© 2025 American Payroll Institute, Inc.
May 2, 2025 Volume 33 Issue 5
DOL to Reconsider Worker Classification Rule
The U.S. Department of Labor (DOL) recently told two
appeals courts that it wants time to reconsider the rule
on how to determine worker classification under the Fair
Labor Standards Act (FLSA) before the courts reach decisions.
The DOL asked the 5th Circuit (Frisard’s Transportation, LLC
v. U.S. Department of Labor, No. 24-30223) and the 11th
Circuit (Warren v. U.S. Department of Labor, No. 24-13505) to
temporarily suspend the cases by submitting motions to hold
the appeal in abeyance. The DOL requested the courts give
“additional time for new agency officials to determine how
they wish to proceed.”
According to the motions, the DOL said it “intends to
reconsider the 2024 rule at issue in this litigation, including
whether to issue a notice of proposed rulemaking rescinding
the regulation.” The motion in Warren states that the suspension
“will serve the interests of judicial efficiency because the
agency’s reconsideration and potential rescission of the rule
may obviate the need for further litigation.” The motion in
Frisard’s echoes the same sentiment.
The rule at issue
In January 2024, the DOL issued a final rule that modifies
how to determine whether a worker is an employee or an
independent contractor under the FLSA (89 F.R. 1638, 1-10-24,
see PAYROLL CURRENTLY, Issue 2, Vol. 32). The 2024 final rule
went into effect on March 11, 2024, and formally rescinded the
2021 rule (86 F.R. 1168, 1-7-21).
The 2024 final rule sets forth an analysis for determining
employee or independent contractor status under the FLSA
that relies on a totality-of-the-circumstances analysis of the
economic reality test rather than using the “core factors” from
the 2021 rule. The analysis focuses on whether each factor
shows the worker is economically dependent upon the
employer for work versus being in business for themselves.
The final rule states the factors should guide the assessment of
the economic realities of the working relationship, and no one
factor or subset of factors should be conclusive.
The 2024 final rule lists six factors to guide the assessment
of the economic realities of the working relationship and to
help answer the question of economic dependence under the
FLSA:
(1) The opportunity for profit or loss depending on
managerial skill.
(2) Investments by the worker and the potential employer.
(3) Degree of permanence of the work relationship.
DOL to Reconsider Worker Classification Rule. ...........................1
IRS Revises Forms 941-X, 944-X, and Instructions....................... 2
IRS CI Tax Case of the Month Focuses on Payroll. .......................2
2024 EEO-1 Data Collection Scheduled to Open on May 20... 3
IRS Provides Information About IRIS, TIN Matching Program. .....3
6th Circuit Rules Employee Was Not Paid a Salary, Not FLSA
Exempt ..............................................................................................4
IRS Releases 2025 Form 1096. ..........................................................5
PayrollOrg Offers Free Webinar on Employment Verification...... 6
Employers Can Enroll in ICE IMAGE to Help With Compliance. ....6
Delaware Added to List of States Using e-NMSN........................ 6
HHS Withdraws Rule to Officially Change OCSE to OCSS. .......6
Payroll Solutions. .................................................................................7
IRS Dirty Dozen List Warns Taxpayers of Common Scams. .....7
Court Rules Pay Plan With Overtime Pay Gap Violated FLSA. ...8
8th Circuit Reverses Ruling for Employer for Automatically
Deducted Breaks............................................................................. 9
Free Reference Book Answers Payroll Questions......................10
IRS Updates Offer in Compromise Booklet.................................10
DOL Enters Into Misclassification Agreements..........................11
EADs for Some Hong Kong Residents Extended to 2027........11
USCIS Extends EADs for Venezuelan TPS Designation Until
2026..................................................................................................11
IRS Encourages Employees to Check Withholding...................12
TIGTA Publishes Report on IRS’s Form 1099 Filing System,
IRIS. ...................................................................................................12
Capitol Hill Update............................................................................12
State and Local Highlights...............................................................15
ED to Resume Collections on Defaulted Student Loans. ..............17
PayrollOrg Contacts House Committee on Wage and Hour
Issues...........................................................................................................17
Dialoguing With PAYO’s Government Relations at Payroll
Congress....................................................................................................18
Starting with this issue of PAYROLL CURRENTLY, references to The Payroll Source® refer to the 2025 edition of the book,
which is printed and available online on the PayrollOrg Bookshelf. The online version is updated throughout the year.
May 2, 2025 Volume 33 Issue 5
DOL to Reconsider Worker Classification Rule
The U.S. Department of Labor (DOL) recently told two
appeals courts that it wants time to reconsider the rule
on how to determine worker classification under the Fair
Labor Standards Act (FLSA) before the courts reach decisions.
The DOL asked the 5th Circuit (Frisard’s Transportation, LLC
v. U.S. Department of Labor, No. 24-30223) and the 11th
Circuit (Warren v. U.S. Department of Labor, No. 24-13505) to
temporarily suspend the cases by submitting motions to hold
the appeal in abeyance. The DOL requested the courts give
“additional time for new agency officials to determine how
they wish to proceed.”
According to the motions, the DOL said it “intends to
reconsider the 2024 rule at issue in this litigation, including
whether to issue a notice of proposed rulemaking rescinding
the regulation.” The motion in Warren states that the suspension
“will serve the interests of judicial efficiency because the
agency’s reconsideration and potential rescission of the rule
may obviate the need for further litigation.” The motion in
Frisard’s echoes the same sentiment.
The rule at issue
In January 2024, the DOL issued a final rule that modifies
how to determine whether a worker is an employee or an
independent contractor under the FLSA (89 F.R. 1638, 1-10-24,
see PAYROLL CURRENTLY, Issue 2, Vol. 32). The 2024 final rule
went into effect on March 11, 2024, and formally rescinded the
2021 rule (86 F.R. 1168, 1-7-21).
The 2024 final rule sets forth an analysis for determining
employee or independent contractor status under the FLSA
that relies on a totality-of-the-circumstances analysis of the
economic reality test rather than using the “core factors” from
the 2021 rule. The analysis focuses on whether each factor
shows the worker is economically dependent upon the
employer for work versus being in business for themselves.
The final rule states the factors should guide the assessment of
the economic realities of the working relationship, and no one
factor or subset of factors should be conclusive.
The 2024 final rule lists six factors to guide the assessment
of the economic realities of the working relationship and to
help answer the question of economic dependence under the
FLSA:
(1) The opportunity for profit or loss depending on
managerial skill.
(2) Investments by the worker and the potential employer.
(3) Degree of permanence of the work relationship.
DOL to Reconsider Worker Classification Rule. ...........................1
IRS Revises Forms 941-X, 944-X, and Instructions....................... 2
IRS CI Tax Case of the Month Focuses on Payroll. .......................2
2024 EEO-1 Data Collection Scheduled to Open on May 20... 3
IRS Provides Information About IRIS, TIN Matching Program. .....3
6th Circuit Rules Employee Was Not Paid a Salary, Not FLSA
Exempt ..............................................................................................4
IRS Releases 2025 Form 1096. ..........................................................5
PayrollOrg Offers Free Webinar on Employment Verification...... 6
Employers Can Enroll in ICE IMAGE to Help With Compliance. ....6
Delaware Added to List of States Using e-NMSN........................ 6
HHS Withdraws Rule to Officially Change OCSE to OCSS. .......6
Payroll Solutions. .................................................................................7
IRS Dirty Dozen List Warns Taxpayers of Common Scams. .....7
Court Rules Pay Plan With Overtime Pay Gap Violated FLSA. ...8
8th Circuit Reverses Ruling for Employer for Automatically
Deducted Breaks............................................................................. 9
Free Reference Book Answers Payroll Questions......................10
IRS Updates Offer in Compromise Booklet.................................10
DOL Enters Into Misclassification Agreements..........................11
EADs for Some Hong Kong Residents Extended to 2027........11
USCIS Extends EADs for Venezuelan TPS Designation Until
2026..................................................................................................11
IRS Encourages Employees to Check Withholding...................12
TIGTA Publishes Report on IRS’s Form 1099 Filing System,
IRIS. ...................................................................................................12
Capitol Hill Update............................................................................12
State and Local Highlights...............................................................15
ED to Resume Collections on Defaulted Student Loans. ..............17
PayrollOrg Contacts House Committee on Wage and Hour
Issues...........................................................................................................17
Dialoguing With PAYO’s Government Relations at Payroll
Congress....................................................................................................18
Starting with this issue of PAYROLL CURRENTLY, references to The Payroll Source® refer to the 2025 edition of the book,
which is printed and available online on the PayrollOrg Bookshelf. The online version is updated throughout the year.
