The distinction between an employee and an independent contractor has always been pivotal in labor law, given the significant implications it holds for taxation, benefits, and legal protections. The US Department of Labor’s (DOL) March 1, 2025, change on defining “independent contractor” introduces substantial modifications to the criteria previously used for enforcement purposes.

New Definition Effective March 1, 2025

The DOL's new rule introduces a more streamlined and focused test that emphasizes two core factors:

• Control: The new rule prioritizes the level of control the worker has over their work. A worker is more likely to be considered an independent contractor if they have substantial control over the performance of their tasks, including setting their own hours, selecting their projects, and having the ability to work for multiple clients.
• Economic opportunity for profit or loss: The focus here is on whether the worker can realize a profit or incur a loss based on their managerial skill, rather than being compensated solely on the basis of time spent working or piece rate.

Secondary considerations may still be taken into account, but the emphasis is clearly on these two primary factors. This is intended to simplify and clarify the determination process for both employers and workers.

The new definition is rooted in DOL’s interpretation of the Fair Labor Standards Act (FLSA), which aims to distinguish employees who are economically dependent on their employers from independent contractors who are in business for themselves. The rationale behind this change is to reduce misclassification and to protect workers from labor rights violations

Practical Implications For Businesses

The new rule may require businesses to reassess their workforce classifications. Companies that rely heavily on independent contractors might need to adjust their contracts and work arrangements to ensure compliance. This could result in increased administrative burdens and potential costs associated with reclassifying workers as employees, including providing benefits and adhering to wage laws.

Practical Implications For Workers

Workers currently classified as independent contractors may find themselves reclassified as employees, gaining access to employment protections such as minimum wage, overtime pay, and benefits. However, this reclassification might also limit their flexibility and autonomy, as employers impose more control over work schedules and conditions.

Conclusion

The March 1, 2025, change in defining “independent contractor” status aims to protect workers' rights and provide clarity for businesses, but its implementation will require careful navigation of legal and economic landscapes. Employers and workers should consult with an experienced Employment Law Attorney.  The Galdean  Law Firm can assist with these issues. 

Government inspections and audits can happen without warning. Whether it’s the Occupational Safety and Health Administration (OSHA), the Department of Labor (DOL), Immigration and Customs Enforcement (ICE), or another agency, employers must be prepared to respond lawfully and strategically. Mishandling an inspection can result in fines, reputational damage, and legal liability. Here's what employers should do when a government agency arrives for a worksite inspection or audit.

1. Stay Calm and Alert Key Personnel

The first step is to remain calm. Panic or hostility can escalate the situation and invite scrutiny. Designate in advance who on your team should respond to inspections—typically a manager, HR representative, or legal counsel. Notify that person immediately upon the arrival of an inspector or auditor.

2. Verify the Identity and Authority of the Agent

Ask to see official identification and credentials. Confirm the agency the person represents, their name, and the scope of their authority. Politely request a copy of any warrant, subpoena, or notice of inspection. If the inspector does not have a warrant and one is required, you may have the legal right to deny entry until one is obtained.Always involve experienced legal counsel at this stage.

3. Understand the Scope and Purpose

Clarify the nature of the inspection or audit:

• Is it random, complaint-based, or part of a targeted initiative?
• What records or areas of the workplace are they seeking to examine?
• Are they interviewing employees?

Document all details of the inspector’s request. If possible, request the scope in writing.

4. Accompany the Inspector

A company representative should accompany the inspector at all times while they are on-site. This helps you monitor what is being reviewed, photograph anything the inspector documents, and ensure they do not access areas beyond the scope of the inspection.

5. Know What They Can and Cannot Do

The limits of an agency’s authority depend on the agency and legal context. For example:

• OSHA: May inspect without a warrant under certain circumstances, but you can request one if you’re unsure.
• ICE (I-9 Audits): Must give at least three days’ notice before conducting a Form I-9 inspection, unless they have a subpoena or warrant.
• DOL: May inspect wage and hour records; employers must maintain and produce them upon request.

Consult an experienced attorney that understands the legal boundaries in these situations.

6. Protect Employee Rights

Inspectors may ask to interview employees. Employees generally have the right to choose whether to speak with inspectors and may request legal counsel. Employers should not coach employees or attempt to interfere, but can inform them of their rights.

7. Provide Only What is Required

Do not volunteer extra information or grant access to documents or areas not specifically requested or required. Keep a record of every document provided or copied. Avoid casual conversations that could be misinterpreted.

8. Document Everything

Maintain a detailed log of the inspection or audit, including:

• Arrival and departure times
• Names and titles of inspectors
• Questions asked
• Areas inspected
• Items requested or taken

This documentation can be crucial if the inspection leads to penalties or enforcement action.

9. Cooperate Without Over-Sharing

Be respectful and cooperative, but don’t overextend. An overly helpful attitude can unintentionally expand the scope of an inspection or result in sharing information that isn’t required. If in doubt, pause and consult legal counsel.

10. Follow Up

After the inspection, debrief internally and with legal counsel. If citations, notices, or follow-up requests are issued, respond promptly and in accordance with deadlines. Begin any necessary corrective actions and consider proactive compliance training or audits to prevent future issues.

Conclusion

Worksite inspections and audits are a reality for most employers. Being prepared, understanding your rights, and involving legal counsel early are essential to managing the process effectively and protecting your business. Establish a protocol before an inspection occurs, and train your management team accordingly.

This article is for informational purposes only and does not constitute legal advice. Employers should consult with legal counsel regarding their specific situation.

President Biden's immigration action of June 18, 2024, is set to expand the workforce pool significantly. The Presidential action addresses labor shortages in critical industries by providing clearer pathways to citizenship and work authorization for undocumented immigrants. This change taps into a vast reservoir of skilled and unskilled labor and fosters a diverse, innovative workforce. Consequently, as more individuals gain legal status and employment opportunities, businesses can expect a robust influx of talent, driving economic growth and competitiveness.

The changes also allow for an increase of talent by Employers being able now access college-educated DACA recipients (i.e. Dreamers) for H1b Visa.  The H1b Visa allows Employers to secure a Visa and employ individuals in specialty occupations.

President Biden's immigration action of June 18, 2024, is set to expand the workforce pool significantly. The Presidential action addresses labor shortages in critical industries by providing clearer pathways to citizenship and work authorization for undocumented immigrants. This change taps into a vast reservoir of skilled and unskilled labor and fosters a diverse, innovative workforce. Consequently, as more individuals gain legal status and employment opportunities, businesses can expect a robust influx of talent, driving economic growth and competitiveness.

The changes also allow for an increase of talent by Employers being able now access college-educated DACA recipients (i.e. Dreamers) for H1b Visa.  The H1b Visa allows Employers to secure a Visa and employ individuals in specialty occupations.

Attorney Trinidad Galdean was recognized as a 2023 Super Lawyer in Employment & Labor Law.  Super Lawyer selects the top 5% of attorneys to the Super Lawyer list each year.  Trinidad is a Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization.  With over 30 years of legal experience, Trinidad’s practice includes helping clients with their employment legal issues. 

Significant changes are coming for Employers with the USCIS Form I-9 on employment eligibility verification. The USCIS Form I-9 serves as a vital tool for ensuring an employer’s workforce is legally authorized to work in the United States. By diligently completing and maintaining these forms for every employee, an Employer fulfills its legal obligation but also safeguards the business from potential legal penalties.

The following are the upcoming changes:

• July 31, 2023 – Employers will no longer be permitted to verify Form I-9 documents remotely. Employers who engaged in remote verification of Form I-9 documents will be required to inspect identity and employment eligibility documents again that were initially inspected remotely, which must be completed by August 30, 2023.

• August 1, 2023 – Certain employers who are enrolled in e-Verify will be permitted to conduct verification of Form I-9 documents electronically and with a live video call interaction.

• November 1, 2023 – Employers will need to begin using the new revised Form I-9, which will be reduced to a single-sided sheet consisting of only Sections 1 and 2.  The new revised Form I-9  will be available for use on August 1, 2023.

Don't underestimate the significance of complying with the USCIS Form I-9. It safeguards your business from legal troubles. Employers should secure help from experienced employment attorneys to address any questions. The Galdean Law Firm can assist employers on these issues.