On February 26, 2026, the U.S. Department of Labor (DOL) announced a Notice of Proposed Rulemaking (NPRM) that could reshape how workers are classified under the Fair Labor Standards Act (FLSA). The proposal would rescind the 2024 rule and move toward an updated framework similar to the 2021 model with a stronger emphasis on “economic reality.”
The Direct Selling Association (DSA) has publicly welcomed this proposal, calling it a constructive move toward clarity and predictability for independent contractors, especially within the direct selling industry.
For ethical, well-structured direct selling companies, this development represents stability, recognition of entrepreneurial independence, and a clearer compliance roadmap.
The U.S. Department of Labor stated that the new proposal aims to clarify when a worker should be classified as:
This distinction matters under the Fair Labor Standards Act (FLSA), which governs minimum wage, overtime, and other labor protections.
The 2026 proposal centers around two primary “core factors”:
The comment period remains open for 60 days, closing on April 28, 2026 (11:59 p.m. ET).
Importantly, this is still a proposed rule, not final yet.
The core legal question under the DOL’s approach is:
Is the individual truly in business for themselves, or are they economically dependent on a company like an employee would be?
Instead of focusing solely on contract language, the DOL emphasizes actual practice how the business relationship works in real life.
This is particularly significant for direct selling, where structure and field autonomy define the model.
The Direct Selling Association (DSA) views the proposed rule as a return to long-standing legal principles grounded in economic reality.
Their position is strategic and consistent:
Direct Selling Is Fundamentally Entrepreneurial
Direct selling provides a low-barrier pathway to financial and occupational independence. Individuals:
Independent contractor status is central to preserving this flexibility.
The Model Is Built on Autonomy, Not Assignment
Legitimate direct selling models are structured around:
These characteristics align directly with the DOL’s two core factors:
When structured correctly, many direct selling companies have strong, defensible facts under this framework.
Clarity and Predictability Strengthen Compliance
DSA has emphasized the importance of regulatory clarity.
For ethical companies, predictable rules allow them to:
Clarity is not about reducing worker protections, it’s about ensuring rules reflect modern entrepreneurial models.
The 2024 rule (effective March 11, 2024) used a broader “totality of circumstances” test with multiple weighted factors.
The 2026 proposal shifts toward:
For direct selling companies built around independence-by-design, this structure provides clearer alignment.
It Validates Independence-by-Design
Companies that intentionally structure their field model around real autonomy are better positioned under a control-focused analysis.
This rewards thoughtful business design not shortcuts.
It Prioritizes Actual Practice Over Paper Contracts
The DOL has emphasized that real-world practice matters more than theoretical contract terms.
That means companies must ensure:
Strong governance becomes a competitive advantage.
It Supports Scalable Entrepreneurship
In uncertain economic environments, flexible income opportunities matter.
Direct selling offers:
The DOL’s recognition of entrepreneurial opportunity supports this model when implemented responsibly.
While the proposal is positive, smart companies understand:
That is exactly why DSA’s focus on clarity and predictability is so important for long-term planning.
Companies that want to grow responsibly under this framework should focus on:
Protecting Field Autonomy (Control Factor)
Strengthening Entrepreneurial Opportunity (Profit/Loss Factor)
Aligning Policy with Actual Practice
Participating in the Rulemaking Process
Submitting professional comments before April 28, 2026, demonstrates leadership and commitment to constructive policy engagement.
A balanced and credible public position looks like this:
“We support policies that protect real entrepreneurship and provide clear, predictable rules. Direct selling empowers individuals to build independent businesses on their own terms, choosing when and how they work, and growing through their own initiative. We welcome regulatory clarity that recognizes this independence while supporting strong worker protections.”
The 2026 DOL proposal represents more than a regulatory adjustment it reflects an ongoing effort to modernize how independent work is understood in today’s economy.
For ethical direct selling companies, this is an opportunity to:
Clear rules, strong governance, and real autonomy form the foundation of a healthy direct selling ecosystem, and this proposal moves the conversation in that direction.
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