ADVOCACY & POLICY UPDATE - March 2, 2026

DOL Issues Proposed Rule on Worker Classification​

Washington Update​

Appropriations/Earmarks

On Wednesday, February 25, House Appropriations Chairman Tom Cole (OK) released guidance for the upcoming FY27 spending cycle indicating House Republican appropriators plan to reintroduce limited earmarks in the Labor-HHS-Education bill after a three-year ban. House Republicans eliminated earmarks from that bill after gaining control of the House in the 2022 midterm elections, while the Senate has continued to allow them. The FY26 Labor-HHS-Education measure included nearly $1.4 billion in earmarks, all from the Senate-designated funding. 

The House proposal would allow community project funding only within the Health Resources and Services Administration account, primarily supporting rural hospitals, rural clinics, and Federally Qualified Health Centers. This is narrower than Senate policy, which permits a wider range of health and education-related entities to receive earmarks. The House guidance also adds restrictions prohibiting funding to organizations that perform or support abortion services, conduct embryonic stem cell research, or provide gender-affirming care, which are not included in Senate policy.

House lawmakers would be allowed to request up to 20 projects each, up from 15, while maintaining the overall earmark spending cap at 0.5% of total federal funding. Supporters say this provides more flexibility to address local needs, particularly in rural health care, while some Republicans remain opposed to earmarks altogether.

The House proposal represents a partial shift toward the Senate approach but still maintains tighter limits on the number of eligible programs, types of facilities, and range of funding requests. Senate guidance for the upcoming cycle has not yet been released.

Click here to access the press release.

U.S. Department of Labor Independent Contractor Rule

On Thursday, February 26, 2026, the U.S. Department of Labor (DOL) released a proposed rule that would revise the framework used to determine whether a worker is classified as an employee or an independent contractor under the Fair Labor Standards Act (FLSA). This rescinds the 2024 final rule and returns to an approach largely aligned with the standard adopted in 2021. The public comment period is open through Tuesday, April 28, 2026, and the rule could be finalized later this year. 

If finalized, the proposed rule retains the “economic reality” test, which courts have used for years to decide whether a worker is an independent contractor or is dependent on an employer. It puts the most emphasis on two main questions: how much control the company has over the person’s work, and whether the worker has a real chance to make a profit or suffer a loss based on their own decisions and investments. If both of those point clearly in the same direction, that will usually determine the classification. Other considerations — such as how skilled the work is, how long the relationship lasts, and whether the work is central to the company’s business — can still be reviewed, but they carry less weight. The proposed rule also stresses that what happens in practice matters more than what is written in a contract.

The rule further explains that simply requiring someone to follow the law, meet health and safety rules, carry insurance, or complete work by certain deadlines would not, by itself, mean the worker must be treated as an employee — which departs from the Biden-era rule as well, which states that several of these things could be considered evidence of control in appropriate circumstances.

DOL stated that the proposed rule’s updated classification test would also apply under the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection (MSPA) Act, which rely on similar definitions of employment. DOL estimates the change could result in 1 to 3 percent more workers being classified as independent contractors compared to the 2024 rule.

Independent contractors are not covered by federal minimum wage, overtime, unemployment insurance, or workers’ compensation protections under FLSA. As a result, the proposed rule could have significant implications for industries that rely heavily on contract labor, including construction, transportation, home health care, agriculture, warehousing, and app-based services.

On the same day, the National Labor Relations Board (NLRB) finalized a rule reinstating its February 2020 joint-employer stance and formally withdrawing a broader rule adopted in November 2023. The new rule was published in the Federal Register and issued without a new notice-and-comment period because the board determined that additional public comment was unnecessary because the 2023 rule never became operative and its appeal had been dismissed.

Under the reinstated standard, an entity is a joint employer only if it exercises substantial direct and immediate control over essential terms and conditions of employment. Those terms are limited to wages, benefits, hours, hiring, discharge, discipline, supervision, and direction. Indirect control or unexercised contractual authority alone is insufficient to establish joint-employer status, and the burden of proof rests with the party asserting the relationship. The withdrawn 2023 rule would have applied a broader test based on authority to control, even if not exercised. The reinstatement returns to a narrower standard focused on actual, direct control.

At the same time, House Republicans are trying to advance legislation addressing joint-employer liability, an issue that affects franchisors and franchisees. Congressman Nick LaLota (NY) expressed support for Congressman Kevin Hern’s (OK) legislation, the American Franchise Act, over that backed by House Education and Workforce Chairman Tim Walberg (MI), which failed to advance to a floor vote following opposition from some GOP members.

Click here to access the DOL full press release and read the proposed rule.

Click here to access the NLRB final rule.

Senate HELP Committee/Department of Education

On Thursday, February 26, during a Senate Health, Education, Labor, and Pensions (HELP) Committee markup of several of education and health bills, lawmakers from both parties questioned the Administration’s efforts to move programs out of the U.S. Department of Education (ED) and called for greater transparency and congressional oversight. Concerns were raised about moving education-related responsibilities to other federal agencies.

Democrats introduced an amendment that would have prevented the Department of Education from transferring its responsibilities to other agencies, arguing that such changes require congressional approval and that some education programs may be moved to agencies without the expertise to administer them. The amendment was ultimately tabled.

Senate HELP Committee Chairman Bill Cassidy (LA) said he is working to schedule a hearing with Secretary Linda McMahon so lawmakers can discuss the Administration’s plans for interagency program transfers. Cabinet officials typically appear before congressional committees during annual budget and oversight hearings. 

Last week, the Trump Administration continued its effort to shift responsibilities out of the Department of Education, announcing that oversight of school safety grants and foreign funding disclosures for universities will be reassigned to other federal agencies. The Department of Health and Human Services will take over work related to school shootings and student mental health programs, while the State Department will assist in monitoring foreign gifts and contracts to higher education institutions. ED has described these changes as efforts to improve efficiency by leveraging expertise across agencies.

Some Republicans expressed partial support for the concerns raised about program transfers but said broad restrictions could limit flexibility. Lawmakers suggested that oversight hearings with the department may be a more effective way to address concerns than legislative amendments to individual bills.

These continued moves follow Congress’s approval of a $1.2 trillion FY26 funding package that includes language stating that the Department of Education does not have the authority to transfer its statutory duties to other agencies and requires the department to maintain the staffing necessary to fulfill its legal responsibilities. Administration officials have not yet provided details on how the changes will be implemented or when the transitions will take effect. Additional guidance is expected in the coming weeks. 

Click here to access the Senate HELP Committee markup.

Click here to access the Department of Education press release.

U.S. Department of Education Interpretive Rule

On Thursday, February 26, the U.S. Department of Education (ED) issued an interpretive rule aimed at reducing barriers for new accrediting agencies seeking federal recognition. The rule is intended to increase competition among accreditors by making it easier for new institutional and programmatic accreditors to enter the market and challenge existing structures in higher education accreditation. It clarifies parts of the recognition process, including when accreditation activities are considered to begin for meeting regulator requirements and setting target timelines for reviewing applications. ED aims to determine basic eligibility within 60 days and complete full reviews within six to 12 months. The policy is nonbinding and is part of broader efforts to reform accreditation by encouraging competition, improving focus on student outcomes, and expanding opportunities for new accrediting agencies to enter the market.

Click here to access the full press release and the interpretive rule.

House Committee on Small Business Hearing

On Tuesday, February 24, the House Committee on Small Business held the hearing “Career and Technical Education: Developing the Future of Main Street Success” to examine how Career and Technical Education (CTE) programs are a viable pathway to the workforce and how more skilled workers could reduce the labor shortage hurting small businesses.

Click here to access a video of the hearing.

U.S. Department of Housing and Urban Development

On Friday, February 27, the U.S. Department of Housing and Urban Development (HUD) released a proposed rule that would allow most public housing authorities and certain landlords participating in federal housing programs to establish work requirements and time limits for nonelderly, nondisabled households receiving assistance. The rule will be open for public comment for 60 days.

Currently, only a limited number of housing authorities participating in HUD’s Moving to Work demonstration program may implement employment-related policies. The proposed rule would expand that authority to most public and federally assisted housing providers, except those in receivership or designated as troubled performers by HUD. The proposal applies to major HUD housing programs, including public housing, the Housing Choice Voucher program, Project-Based Vouchers, and Project-Based Rental Assistance. Together, these programs support more than four million households nationwide.

Under the proposal, housing providers would have discretion to design work requirements and term limits for eligible households. The rule would generally maintain protections for elderly and disabled residents, while allowing fewer exemptions for time limits than for work requirements. HUD Secretary Scott Turner said the proposal is intended to expand access to housing assistance for families on waiting lists and promote employment among working-age residents.

Housing advocacy organizations have raised concerns that work requirements and time limits could increase housing instability for low-income households and affect broader housing markets.

Click here to access the proposed rule.