Workforce Bulletin

On May 1, 2025, the U.S. Department of Labor’s (DOL) Wage and Hour Division (Division) issued Field Assistance Bulletin (FAB) No. 2025-1 (“FAB 2025-1”), announcing that it is currently working to reformulate the test as to how independent contractor status is determined under the Fair Labor Standards Act (“FLSA”).  Although it is unclear what contours the revised rule will eventually take, FAB 2025-1 signals a clear intention to make it easier for businesses to classify workers as independent contractors. 

The rulemaking process will take time.  FAB 2025-1 accordingly provides that, during the interim, the DOL will no longer enforce a 2024 rule established under the Biden administration.  The 2024 rule, which consisted of a non-exhaustive multi-factor test, is largely viewed as placing a difficult hurdle with respect to independent contractor classification.

FAB 2025-1 relaxes the DOL enforcement standard by reverting to the “economic reality” framework outlined in Fact Sheet #13 (July 2008), as informed by Opinion Letter FLSA2019-6. The “economic reality” framework asks whether the worker is an independent contractor in business for themselves, or an employee economically dependent on the business they serve. While this does not involve a single rule or test, significant factors include:

Section 3(m)(2)(B) of the FLSA prohibits employers, including managers or supervisors, from keeping any portion of an employee’s tips.  Accordingly, the law has been clear that a manager or supervisor cannot participate in a general employee tip pool, since tip pools including tips of other employees. 

Although this appears clear at first blush, the blurred lines of restaurant staffing creates ambiguity as to who is exactly a manager or supervisor.  Non-exempt employees often work in a certain supervisory capacity as team or shift leads.  Conversely, it is also common for managers and supervisors in restaurants to perform a certain amount of non-supervisory duties.  So, when are employees with minor supervisory responsibilities treated as managers for tip pooling?  And can managers participate in tip pools when they perform non-supervisory duties?

As more organizations across industry sectors store personal data with cloud storage vendors— including the three largest vendors in the world, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform—federal regulatory agencies are increasing their scrutiny of data control efforts and vetting the data privacy and security protocols of third-party vendors. AT&T’s recent settlement with the Federal Communications Commission (FCC) serves as a cautionary tale.

What Is the Cloud?

In case your cloud knowledge is, well, nebulous, cloud data storage allows user organizations to store data on remote servers that are maintained by a third party and are located off site. Users then access the data via the internet. This enables seamless collaboration and accessibility by users in disparate locations, without the burden of physical infrastructure.

According to Precedence Research, the cloud computing market will continue to rise, with the global market predicted to surpass $1 trillion by 2028. A 2023 survey of  hospital and health system leaders conducted by Global Healthcare Exchange (GBX) found “cloud-based solutions are quickly becoming a new standard within hospitals and health systems and impact nearly every domain, including supply chain, clinical, finance, and HR teams.” The survey revealed that nearly 70 percent of all hospitals and health systems are likely to adopt a cloud-based approach by 2026.

The benefits of cloud storage include scalability, cost efficiencies, increased user accessibility, and improved operational resiliency. Cloud technology can even lead to increased cybersecurity. Yet the GBX study still emphasizes the importance of selecting the “right cloud partner” to achieve the best outcome and stronger data security.