, the Labor Department issued a new final rule on IC status under the FLSA. It rejected the Trump Administration regulation that gave greater weight to two factors and instead focused on a “totality-of-the-circumstances” approach in which none of the factors have a predetermined weight. The most meaningful impact of this approach was the Biden Administration’s effort to place more weight on one of the three “non-core” factors: whether the work is integral to the employer’s business. This factor almost universally favors employee status, thereby causing many courts to give it less weight than the other factors used to determine IC status. As we noted in our blog post[3] on the day the Biden regulation was issued, “it is unlikely the courts will change their precedent and give more weight to that factor.” No courts have relied on that 2024 rule in deciding if a worker is an IC or employee. 

There have been as many as five lawsuits seeking to enjoin the Biden 2024 rule, but all have been paused after the second Trump Administration filed court papers in each case that it was seeking to rescind the 2024 rule issued by the Biden Administration.

The Upcoming Second Trump Administration Regulation

It is anticipated that the next Trump Administration rule on IC status under the FLSA will mirror to a large extent the approach taken five years ago in the regulation issued by the Labor Department in the first Trump Administration – a rule that was essentially the Trump Administration’s interpretation of court decisions, with emphasis on the two “core” factors identified in the 2021 rule. If so, one should expect that the courts will continue to ignore Labor Department regulations on IC status and instead follow their own well-established precedents.

Another reason why the anticipated IC regulations will have an insignificant impact legally is that the position of the U.S. Department of Labor on the issue has virtually no influence on state laws, which vary considerably on the test for IC status. The overwhelming number of state laws permit the legitimate IC arrangements, although a few state laws strictly curtail all types of IC relationships. Thus, the upcoming federal regulation will not likely impact the legal status of the nearly 12 million U.S. workers that identified themselves as engaged in an IC relationship, according to a November 2024 study[4] by the U.S. Department of Labor.

Conclusions and Takeaways

Many commentators will likely report that this upcoming regulation on IC status under federal law will increase the use of ICs by many businesses, including the gig economy, which is one industry sector that makes great use of workers that companies classify as ICs. Another industry that will likely welcome the new regulation is transportation, which relies heavily on owner-operators, whom transport companies classify as ICs. That industry has been the subject of countless IC misclassification lawsuits by government agencies in certain states and plaintiffs’ class action lawyers in courts around the country. It is anticipated, however, that the issuance of the new regulation on IC status will have no meaningful impact on the end-result of IC misclassification lawsuits, the bulk of which are brought under state law in whole or in part.

For companies that rely on the use of ICs, prudence suggests that the issuance of the new regulation governing IC status of workers should not be treated as some type of assurance that their IC relationships will more likely withstand scrutiny under federal and state laws governing IC status. Plaintiffs’ class action lawyers and state government agencies will hardly be deterred by a new federal IC rule that will have little to no impact on IC misclassification cases. Rather, the renewed focus on IC status should serve as an impetus for companies using ICs to enhance their compliance with IC laws, particularly state laws governing IC status. Companies seeking to do so may wish to use a process that structures, documents, and implements IC relationships to maximize IC compliance in a customized and sustained manner.[5]

[1] https://www.independentcontractorcompliance.com/2015/07/15/new-different-dramatic-the-labor-departments-new-guidance-on-independent-contractor-misclassification-is-nothing-new-legally-but-will-reinvigorate-the-crackdown-on-the-proliferating-use/.

[2] https://www.independentcontractorcompliance.com/2021/01/06/no-major-changes-but-impact-of-independent-contractor-final-regulation-issued-today-is-questionable/.

[3] https://www.independentcontractorcompliance.com/2024/01/09/legally-nil-but-will-look-a-lot-like-a-score-labor-department-issues-its-final-rule-on-independent-contractor-status/.

[4] https://www.independentcontractorcompliance.com/2024/12/10/federal-government-study-shows-independent-contractor-working-arrangement-steadily-increasing-november-2024-ic-legal-news-update/.

[5] https://www.independentcontractorcompliance.com/ic-diagnostics/.

Reprinted with permission from the February 23, 2026, edition of the New York Law Journal© 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.

The Amazing Care Case

The DOL commenced this lawsuit against Amazing Care and its owner and manager in 2024. After pretrial discovery, the DOL made a motion for summary judgment, arguing that Amazing Care and the individual defendants misclassified the LPNs and HHAs as ICs instead of employees and failed to pay them overtime as required by the FLSA for all hours worked over 40 in a workweek.

The court, in entering summary judgment in favor of the DOL on liability, applied a six-part test for IC status under the FLSA, holding that all but one of the factors favored employee status. The first factor addresses the degree of the alleged employer’s right to control the manner in which the work is to be performed. Finding that the company unilaterally dictated the wage rates of the nurses, supervised them by monitoring patient care notes and visiting job sites, and created and instructed the LPNs to follow detailed patient care plans, the court concluded that this factor supported employee status.

The second factor was whether LPNs had an opportunity for profit or loss depending on each worker’s managerial skill. While the court noted that LPNs could decline work opportunities and could engage their own replacements, they did this infrequently and, in any event, any “managerial skill” they exercised was far outweighed by the defendants’ management of Amazing Care’s operations. The court concluded that this factor also favored employee status, although the court’s decision seems less than persuasive on this factor.

The third factor involves the workers’ investment in required equipment or materials and the workers’ employment of helpers. The court found that this factor favored IC status, “albeit slightly,” because the LPNs supplied their own PPE equipment.

The fourth factor addresses the use of special skills. Despite the fact that LPNs require considerable training and clinical experience, the court found that this factor favored employee status. It concluded that the skills were not used in an “independent way” because Amazing Care required them to adhere to care plans. Like the second factor involving opportunity for profit or loss, the court’s reasoning seems somewhat strained, but there is no indication in the court’s decision of any evidence submitted by the defendants as to how the LPNs applied their advanced skills.

The fifth factor is the permanence of the working relationship. The court found that this factor also favored employee status because 90% of the LPNs worked exclusively with Amazing Care and the company’s goal was to staff LPNs on a long-term basis in patients’ homes. The court concluded that the overwhelming majority of LPNs did not have a “transitory” working relationship with Amazing Care. Of interest here, those LPNs that did have a “transitory” working relationship seem to have been lumped together with those that did not for purposes of summary judgment.

The sixth and final factor is one that most often favors employee status: whether the services provided by the workers are integral to the alleged employer’s business. Not surprisingly, the court found that this factor also favored employee status.

The court also considered additional facts in the record bearing on the independence of the LPNs, but found most of them favored employee status. Those facts included that Amazing Care gave LPNs performance reviews like employees, directed LPNs to use the same time sheets as employees, subjected LPNs to Amazing Care’s employee handbook, employed some LPNs as W-2 employees despite the fact that they performed similar tasks, and used workplace forms that referred to all LPNs as “employees,” even those paid on a 1099 basis.

Finally, the court determined whether the owner, who served as President and Administrator, and the principal manager, who served in the position of Director of Nursing, were also “employers” under the FLSA and equally liable to the LPNs as Amazing Care itself. The court found the Nursing Director to be an “employer” because she participated in deciding whether LPNs would be classified as ICs or employees, supervised the LPNs, reviewed their notes, disciplined them, and conducted their performance reviews.

While the court did not determine damages, because it was unclear if a two-year or three-year statute of limitations applies, the DOL submitted evidence that unpaid overtime exceeded $5.9 million and that the defendants should also be liable for an equal amount of liquidated damages under the FLSA. The issue of damages will be submitted to a jury. Thus, the corporate and individual defendants, personally, could face a judgment of nearly $12 million. Su v. Amazing Care Home Healthcare Services LLC, No. 2-24-cv-00190 (E.D. Pa. Feb. 13, 2026).

Lessons for Businesses Classifying LPNs and Other Nurses as ICs

Businesses can learn quite a lot from the court’s decision in Amazing Care, especially those that use LPNs and other nurses they classify as ICs. While this case is somewhat different from a lawsuit against a large health care system operating in seven states west of the Mississippi that was the subject of the December 2024 blog post referenced above, there are similarities worth mentioning. That health care system was sued in a class action for allegedly misclassifying registered nurses (RNs) as ICs instead of employees. The proposed class action was filed in a federal district court in Washington state by an RN who alleged that the health care system that engaged him as an IC and paid him on a 1099 basis had directed and controlled him and other similarly situated contract RNs, despite the fact that he and the other 1099 RNs performed duties quite similar to RNs working for the system but paid as W-2 employees. Ward v. Providence St. Joseph Health, No. 2-24-cv-01528 (W.D. Wash. Sept. 24, 2024).

The plaintiff nurse alleged in his complaint filed in that case that the health care system controlled and directed all aspects of the work by RNs that have been classified as ICs; required adherence to company policies and procedures; and maintained control, oversight and direction of the contract RNs, including their hiring, firing, and discipline. According to the latest court filing in that case, the parties have reached a settlement agreement that will soon be presented to the court for approval. It is anticipated that the settlement agreement will be for a substantial amount.

There are steps that nursing companies and health care systems can take to minimize their exposure to these types of lawsuits and place themselves in a position to successfully defend against legal challenges to their IC relationships — or settle such cases on modest terms.

First, it is critical to assess whether the role being classified as an IC and paid on a 1099 basis can likely be legally classified in that manner. Some nursing positions are simply not susceptible to being classified legally as ICs, although many are, as long as all of the i’s are dotted and t’s are crossed. Once determined that a role can likely be legally structured, documented, and implemented as an IC as a general matter, there are a variety of federal and state tests for IC status that may be applicable. In some situations, the position may be classified properly under some state laws but not under others.

Documentation of the IC relationship is often key. A February 8, 2022, article published in Law360 Employment Authority, titled “Nurses Are Becoming Gig Workers, Raising Wage Concerns,” discussed the nationwide nursing shortage and how online staffing platforms are seeking to meet that need with opportunities for nurses to provide their services as ICs. Regarding the specter of IC misclassification claims and the need for robust agreements that set forth details of the relationship between the business and IC nurses, the author of this blog post was quoted as follows: “You can have nurses who are independent contractors legitimately, and you can have nurses who are not legitimately independent contractors, who are misclassified. You shoot yourself in the foot if you don’t have an independent contractor agreement that is state-of-the-art.”

Where a health care system uses both employees and ICs to perform similar roles, as was the case with Amazing Care and the hospital system that was the subject of our December 2024 blog post, meaningful distinctions need to be implemented so that it is abundantly clear that the differences support the classification of some workers as ICs and others as employees.

Finally, structuring and documentation alone are not sufficient. Implementing an IC relationship in a compliant manner can be critical, and was something that Amazing Care did not do well, according to the court. Communications with ICs need to recognize and reflect that they are their own bosses. Health care systems need to treat them that way — and not in the same way management communicates with its employees.

Communicating in “IC-speak” does not come naturally to many, so management training is important. So, too, is eliminating “employee-centric” terms from documents used to communicate with ICs themselves and with patients that receive their nursing services. Giving internal documents an “IC bath” is a lot less challenging than it seems, but can and should be done. If not, a business’s own words will be used against it in a lawsuit, as was the situation in the Amazing Care case.