100 State Leaders Urge Washington to Protect Independent Work
By Andrew Dunn; May 1, 2026
Millions of Americans earn a living through independent work. They serve clients, set schedules, and build businesses without becoming permanent employees of the companies or customers they serve.
Federal rules can make that work easier or harder. When Washington blurs the line between “employee” and “independent contractor,” workers and businesses both pay the price. Companies become less willing to contract with independent workers. Entrepreneurs lose clients. These flexible work arrangements become harder to sustain.
That is why State Policy Network’s Center for Practical Federalism helped organize a coalition of 100 state leaders from 25 states in support of the US Department of Labor’s proposed rule clarifying independent contractor status under federal law. The coalition includes four statewide officials and 96 state legislators.
The proposed rule would rescind the Biden administration’s 2024 independent contractor rule and replace it with a clearer standard for determining when a worker is an employee and when a worker may be classified as an independent contractor under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act.
In practice, the rule would give workers and businesses a more predictable way to determine whether someone is truly in business for himself or herself, rather than economically dependent on one employer. The proposal gives special weight to two core factors: how much control the worker has over the work and whether the worker has the opportunity to earn a profit or take a loss based on initiative or investment.
The coalition submitted a formal public comment urging the Department of Labor to finalize the proposed rule. You can read the full public comment here.
“State leaders understand how federal labor rules affect real workers, entrepreneurs, and small businesses in their communities,” said Madison Ray, Senior Director for the Center for Practical Federalism at State Policy Network. “We’re grateful to the 100 statewide officials and legislators who joined this comment and made sure Washington heard directly from the states. Their message is clear: Federal rules should protect independent work, respect state authority, and give workers and businesses the clarity they need to thrive.”
Why Independent Work Matters
Independent work is part of everyday economic life in every state. It includes people who choose to earn a living through client-based, contract, project-based, or self-directed work, such as:
Freelancers and consultants
Truck drivers and delivery workers
Skilled tradesmen
Home health and caregiving workers
Creative professionals
App-based workers
Sole proprietors and small business owners
For many Americans, this kind of work offers something traditional employment cannot: the ability to choose clients, set schedules, build a business, and work around family or community obligations.
The public comment notes that workers in skilled trades, health services, financial services, transportation, and the digital economy all rely on independent work to turn their skills into livelihoods. This flexibility can be especially important for caregivers, veterans, and people in rural communities who may not be able to take on a traditional full-time job.
The Biden-Era Rule Moved in the Wrong Direction
The Biden administration’s 2024 rule made independent contractor classification harder and less predictable. Similar to what California did with Assembly Bill 5, it moved federal policy toward a more restrictive approach that would make it easier for regulators to treat independent workers as employees, even when workers and businesses prefer a contract-based relationship.
The Department of Labor now says the 2024 rule failed to provide enough clarity. In its new proposal, the Department argues the Biden-era rule created “an open-ended balancing analysis of six ambiguous elements” that can deter businesses from working with legitimate independent contractors.
That kind of uncertainty falls hardest on the people least able to manage it. Large companies can hire lawyers, accountants, and compliance staff. A local contractor, freelance designer, home health provider, or small trucking business usually cannot.
The result is predictable. When federal rules are vague, businesses avoid risk. Work goes unfilled. Contracts disappear. Independent workers lose opportunities to build client lists, expand services, and take the next step toward entrepreneurship.
The CPF-led comment points to California as a warning. That law narrowed the scope of independent work in the state and, according to research cited in the comment, reduced self-employment without evidence that workers were moved into traditional jobs.
Federal policy should not repeat that mistake nationwide.
The Takeaway
Independent work gives Americans a practical way to build businesses, serve customers, and shape their working lives. It should be protected by clear rules, not crowded out by federal uncertainty.
The Department of Labor’s proposed rule is a meaningful step toward restoring that clarity after the Biden-era rule. And thanks to this coalition, Washington has heard directly from state leaders who understand how federal labor rules affect workers, entrepreneurs, small businesses, and state economies.
A rule written in Washington can change how a small business hires help, how a freelancer serves clients, or how a rural worker earns income around family responsibilities. CPF helped make sure those realities are part of the federal rulemaking record.
State leaders and Network partners can learn more about CPF’s federalism work by subscribing to the Center for Practical Federalism’s Dispatch from DC newsletter.
As a reminder, before engaging in any federal education and outreach activities, please ensure the opportunity aligns with your current strategy and seek legal counsel before weighing in on a specific piece of legislation. The IRS does not consider 501(c)(3) participation in the federal regulatory notice and comment process as lobbying.