Independent Contractor vs. Employee And the New Rules Issued by The Department of Labor

Overview:

For HR professionals, payroll leaders, managers, and business owners, worker classification remains one of the most difficult and costly decisions to get right. Treating someone as an independent contractor when the facts point to employee status can create wage and hour exposure, tax and benefit issues, and expensive disputes with agencies or workers. That risk is not theoretical. A recent Fourth Circuit decision affirmed a $9.3 million judgment in a Department of Labor case involving nurses who had been classified as independent contractors, underscoring how serious misclassification liability can become when the working relationship does not support the label being used.

This issue is especially timely because the federal framework is again in flux. On February 26, 2026, the U.S. Department of Labor published a proposed rule that would rescind the 2024 independent contractor rule and replace it with a revised economic reality analysis. For employers, that does not mean the answer is suddenly simple. It means classification decisions deserve even closer attention right now, particularly because the Department’s proposal continues to focus on the real substance of the relationship rather than contract labels alone, including factors such as control over the work and the worker’s opportunity for profit or loss.

At the same time, employer risk does not stop with the Department of Labor. The IRS applies its own common law approach, and many states use separate tests that may be stricter than the federal analysis, including ABC-style standards. That means organizations using freelancers, consultants, gig workers, project-based talent, or other nonemployee arrangements need to evaluate classification decisions from multiple angles. A worker may appear properly classified under one framework and still create exposure under another.

This webinar will provide a practical roadmap for evaluating worker-classification decisions in the current environment. It will examine the Department of Labor’s current direction, the economic realities test, IRS common law rules, ABC-style approaches, differences in financial obligations, the consequences of misclassification, the role of independent contractor agreements, what is most likely to create liability, and the action items employers should consider now. For HR and payroll teams trying to support business flexibility without increasing legal risk, this session is designed to help clarify where the biggest mistakes occur and how to make better classification decisions before those mistakes turn into audits, claims, or litigation.

Areas covered in the session:

• Advantages of Using Independent Contractors
• Current DOL Position on Independent Contractors
• The DOL Economic Reality Test
• The Current Independent Contractor Rules
• IRS Common Law Rules Regarding Independent Contractors
• ABC Test for Independent Contractors
• Differences in Financial Obligations
• Consequences of Misclassifying Employees as Independent Contractors
• Independent Contractor Agreements
• What Can Get You in Trouble
• Action Items

Exclusive Handouts:

• Worker Classification Scenario Workbook for 2026
• Independent Contractor Classification Audit Checklist
• Independent Contractor Agreement Red-Flag Guide

Why should you attend?

Worker classification remains one of the easiest areas for employers to get wrong and one of the most expensive when they do. A decision to treat someone as an independent contractor may seem practical from an operational standpoint, but if the facts do not support that classification, the result can be wage and hour liability, tax problems, benefit issues, and costly disputes that reach far beyond a single worker.

This webinar is especially valuable because employers are making these decisions in a period of continued uncertainty. The standards used by the Department of Labor, the IRS, and the states do not always line up neatly, and many organizations rely too heavily on contract language without examining how the relationship actually works in practice. This session will help bring clarity to an area where many businesses are exposed without fully realizing it.

You should attend if your organization uses freelancers, consultants, project-based workers, or any other nonemployee talent and wants to reduce risk without losing flexibility. Bob McKenzie will walk through the core tests, the practical trouble spots, and the action items employers should focus on now, giving attendees a more grounded framework for making worker-classification decisions with greater confidence.

Who will benefit?

This webinar will benefit employer-side professionals who make, review, approve, or support worker-classification decisions and need to understand where misclassification risk is most likely to arise. Those include:

• HR Directors/Human Resources Managers/HR Compliance Managers
• Employee Relations Managers/Directors of People Operations
• Chief Human Resources Officers/Chief People Officers
• Payroll Managers/Payroll Directors
• Compensation and Benefits Managers/Finance Managers
• Controllers/Chief Financial Officers
• In-House Employment Counsel/Labor and Employment Attorneys
• Corporate Counsel/Compliance Officers
• Risk Management Professionals/Internal Auditors
• Operations Managers/Business Owners
• Presidents/Chief Executive Officers
• Chief Operating Officers/Staffing Firm Owners
• Staffing Branch Managers/Workforce Management Leaders
• Procurement Managers overseeing contractor engagements/Vendor Management Professionals
• Independent Contractor Program Managers