Comments Filed in Support of Department of Labor’s Proposed Independent Contractor Rule

By SBE Council at 27 April, 2026, 4:55 pm

The Honorable Andrew Rogers
Administrator
Wage and Hour Division
U.S. Department of Labor

Submitted via regulations.gov

Re: RIN 1235-AA46 - Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act

Dear Administrator Rogers:

On behalf of the Small Business & Entrepreneurship Council (SBE Council), I write in strong support of the Department of Labor's proposed rule updating the standard for determining employee versus independent contractor status. The proposed rule appropriately restores clarity and balance by returning to a framework grounded in long-standing judicial precedent while recognizing the realities of modern commerce and work.

A clear, workable, and predictable independent contractor standard is essential to sustaining entrepreneurship, expanding economic opportunity, flexibility, and enabling small businesses to grow, compete, and innovate in today's dynamic economy.

Independent work is a central and growing component of the U.S. economy. According to MBO Partners 2025 State of Independence Study, approximately 72.9 million Americans engaged in independent contracting work in 2025, including 27.6 million full-time independent contractors and 37.4 million occasional participants. These individuals are not only supplementing income but increasingly building businesses, developing specialized expertise, and contributing to economic dynamism. Notably, according to the MBO report, 5.6 million independent contractors earned more than $100,000 annually in 2025, underscoring the financial opportunity and growing economic significance connected to independent contracting work.

These trends are reinforced by federal data on business formation and "intention" to launch a business. According to the U.S. Census Bureau, new business applications have remained historically elevated since 2020, with more than 5 million applications filed annually in recent years, including over 5.4 million in 2023. The surge continued in 2024, and more than 5.6 million applications were filed in 2025. These applications for Employer Identification Numbers (EINs) translate into new business-entity formation for many. While the EIN application is an intention to start a business, there is a direct correlation between this activity and new business growth. The data demonstrates a powerful and ongoing shift toward entrepreneurship, with independent contracting often serving as the entry point to the traditional business ownership model.

For small businesses, independent contractors are indispensable. They allow small firms to access specialized talent, manage costs, and scale operations in response to changing demand. For startups and early-stage firms in particular, having access to independent contractors often determines whether a business can launch, grow, or innovate. Regulatory ambiguity in worker classification imposes disproportionate burdens on these firms, increasing compliance costs, legal risks, and uncertainty. Such ambiguity undermines opportunity.

SBE Council strongly supports the Department of Labor's decision to rescind the 2024 rule and restore a more structured and predictable framework. The prior rule created confusion for independent contractors and those who use them by elevating multiple factors without clear weighting, increasing litigation risk and discouraging legitimate independent work arrangements. The loss of clarity particularly harmed small businesses, which lack the legal resources to navigate complex and shifting standards.

We strongly support the proposed rule's emphasis on two core factors: (1) the nature and degree of control over the work, and (2) the worker's opportunity for profit or loss - as the most probative indicators of economic dependence. This approach reflects decades of judicial application of the economic realities test and provides a clearer, more predictable framework for businesses and workers alike. Importantly, the rule maintains a totality-of-the-circumstances analysis, ensuring worker protections remain intact while improving clarity and consistency.

The proposed clarification regarding control is especially important. Small businesses must comply with federal, state, and local laws, as well as health, safety, insurance, and quality standards. Clarifying that such compliance does not indicate employer-like control is critical to ensuring that responsible business practices are not misinterpreted as evidence of employment relationships. Without this clarification, businesses could be penalized for meeting regulatory obligations, which fuels confusion and discourages best practices.

SBE Council also supports the treatment of opportunity for profit or loss, including the recognition of entrepreneurial initiative, independent decision-making, and worker investment. These characteristics are hallmarks of independent business activity and are essential to fostering innovation and economic mobility. Independent contractors are basically small business owners themselves who set their own rates, market their services, manage risk, and invest in their growth.

In addition, we support the Department of Labor's reaffirmation that actual practice should carry greater weight than theoretical or contractual possibilities. This principle ensures that classification determinations reflect real-world economic relationships rather than formalities that may not reflect how work is performed in practice.

Finally, we emphasize that policy in this area must strike the right balance: protecting workers from genuine misclassification while preserving the flexibility and autonomy that millions of Americans value. The proposed rule achieves that balance. It provides clarity without rigidity, and structure without undermining legitimate independent work arrangements that are vital to the U.S. economy.

Conclusion

SBE Council urges the Department of Labor to finalize this rule expeditiously. Doing so will provide small businesses, entrepreneurs, and independent workers with the certainty they need to operate, invest, and grow.

Thank you for the opportunity to comment on this important proposal.

Sincerely,

Karen Kerrigan
President & CEO