Worker Classification in 2026: What's Changing and Why it Matters

The Changing Enforcement Landscape for Independent Contractors 

For many businesses that rely on independent contractors, misclassification risk often feels like a legal issue that only surfaces when regulators directly challenge worker classification. But today’s enforcement landscape tells a different story. 

Across state and federal agencies, regulators are increasingly pursuing wage violations, consumer protection claims, contract disputes, and supply-chain liability. All of which can quickly expose independent contractor programs to misclassification risk, even when classification itself is not the headline of accusation. 

Recent actions in New York, new federal enforcement data, emerging court decisions, and expanding “up-the-ladder” liability trends send a clear message: enforcement is accelerating, and scrutiny is widening. Companies operating in delivery, field services, healthcare, logistics, and other contractor-heavy industries should take this moment to reassess how their programs are structured, documented, and managed. 

Here’s what’s driving the current enforcement environment and what it means for your business. 

New York Is Increasing Pressure on Delivery Companies 

New York City and New York State have significantly escalated enforcement activity against app-based delivery companies. While these cases are not framed strictly as misclassification lawsuits, they focus on wage practices, worker protections, and consumer transparency with areas that often create downstream classification exposure. 

In one case, New York City alleges that Uber Eats and DoorDash checkout practices reduced delivery driver tips by more than $500 million. Regulators claim customers were misled about how tips were distributed, impacting driver earnings. This illustrates how customer-facing design decisions can become worker compensation issues. 

In another action, New York’s Department of Consumer and Worker Protection is pursuing Motoclick, a food delivery app company, and its CEO personally for alleged wage and hour violations. The claims center on improper deductions, including deductions for canceled deliveries and damaged food. 

What this means: 
Businesses operating in New York should closely review how pay is calculated, how deductions are authorized and documented, and whether managers have too much discretion in making settlement adjustments with independent contractors. Even when classification is not directly challenged, wage practices can quickly trigger regulatory scrutiny. 

Federal Wage Enforcement Remains Active 

The U.S. Department of Labor’s Wage and Hour Division recovered more than $259 million for approximately 178,000 workers in 2025, averaging roughly $1,500 per worker. These recoveries included a wide range of wage and hour claims, including misclassification-related matters. 

Enforcement continues into 2026. In January, the Department of Labor reached a settlement with a home health aide provider requiring the company to pay $250,000 and reclassify its independent contractors as employees going forward. 

What this means: 
Even though misclassification may not dominate headlines as heavily as in prior years, federal enforcement remains consistent and impactful. Companies should not assume reduced risk simply because messaging has shifted. 

Courts Are Reexamining Independent Contractor Contracts 

A recent federal appeals court case in Connecticut examined whether an arbitration clause in an independent contractor agreement was enforceable. The distributor argued the contract was between the company and the contractor’s LLC, not the individual worker. The court rejected this argument and ruled the agreement functioned as a “contract of employment,” making the arbitration clause unenforceable. 

The U.S. Supreme Court has agreed to hear a similar case, which could further shape how courts interpret independent contractor contracts nationwide. 

What this means: 
Contract language alone may not protect companies from classification risk. Businesses should review their independent contractor agreements, especially arbitration provisions and how independence is documented to ensure contracts align with operational reality and evolving legal standards. 

Up-the-Ladder Liability Is Expanding 

Regulators and plaintiffs are increasingly targeting companies higher up the contracting chain rather than only the direct hiring entity. 

Examples include California enforcement actions targeting shippers and logistics providers for subcontractor misclassification, and New York claims applying freelance worker protections to companies that benefit from subcontracted labor even when workers were hired by another contractor. 

Several states now hold businesses responsible for downstream labor practices when they benefit from the services being performed. 

What this means: 
Organizations that rely on master contractors, subcontractors, or vendor networks should evaluate how compliance responsibilities flow through their supply chains. Companies may now face liability for practices they do not directly control unless proper safeguards and oversight are in place. 

Misclassification Is a Nationwide Issue 

Misclassification and classification of compliance challenges are no longer confined to a few states. In recent years, companies have faced claims and enforcement activities in states such as Montana, Texas, Minnesota, Kansas, Nevada, Arizona, Utah, Missouri, and many others. 

What this means: 
Classification compliance must be treated as a nationwide operational discipline. Businesses should regularly review enrollment workflows, agreements, insurance requirements, documentation standards, and compliance monitoring practices across all operating regions. 

Compliance Is Becoming an Operational Imperative 

Today’s enforcement environment makes one thing clear: misclassification risk is no longer limited to traditional employment tests or isolated regulatory audits. Wage practices, consumer transparency, contract enforceability, and supply-chain relationships are now part of the compliance equation. 

Companies that proactively strengthen their independent contractor programs through better documentation, consistent workflows, transparent pay practices, strong contract structures, and ongoing compliance monitoring will be better positioned to withstand regulatory scrutiny and scale with confidence. 

Rather than reacting to enforcement after issues arise, organizations should view compliance as a strategic operational investment. The cost of inaction continues to grow, while the expectations for accountability, transparency, and contractor independence continue to rise.