The leading development last month in the area of independent contractor (IC) compliance and misclassification was undoubtedly the issuance of the proposed rule on IC status by the U.S. Department of Labor (DOL). That proposed rule was the subject of our blog post on February 26, 2026, the day the proposed regulation was issued. Also in the news last month were three new class and collective action lawsuits alleging IC misclassification: one in California against a weight management and prescription services company by a physician; another in Pennsylvania against a waste removal company by trash collectors; and the third in Florida against an insurance company by sales representatives. In addition, the DOL secured a judgment last month, likely to lead to a damages award of nearly $12 million on behalf of licensed practical nurses and home health aides, in an IC misclassification lawsuit against a home health care company, its owner, and its director of nursing. Finally, a trucking company settled in February 2026 an IC misclassification class action with drivers in Kentucky for $1.175 million. Each of these cases is summarized below. How can these and other types of businesses minimize the likelihood they will be subjected to an IC misclassification lawsuit? As we have noted in prior blog posts, many prudent companies use a process such as IC Diagnostics (TM) to structure, document, and implement their IC relationships in a customized manner that maximizes compliance with IC laws and minimizes exposure to misclassification liability, consistent with their business model and organizational objectives.

In the Courts (5 cases)

WEIGHT MANAGEMENT AND PRESCRIPTION SERVICES COMPANY SUED BY PHYSICIAN IN CLASS ACTION LAWSUIT FOR IC MISCLASSIFICATION. A California physician has commenced a class and collective action lawsuit in California against a health care company offering weight management and prescription services, alleging the company violated the Fair Labor Standards Act (FLSA) and California wage and hour laws by misclassifying physicians as ICs instead of employees. The complaint seeks relief for the company’s alleged failure to pay the physicians minimum wages and overtime compensation, failure to furnish accurate itemized wage statements, and failure to reimburse business expenses. As to the claim under California law, the plaintiff alleges that the defendant cannot satisfy any components of the three-part ABC test. That test, however, may be inapplicable to the extent one of the many exemptions from the ABC test applies to doctors, who may also be exempt from the FLSA’s provisions as a learned professional. Cioppettini v. Mochi Medical CA, PC, No. 3:26-cv-01260 (N.D. Cal. Feb. 11, 2026).

WASTE REMOVAL COMPANY SUED FOR IC MISCLASSIFICATION IN CLASS ACTION BY TRASH COLLECTORS. A waste and snow removal company faces a class and collective action complaint brought in a Pennsylvania federal court by a worker claiming wage and hour violations under the FLSA and Pennsylvania state law due to the company’s alleged misclassification of trash collectors and snow removal workers. The plaintiff collected trash and performed snow removal and hauling for Metropolitan Waste Systems, Inc. He alleges that the company intentionally misclassified him and other similarly situated workers as ICs in an effort to avoid its overtime and minimum wage obligations under the FLSA and Pennsylvania Minimum Wage Act, including training time. According to the complaint, the workers were allowed little or no discretion or independent judgment in the method or manner as to how they performed their work, were supervised by company employees and were subject to discipline, were required to wear uniforms and identify themselves as company employees, and had to follow company guidelines. Johnson v. Metropolitan Waste Systems Inc., No. 2:26-cv-01056 (E.D. Pa. Feb. 19, 2026).

INSURANCE COMPANY AND ITS PRESIDENT SUED IN FLORIDA BY SALES REPRESENTATIVES IN IC MISCLASSIFICATION LAWSUIT. EZ Health IQ, Inc. and its president have been sued by sales representatives under the FLSA in a collective action complaint in a Florida federal court lawsuit alleging the company misclassified the sales reps as ICs and failed to pay them overtime for hours worked as employees over 40 hours in a week. The complaint claims that the sales reps followed sales scripts provided by the company, received a flat rate per week plus commissions regardless of the number of hours worked, and were paid through a cash app. The plaintiff asserts in the complaint that the company set the sales reps’ hours, required them to adhere to a strict schedule, controlled the way they performed their work, provided all materials necessary for the job, required them to undergo training, and closely oversaw the manner in which the reps performed their jobs on a daily basis. Frater v. American Work Health and Life Inc., No. 0:26-cv-60398 (S.D. Fla. Feb. 12, 2026).             

HOME HEALTH COMPANY LIABLE FOR UP TO $12 MILLION DUE TO IC MISCLASSIFICATION ‎OF NURSES AND HOME HEALTH AIDES. A federal district court in Pennsylvania entered summary judgment against a home health company, Amazing Care Home Healthcare Services LLC, as well as its owner and one of its senior managers, in a lawsuit brought by the DOL, finding the defendants liable for misclassifying both licensed practical nurses (LPNs) and home health aides (HHAs) as ICs instead of employees. As detailed in our blog post of February 18, 2026, the court held that the IC relationships with LPNs (and HHAs) failed to satisfy the applicable six-part test for IC status under the federal FLSA because all but one of the factors favored employee status. As a result, the DOL is seeking nearly $12 million in unpaid overtime and statutory liquidated damages from the corporate and individual defendants, personally. The five factors supporting employee status were the degree of the alleged employer’s right to control the manner in which the work is to be performed, whether LPNs had an opportunity for profit or loss depending on each worker’s managerial skill, the use of special skills, the permanence of the working relationship, and whether the services provided by the workers are integral to the alleged employer’s business. The only factor supporting IC status was the workers’ investment in required equipment or materials and the workers’ employment of helpers. The court also considered additional facts, but found most of them favored employee status, such as the fact that the company gave the LPNs performance reviews like employees, directed LPNs to use the same time sheets as employees, subjected LPNs to Amazing Care’s employee handbook, and used workplace forms that referred to all LPNs as “employees” even those paid on a 1099 basis. The court also determined that the owner, who served as president and administrator, and the director of nursing were also “employers” under the FLSA and personally liable to the LPNs as well. The issue of damages will be submitted to a jury. Su v. Amazing Care Home Healthcare Servs., No. 2:24-cv-00190 (E.D. Pa. Feb. 13, 2026).

TRUCKING COMPANY SETTLES IC MISCLASSIFICATION CLASS ACTION BY DRIVERS FOR $1.175 MILLION. A Kentucky federal district court has granted final approval of a $1.175 million collective action settlement resolving IC misclassification claims in a class action lawsuit brought by truck drivers against a trucking and freight transportation company. The drivers claimed in their second amended complaint that, among other things, due to their misclassification as ICs and not employees, Paschall Truck Lines, Inc. unlawfully made deductions from the drivers’ pay, thereby “intentionally reducing” their pay below the minimum wage under the FLSA. In support of their misclassification claims, the drivers alleged that they were required to attend a multiday orientation, watch training videos, and complete a drug test; were subject to supervision; were not permitted to use the commercial vehicles leased to them for any carrier other than the company; and could not accept jobs assigned to them by any other carrier. Carter v. Paschall Truck Lines, Inc., No. 5:18-cv-41 (W.D. Ky. Feb. 13, 2026).

Regulatory Initiatives (1 matter)

U.S. Department of Labor Issues a Proposed Rule on IC Status under the FLSA. As discussed in our blog post of February 26, 2026, the DOL in this second Trump administration issued a proposed regulation on that date regarding the classification status of ICs. It was almost a carbon copy of the 2021 regulation issued by the first Trump administration, which was replaced by a 2024 regulation issued by the Biden administration. As we remarked previously about these competing regulations addressing the issue of IC status under the FLSA, the new rule, once finalized, would be “much ado about (almost) nothing.”

The first part of the proposed regulation would rescind all inconsistent or conflicting administrative rulings, interpretations, practices, and enforcement policies of the DOL relating to the classification of ICs and employees. This appears to be a means to override the Biden administration’s 2024 rule on the subject. The next part of the proposed rule recites the time-honored principle under the FLSA that a worker is an IC only if he or she, as a matter of economic reality, is “in business for him- or herself.” The proposed regulation then lists five factors to be examined. Of the five, the DOL’s proposed regulation refers to two as “core factors”: (1) the nature and degree of the individual’s control over their work; and (2) the individual’s opportunity for profit or loss. The proposed regulation states these two core factors “are the most probative as to whether or not an individual is an economically dependent ‘employee,’ … and each is therefore afforded greater weight in the analysis than is any other factor.” The remaining three, referred to as “non-core” factors, are: (1) the amount of skill required for the work; (2) the degree of permanence of the working relationship; and (3) whether the work is part of an integrated unit of production. Finally, the proposed rule also notes that any factor related to the relationship between an individual and potential employer may be relevant. Notably, the courts under the FLSA have considered dozens of factors bearing on IC status, and the proposed regulation therefore validates this type of broad judicial inquiry.

The DOL’s proposed rule has no application to the IC status of workers under most other federal laws, such as ERISA and the National Labor Relations Act, which have different worker classification tests. It also has no application to the classification of workers under state IC tests, most of which vary considerably from the test under the FLSA. This is a key takeaway, because most litigation against companies alleging IC misclassification arises in whole or in part under state laws.

The publisher of this blog was quoted in numerous publications on the proposed rule:

• An article by Parker Purifoy, titled “Labor Agency’s Gig Worker Flip-Flopping Weakens Rules in Court,” in Bloomberg Law Daily Labor Report and Bloomberg Daily Tax Report on March 2, 2026;
• An article by Max Kutner, titled “DOL Contractor Proposal Looks Familiar, With Less Deference,” in Law360 Employment Authority on February 26, 2026;
• An article by John Kingston, titled “Trump’s Independent Contractor Rule Revived, Minimal Difference From Earlier Version.” in Freight Waves on February 26, 2026;
• An article by Michael Cardman, titled “DOL Proposes New(ish) Independent Contractor Rule,” in Brightmine HR and Compliance on February 26, 2026; and
• An article by Nancy Marshall-Genzer, titled “Employee or Gig Worker? Proposed Labor Department Rule Seeks to Clarify,” in Marketplace on March 5, 2026.

Prior to the issuance of the proposed regulation, the New York Law Journal published an article by the author of this blog post on the anticipated proposed regulation in its annual Labor & Employment Special Report, titled “The Upcoming Independent Contractor Regulations,” on February 23, 2026.