The Department of Labor under the Trump administration is signaling its intent to revoke a controversial Biden-era rule governing how independent contractors are classified — a move that could once again reshape labor relationships across industries, including commercial real estate.

“In the 30s, the mandate was quite a different one,” Doris Short, a partner at Duane Morris, tells GlobeSt.com. “They were creating a way to ensure that people were being properly paid. As time has marched forward, there are lots of different ways to work and lots of different ways to be paid, and some of that is the discretion of the worker themselves.”

For the commercial real estate industry, the implications could be significant. Some observers have long argued that parts of the construction workforce are improperly treated as independent contractors rather than employees. “You can find it, it is out there, it is happening,” Short acknowledges. “But that doesn’t mean it’s happening broadly.”

According to Short, state and local labor authorities often set standards stricter than those at the federal level. “When you have states that are going far, far above and beyond what the Fed is doing, you’re going to find more guidance and more cases at the state and local levels,” she says. “In New York, you’re not going to have as many issues with construction and independent contractors.”

Companies in commercial real estate would do well to remain cautious. As Short notes, both federal and state labor agencies continue to aggressively pursue businesses that misclassify employees — regardless of which administration happens to be in charge.

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