The U.S. Department of Labor (DOL) announced Thursday that it will no longer enforce a final rule that increased the possibility of Fair Labor Standards Act (FLSA) violations for home care providers.

Implemented in January 2024, the Employee or Independent Contractor Classification Under the Fair Labor Standards Act is currently under DOL review and facing challenges in federal court. During the review process, the DOL’s investigators will no longer enforce the rule, which impacts the criteria used to determine whether workers are classified as employees or independent contractors under the FLSA.

“The Field Assistance Bulletin (FAB) from the DOL Wage and Hour Division announces a change in enforcement of the final rule on worker classification that has significant potential legal and economic implications for home care providers utilizing independent contractors, including virtual marketplaces,” Angelo Spinola, shareholder and co-chair of the home health, home care and hospice practice at Polsinelli law firm, told Home Health Care News in an email. “For home care providers evaluating their worker classifications, the change in enforcement may be helpful in assessing business risk under federal law.”

The 2024 final rule created potential issues for home care businesses, as caregivers who work in non-medical home care for several companies simultaneously are often determined to be independent contractors.  Now, the DOL has reinstated Opinion Letter FLSA2019-6, which Spinola says has been and continues to be controversial, but is believed to provide more support for the gig economy.

The final rule rescinded a 2021 rule published under the Trump administration that was said to be more business-friendly, continuing a pendulum swing based on who holds the executive office. 

‘The prior administration may have been more inclined to find a presumption of employment status and the benefits that go with being a bona fide employee, to both the individual and the government,  by issuing its set of guidance criteria,” Rolf Lowe, partner at Wachler Associates, told HHCN in an email. “The DOL under the current administration is reverting back to how it was previously approached before the 2024 guidance was issued.”

The DOL’s decision not to enforce the rule does not change existing regulations, according to the department, but will inform how the department allocates enforcement resources during the review process.

The department may still enforce the rule in individual cases, but Lowe says it is unlikely that the DOL will proactively seek out cases to assess under the rule.

The change in enforcement only applies to how the DOL interprets the FLSA and does not impact the enforcement of state law, Spinola said.