The Department of Labor just created the most confusing compliance environment in decades. And for employers, the financial stakes couldn’t be higher.
What Changed
On May 1, 2025, the DOL announced it will no longer enforce its 2024 independent contractor rule during investigations. Instead, investigators are using the 2008 guidance — a completely different, more employer-friendly set of standards.
Here’s the catch:
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The 2024 rule is still legally in effect (especially for lawsuits).
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States like California and New Jersey continue to apply even stricter standards.
That means businesses are now stuck with three conflicting rulebooks:
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DOL Investigations → 2008 standards (more employer-friendly)
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Private Lawsuits → 2024 rule (stricter “economic realities” test)
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State Enforcement → varies by state, often the toughest of all (e.g., California’s ABC test)
The Cost of Getting It Wrong
Misclassification isn’t just a technicality — it’s a multi-million dollar liability.
Violations can trigger:
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Back wages and overtime payments
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Employment tax liabilities
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Workers’ comp exposure
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Class-action lawsuits
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Federal and state penalties
Real-world example: California gig worker cases have produced settlement demands over $100 million.
Even in smaller states, misclassification has cost $50,000+ per worker. Multiply that by 10 or 20 contractors — and you’re staring down a $2.5 million mistake.
⚠️ Why September 2025 Is Especially Risky
The DOL has signaled it may issue new guidance “in the near future.”
Until then, employers are operating in regulatory limbo — unsure which rules ultimately apply to their workforce decisions.
This month is the danger zone: the rules are unclear, enforcement is unpredictable, and plaintiffs’ attorneys are watching closely.
✅ What Smart Businesses Are Doing Now
The organizations that will survive this chaos are taking proactive steps:
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Audit classifications now — using the strictest standard likely to apply.
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Review contractor agreements for compliance gaps.
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Document business justifications for contractor relationships.
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Prepare budgets for potential reclassification costs.
Bottom Line
With three conflicting standards in play, guessing wrong is no longer an option.
The businesses that thrive in 2025 will be those who audit their compliance today — before the DOL makes its next move.
Don’t leave a $2.5 million gamble on your books.
Give us your HR headache—so you can lead with confidence.
Schedule your Independent Contractor Compliance Audit today: ExpertHumanResources.com
