The Department of Labor under the Trump administration is signaling its intent to revoke a controversial Biden-era rule governing how independent contractors are classified — a move that could once again reshape labor relationships across industries, including commercial real estate.
The decision would mark yet another turn in a long series of federal shifts on the issue. The Biden administration’s rule had itself undone a Trump-era standard, which had replaced an earlier framework. Each rule change has altered how businesses determine whether a worker is an employee or an independent contractor — and each has created fresh uncertainty about what may happen next under future leadership.
At the heart of the debate is a problem that’s persisted for decades: there is no clear, universally accepted definition of an independent contractor. The distinction between “employees” and “employers” in federal labor law still dates to the 1930s — and is, as attorneys note, circular in logic.
“In the 30s, the mandate was quite a different one,” Doris Short, a partner at Duane Morris, tells GlobeSt.com. “They were creating a way to ensure that people were being properly paid. As time has marched forward, there are lots of different ways to work and lots of different ways to be paid, and some of that is the discretion of the worker themselves.”
Over the years, courts, federal agencies and state governments have all attempted to draw their own distinctions between employment and contracting. But because Congress has never codified a single definition, each presidential administration has been left to set its own regulatory approach through the Department of Labor.
In the final year of Trump’s first term, the DOL issued a rule that prioritized workers’ control over their duties and their profit opportunities — effectively making it easier for companies to classify workers as independent contractors. The Biden administration later rescinded that rule, introducing a more complex framework that drew heavily from the 1930s-era “ABC test.” Under which, a worker could qualify as an independent contractor only if their work fell outside the company’s usual line of business.
When California adopted a version of the ABC test, it was forced to issue hundreds of exemptions after businesses and freelancers warned the approach would eliminate contracting opportunities without opening new jobs. The Biden DOL’s 2024 rule faced similar criticism for leaving too much room for agency interpretation and providing little concrete guidance.
By May 2025, the Trump administration’s Department of Labor announced it would stop enforcing the 2024 rule and instead rely on an older framework outlined in a 2008 federal fact sheet. It’s widely expected that the administration will propose an updated rule, likely mirroring the Trump DOL’s original January 2021 regulation.
For the commercial real estate industry, the implications could be significant. Some observers have long argued that parts of the construction workforce are improperly treated as independent contractors rather than employees. “You can find it, it is out there, it is happening,” Short acknowledges. “But that doesn’t mean it’s happening broadly.”
According to Short, state and local labor authorities often set standards stricter than those at the federal level. “When you have states that are going far, far above and beyond what the Fed is doing, you’re going to find more guidance and more cases at the state and local levels,” she says. “In New York, you’re not going to have as many issues with construction and independent contractors.”
For the time being, skilled craft labor will likely continue to be treated as employment, while specialized subcontracting or vendor arrangements may still qualify as independent contracting. But with labor rules changing from one administration to the next, the boundaries remain fluid.
Companies in commercial real estate would do well to remain cautious. As Short notes, both federal and state labor agencies continue to aggressively pursue businesses that misclassify employees — regardless of which administration happens to be in charge.
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