Candy Laxatives and Verbal Diarrhea: There is No New Independent Contractor Rule – Yet

A daycare teacher in St. Charles, Illinois, was arrested this month after she allegedly gave the children candy-flavored laxatives. The plan, apparently, was to cause them to get diarrhea, which meant they would have to be sent home. The teacher’s motivation? She was overwhelmed at work. Fewer kids means less work.

I would counsel against this. If overwhelmed at work, there are generally better options than making a bunch of kids get watery poops. But what do I know?

A client last week alerted me to a mess of a different type. She received a flyer from an HR training firm, offering (for a fee, of course) to train HR professionals and lawyers on the “New Rule Issued by the Department of Labor” on independent contractor classification. Failure to comply with this rule, they warned in the flyer, could result in “the IRS penalizing you for back income taxes, FICA and states going after you for unpaid income taxes, workers compensation premiums and unemployment payments.”

I’d say there’s just one problem here, but that’s not true. So much of this is wrong.

First, there is no new DOL rule on the test for independent contractor classification. The DOL has indicated its intent to propose a new rule at some point in the near future. The proposed rule, whenever it is prepared, would then have to be published and go through a public comment period. Even if a proposed rule were to be released tomorrow, we are many months away from any new rule being finalized and implemented.

The current status of any proposed, not-yet-published, possible rule is here, where the DOL indicates that “The Department intends to rescind the 2024 IC rule and is considering how it will proceed with respect to independent contractor classification under the FLSA employee or under the FLSA.” Nothing has happened yet.

Second, even if the DOL does publish a new rule (which can only happen after a notice-and-comment period), that rule will have no effect on federal or state taxes, withholdings, workers compensation premiums, or unemployment. The DOL rule would impact only the determination of employee status under the Fair Labor Standards Act (FLSA), which governs when workers must be paid a minimum wage and overtime. The DOL has no oversight or jurisdiction over any of those other laws.

Other laws — and other tests — determine whether someone is an employee for federal tax purposes, and the states have their own laws to determine whether someone is an employee for state law tax purposes, workers compensation purposes, and unemployment insurance purposes.

It is true that misclassifying a worker can result in all of these bad outcomes, but a new DOL rule would have no effect on any of them. Companies using independent contractors should remember that there are a myriad of standards for determining whether someone is an employee or an independent contractor, and these tests all exist simultaneously and apply to different laws at the federal and state level. A worker can be an employee under some laws and an independent contractor under other laws, at the same time. (Fun!)

Apparently anyone can advertise to speak on topics with legal significance, even if they’re just plain wrong on what they plan to say.

If all of this seems overwhelming, just take a deep breath and let’s wait for the DOL to propose a new rule, which undoubtedly will make it easier to classify someone as a contractor under the FLSA. In the meantime, if you still feel overwhelmed, please do not resort to giving children diarrhea.

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© 2026 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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What Animals! New Jersey Proposes to Toughen Independent Contractor Test

In medieval Europe, it was not uncommon to put animals on trial for various crimes. In France, Italy, Switzerland, and elsewhere, courts tried pigs, dogs, rats, grasshoppers, and snails for crimes against people, property, and God. 

Examples include cases brought against vermin who dared to ransack stores of grain and prosecutions for pigs having maimed or killed people.

There’s a whole book about the practice, Chronological List of the Prosecution of Animals from the Ninth to the Twentieth Century, by E.P. Evans. I typed the name of the book in the search bar at Amazon. Apparently it is not available, and the site instead recommended that I purchase a DVD of Ransom, starring Mel Gibson. (?)

No, thank you.

I also say no, thank you to New Jersey Department of Labor and Workforce Development (NJ DLWD), which has proposed new independent contractor classification regulations.

The regulations would re-interpret NJ’s ABC Test in a way that would make it much harder to maintain IC status. The regulations would apply to the NJ Wage Payment Law, the Unemployment Compensation Law, and the Earned Sick Leave Law.

For years New Jersey has used an ABC Test, but with the standard version of part B, unlike California and Massachusetts, which have a strict version of part B.

To satisfy a standard ABC Test, like in NJ, the party engaging the contractor must prove (all three):

  1. The individual has been and will continue to be free from control or direction over the performance of work performed, both under contract of service and in fact; and
  2. The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed; and
  3. The individual is customarily engaged in an independently established trade, occupation, profession or business.

The regulations would largely re-interpret part B to make it more like the strict version, which can be met only if the work is performed “outside the course of the business for which such service is performed.”

The regulation would essentially eviscerate the second option — that the work is performed outside of all the places of business of the enterprise for which such service is performed — and make it nearly impossible to satisfy this alternative.

For example, under the regulations, the retaining party’s “place of business” could include any place where the work is typically performed, even customer’s homes.

The regulations would also make parts A and C harder to meet. In part A, for example, the regulations would declare that control exerted to make sure a contractor follows the law is relevant control that can convert the worker to an employee. But control exerted to ensure compliance with a law is control imposed by the government, which passed the law, not by the company retaining the contractor. This re-imagining of part A would be inconsistent with a multitude of court decisions that have addressed this issue.

I say no, thank you, because the regulation is not consistent with New Jersey law and is not consistent with how other courts around the country have interpreted the ABC factors. The NJ DLWD is supposed to apply the law, not change it. The NJ DLWD is not a legislative body and is not a court.

Nonetheless, it seems like there’s a good chance this will pass.

A 60-day public comment period began with the publication of the proposed rule on May 5. Companies that will be impacted by the rule should consider submitting comments. Page 1 of the proposed regulations explains how.

Misclassification in New Jersey is serious business. The state has been aggressive about pursuing legal action against companies that systemically misclassify workers as ICs. (But so far, no cases against pigs, dogs, rats, grasshoppers or snails. I think.)

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© 2025 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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