DOL Issues New Proposed Independent Contractor Rule

On February 26, 2026, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking to assess how workers are classified under the Fair Labor Standards Act (FLSA). The previous Independent Contractor rule used a totality of the circumstances test, which consisted of several factors to assess a worker’s classification. The new proposed rule rescinds the prior rule and proposes a new economic reality test.

Under the economic reality test to determine whether a worker should be properly classified as an employee or independent contractor. Under the economic reality test, there are two core factors that are considered, “(1) the nature and degree of the worker’s control over the work; and (2) the worker’s opportunity for profit or loss based on initiative and/or investment.” The two-factor test is primarily to assess whether a worker is in business for themselves or whether the worker is economically dependent on a potential employer for work.

NAR is continuing to review the proposed rule to assess its impact on the real estate industry and its members. NAR will issue additional information about the proposed rule in the future.

Please find additional information about the rule here.