The Department of Labor (DOL) announced it’s pulling back from the 2024 Independent Contractor Rule.

If you’re a freelance creative, here’s what that means.

Background on Contractor Rules

Up until 2021, there wasn’t a formal means to determine who was a contractor versus employee.

Instead, the federal government offered guidance, primarily via Fact Sheet #13, and essentially said good luck.

Under the Trump administration, the 2021 rule was established creating a formal 5-factor test to determine contractors from employees.

After Biden took office, the 2021 Rule was rescinded and the 2024 Rule was brought in with a 6-factor test.

For What Though?

Let the government tell it, these independent contractor rules are to protect us, the freelancers. The goal is to make sure businesses don’t label us contractors to avoid paying minimum wage, overtime, or benefits while treating us like employees.

The rules are also meant to offer clarity so we know what it means to be a contractor and clients have framework too.

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May 2025 Changes

On May 1, the Department of Labor announced they “will no longer apply the 2024 Rule’s analysis when determining employee versus
independent contractor status.”

The department cited legal challenges, saying there are a number federal lawsuits pending challenging the legality of the 2024 Rule.

Although the 2024 rule isn’t officially rescinded, the DOL said they’re going old school, back to Fact Sheet #13 (July 2008) and a 2019 opinion letter, which use an “economic reality” test. That looks at factors like how independent you are in the market and how integral your work is to a client’s business.

Meanwhile, the department said they’re “reviewing and developing the appropriate standard for employee versus
independent contractor status.

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What’s the Impact on Creative Freelancers?

For freelancers who love their independence, this rollback could ease some worries. The 2024 Rule’s stricter framework made some clients nervous about hiring freelancers.  For example, a small media company might hesitate to hire a freelance editor for ongoing blog posts, worried the DOL would see it as an employee role.

Even the risk of getting entangled in a battle over whether or not someone is a freelancer can cause some prospective clients to say, no thanks.

The older economic reality test is looser and should give more clients more confidence to hire you.

Some argue the less-structured test brings risks. Clients might try to take advantage of freelancers and push employee-like demands without benefits.

But I would argue that will only happen when and where it’s allowed to happen.