DOL Proposes New Independent Contractor Rule Affecting Agricultural Employers

On February 26, 2026, the U.S. Department of Labor’s Wage and Hour Division (DOL) announced that it had published a Notice of Proposed Rulemaking (NPRM) proposing revisions to the federal test used to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The NPRM would rescind DOL’s 2024 Independent Contractor Final Rule and replace it with an analysis for employee classification similar to the framework adopted by DOL in 2021.

Consistent with Supreme Court and federal circuit court precedent, the NPRM is intended to make it easier to properly differentiate between employees entitled to protections under the FLSA and workers who operate as independent contractors. Importantly, the NPRM does not currently have the force of law and will only take effect once DOL issues a final rule following the completion of the notice and comment rulemaking process. 

Key Changes to the Classification Test

Under the NPRM, the DOL proposes to return to a streamlined economic-dependence standard for analyzing whether a worker is an independent contractor. Specifically, the NPRM amends the current analysis used by WHD to determine the proper classification of workers by:

• Applying an “economic reality” test to determine whether a worker is in business for himself or herself as an independent contractor or is an employee economically dependent on an employer for work

• Relying on two “core factors” to help determine if a worker is economically dependent on an employer for work or in business for him- or herself:

• (1) The nature and degree of control over the work; and

• (2) The worker’s opportunity for profit or loss based on initiative and/or investment

• Identifying other relevant, but secondary, factors to help determine a worker’s status as an employee or independent contractor, including:

• (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

• Emphasizing that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible, and

• Providing eight fact-specific examples applying the factors to real-life scenarios.

By prioritizing fewer factors, the NPRM is widely viewed as more employer-friendly than the current rule because it reduces the broader multi-factor balancing test that has often produced inconsistent outcomes.

Application to MSPA and Implications for Agricultural Employers

The NPRM would also apply the streamlined analysis to the Migrant and Seasonal Agricultural Worker Protection Act (MSPA) and Family Medical Leave Act (FMLA), both of which rely on the FLSA’s statutory definition of “employ.” The MSPA regulates farm labor contractors and certain agricultural employment relationships, making this change particularly relevant for agricultural employers. Current H-2A program regulations do not incorporate MSPA directly, but rather operate alongside it—meaning that farm labor contractors (FLC) participating in the H-2A program must independently comply with MSPA registration, disclosure, and worker-protection requirements where MSPA applies. 

In particular, the NPRM proposes to amend the MSPA’s current regulations at 20 C.F.R. § 500.20(h)(4) to the following: 

• The definition of the term employ may include consideration of whether or not an independent contractor or employment relationship exists under the FLSA.

• Under MSPA, questions will arise whether or not a farm labor contractor (FLC) engaged by an agricultural employer/association is a bona fide independent contractor or an employee. 

• Questions also arise whether or not the worker is a bona fide independent contractor or an employee of the FLC and/or the agricultural employer/association. These questions should be resolved in accordance with the criteria set forth in §§ 795.105 through 795.110… 

• If it is determined that the FLC is an employee of the agricultural employer/association, the agricultural workers in the FLC’s crew who perform work for the agricultural employer/association are deemed to be employees of the agricultural employer/association and an inquiry into joint employment is not necessary or appropriate. 

• In determining if the FLC or worker is an employee or an independent contractor, the ultimate question is the economic reality of the relationship— whether there is economic dependence upon the agricultural employer/association or FLC, as appropriate. 

Real-world examples where this analysis may become important include: 

• A fixed-site grower that relies on a crew leader who recruits workers, supervises field work, and is paid per acre harvested but works exclusively for that grower

• A fixed-site grower that uses a FLC who supplies workers but does not maintain its own equipment, payroll systems, or independent business operations 

• A FLC provides a fixed-site grower with agricultural workers to perform services such as a pruning or harvesting crew that advertises services to multiple farms, supplies its own equipment and transportation, and negotiates prices with multiple growers.

Comment Period and Next Steps

Although the proposed rule may provide greater clarity and may be viewed as somewhat more favorable to employers than the current rule, it does not eliminate misclassification risk. Agricultural employers that rely on crew leaders or third-party labor providers should continue to evaluate whether those entities operate as genuine independent businesses or whether workers may be economically dependent on a single grower or contractor. 

Public comments on the proposed rule must be submitted by April 29, 2026, and interested stakeholders may submit public comments here: Agricultural employers, FLCs, and industry organizations should strongly consider submitting comments to ensure DOL understands how worker classification standards affect real-world agricultural labor arrangements.

DOL’s Top Lawyer Announces New Enforcement Priorities and Greater Focus on Compliance Assistance

On February 26, 2026, the U.S. Department of Labor (DOL)’s general counsel, the Solicitor of Labor (SOL), recently issued a memorandum outlining new enforcement priorities that will guide how the agency allocates investigative and litigation resources across federal labor laws. The new directive from the SOL emphasizes protecting American workers while focusing enforcement on the most serious violations and expanding compliance assistance for employers.

Focus on Safety, Wages, and Benefits

The memorandum explains that DOL enforcement will center on three core areas: workplace safety, wage protections, and employee benefits. Investigations will prioritize cases involving unsafe working conditions, failure to pay legally required wages, and mismanagement of employee benefit plans such as retirement or health benefits. The memo also signals increased attention to employers who intentionally violate wage laws or misuse immigration or visa programs to evade compliance with labor standards.

Enforcement Targeted at the “Big, Bad, and Ugly”

Rather than spreading resources across smaller cases, DOL intends to concentrate enforcement on what the memo describes as the “Big, Bad, and Ugly.” This includes large employers whose practices affect significant numbers of workers, repeat or willful violators, and cases involving severe worker harm such as trafficking or major fiduciary breaches. The memo also notes that DOL may work more closely with the Department of Justice in pursuing the most serious violations. 

Shift Away from Unionized Workplaces

One notable change is that DOL attorneys are generally discouraged from pursuing enforcement actions in workplaces covered by collective bargaining agreements when unions already provide effective remedies. The memo explains that unions are often better positioned to evaluate and address workplace disputes unless workers are not being fairly represented or the available remedies are insufficient. This approach may result in fewer federal enforcement actions in unionized workplaces and greater attention directed toward non-union employers and industries.

Greater Emphasis on Compliance Assistance

The memo also directs DOL attorneys to provide increased compliance guidance to employers. DOL plans to expand the use of advisory opinions, interpretive guidance, and other resources designed to help employers understand their obligations under federal labor laws. Over the years, H-2A employers have repeatedly urged DOL to issue more published guidance to ensure clarity regarding the rules and regulations of the program. 

What This Means for Employers

Although the memo does not change the underlying laws enforced by DOL, it provides insight into how enforcement resources may be deployed moving forward. Employers should expect continued scrutiny of safety practices, wage compliance, and benefit plan management, particularly where violations affect large numbers of workers or involve repeat offenders. At the same time, the increased emphasis on compliance assistance suggests that employers who proactively engage with DOL guidance may have greater opportunities to resolve potential issues before they escalate into formal enforcement actions. 

March 2026 - Federal/State Regulatory & Litigation Round Up for Agricultural Employers

Federal Regulatory Update 

FMCSA Final Rule on Non-Domiciled CDLs Leaves H-2A Employers Unaffected

The Federal Motor Carrier Safety Administration (FMCSA) recently issued a Final Rule, which tightens eligibility standards by limiting CDL issuance and renewal to individuals in specific visa categories—namely H-2A, H-2B, and E-2—and eliminating the use of Employment Authorization Documents (EADs) as qualifying proof of status. The Final Rule is aimed at addressing fraud, improving verification processes, and enhancing roadway safety by ensuring that only properly authorized non-domiciled drivers receive CDLs. Importantly for agricultural employers, this rule does not negatively impact H-2A operations: H-2A workers remain fully eligible to obtain and renew CDLs under the updated framework. As a result, growers and farm labor contractors relying on H-2A workers for driving duties—including transporting crops, equipment, or supplies—can continue operations without disruption, while the rule primarily affects other categories of work-authorized individuals who previously relied on broader documentation pathways. The Final Rule officially went into effect on March 16, 2026. 

State Regulatory Update

New Washington State Income Tax Law Raises Concerns for Agricultural Employers

Washington’s newly approved state income tax on high earners marks a significant policy shift—and one that is drawing sharp criticism from agricultural stakeholders due to the absence of any small business exemption. The tax applies to income above $1 million, but for many farm operations structured as pass-through entities, business income flows directly to the owner’s personal return, meaning even family-owned farms can be swept into the tax in strong production years. Unlike other tax regimes, the law does not account for the cyclical nature of agriculture or provide relief for operations with fluctuating margins, effectively taxing “good years” without offsetting prior losses. For H-2A employers in particular, this could reduce available capital for labor costs, housing investments, and compliance obligations, while increasing financial volatility and discouraging reinvestment. In short, the lack of a small business carveout raises real concerns that the tax will disproportionately burden agricultural employers rather than solely targeting ultra-wealthy individuals.

Virginia Moves to Extend Minimum Wage to Farmworkers—H-2A Exemption Preserved

Virginia is poised to enact legislation (HB 20) that will, for the first time, extend the state’s minimum wage protections to farm laborers and farm employees by eliminating a decades-old exemption in the Virginia Minimum Wage Act—an effort that has been vetoed twice by the Governor in 2024 and 2025 before finally gaining sufficient support this session. Notably, while earlier versions of the bill would have also removed the exemption for temporary foreign workers, the final version preserves the exemption for H-2A workers, meaning H-2A employers will continue to operate under the existing federal wage framework rather than Virginia’s state minimum wage requirements. The legislation, expected to take effect on January 1, 2027, represents a significant shift in Virginia labor law and will increase wage obligations for employers of domestic agricultural workers, while creating a dual wage structure that distinguishes between domestic and H-2A labor—an outcome with important operational and compliance implications for agricultural employers across the state.

New California Bill Targets H-2A Wages with Significant Increases

A newly introduced California bill (AB 2646) would significantly increase wage obligations for agricultural employers—particularly those utilizing the H-2A program—by establishing a minimum hourly wage of $19.75 beginning in 2027, with automatic annual increases tied to inflation. The legislation is specifically structured to capture H-2A workers through the term “approved agricultural employees,” which effectively applies to out-of-state, temporary workers authorized under H-2A certifications, while also requiring the same elevated wage to be paid to corresponding domestic workers performing similar duties. The proposal appears to be a direct response to recent federal changes that lowered H-2A wage rates in California, and if enacted, would override those reductions by imposing a substantially higher state wage floor. For H-2A employers, this could result in a material increase in labor costs and renewed compliance complexity, while also raising potential legal questions around federal preemption given the bill’s clear targeting of the H-2A program despite avoiding explicit references to it. Whether the bill will ultimately pass into law remains to be seen, but CA employers should keep it on their radar in the coming months. We will provide subsequent updates regarding the status of the bill as they become available. 

Litigation Update

Sun Valley Orchards v. DOL

Following up our recent blog post regarding the impact of the Third Circuit’s landmark ruling in Sun Valley Orchards v. DOL, DOL recently filed a last gasp appeal to the U.S. Supreme Court urging it to take up the issue of whether its longstanding use of in-house administrative law judges (ALJs) to enforce alleged violations of the H-2A program, civil monetary penalties, and back wage assessments violates an H-2A employer’s constitutional right to a jury trial before an Article III court via the Seventh Amendment. 

A review of,DOL’s supporting brief reflects that its main argument is that its administrative adjudication of H-2A violations falls within the Constitution’s “public rights” exception because the dispute arises from the federal immigration-based H-2A program and enforcement of government-mandated job-order terms, allowing the agency to assess back wages and civil penalties through administrative proceedings rather than in an Article III court. Sun Valley Orchards filed its opposing brief on March 16, 2026. Whether SCOTUS ultimately decides to hear DOL’s appeal is expected to be decided in the coming months. 

Del Valle Fresh v. DOL

As first reported in our prior blog post, the South Carolina District Court recently denied Del Valle Fresh’s request for a temporary restraining order and preliminary injunction seeking to halt a pending DOL administrative enforcement proceeding arising from alleged H-2A violations, including unpaid wages, unlawful deductions, and illegal worker fees totaling more than $368,000 in back wages and over $500,000 in civil penalties. The employer unsuccessfully argued that the court should follow the Third Circuit’s decision Sun Valley Orchards v. DOL. Instead, the court declined to block the proceeding, finding that the employer failed to show a likelihood of success on the merits or irreparable harm, and concluding that enforcement of H-2A program obligations likely falls within the “public rights” exception tied to Congress’s plenary authority over immigration, which permits adjudication in an administrative tribunal. Del Valle Fresh is expected to appeal the decision to the Fourth Circuit. 

Triple R Farms v. DOL

Yet another H-2A employer, Triple R Farms, LLC has filed a constitutional challenge in the District Court for the Eastern District of Kentucky (Lexington Division) seeking declaratory and injunctive relief to halt an ongoing DOL administrative enforcement proceeding arising from alleged H-2A violations and approximately $70,000 in assessed back wages and civil penalties. In its Complaint and Motion seeking a preliminary injunction, the farm argues that DOL’s in-house adjudication of alleged job order (i.e., work contract) violations—covering issues such as the three-fourths guarantee, transportation, recordkeeping, and other obligations—violates Article III and the Seventh Amendment under SEC v. Jarkesy and the Third Circuit’s decision in Sun Valley Orchards, because the claims are effectively breach-of-contract disputes involving private rights that must be decided by a federal court and jury. Triple R further asserts that it will suffer irreparable harm if forced to proceed through the administrative process—particularly given an upcoming September 16, 2026 hearing—because it must expend resources defending itself in an allegedly unconstitutional forum where DOL acts as prosecutor, judge, and adjudicator, and where meaningful judicial review is limited and deferential. 

United Farm Workers v. DOL 

United Farm Workers (UFW)’s legal challenge to DOL’s 2025 Interim Final Rule introducing its new AEWR methodology pending in the Eastern District of California will proceed to a hearing on its request for an injunction on March 18, 2026. UFW recently announced it will hold a rally outside of the courthouse on the day of the hearing. The court is expected to rule on UFW’s motion at some point in the next few months. Seso continues to monitor this case closely and will provide real time updates as soon as they become available.