In an unusual directive that underscores mounting legal uncertainties, the U.S. Department of Labor has instructed employees to pause enforcement of the Biden administration’s new independent contractor rule, according to an internal memo reviewed by HR Dive. The move follows a Texas federal judge’s decision last month to block the agency’s efforts to implement stricter criteria for determining which workers should be classified as independent contractors as opposed to employees.

The DOL’s pause on enforcement throws into limbo a policy aimed at unraveling confusion surrounding the gig economy, drawing renewed scrutiny from business leaders and worker advocates alike. The January 2024 rule, slated to take effect in March, would have replaced the Trump-era standard with a more worker-friendly, multi-factor “economic realities” test. At stake are questions over worker benefits, overtime pay, and the bottom lines for companies reliant on contract labor, such as those in delivery and ride-hailing.

According to internal communications, Labor Department staff received explicit instruction not to enforce the new policy while litigation persists. “All enforcement activity under the 2024 rule is to be halted pending further notice,” the memo reads. Legal experts say the directive signals unusual caution—federal agencies don’t typically issue blanket cease orders unless they’re concerned about court sanctions.

The heart of the dispute lies in how workers are classified—an issue with nationwide economic consequence. Advocates say allowing businesses to categorize more workers as independent contractors enables wage theft and restricts access to employer-provided protections. Businesses counter that the flexibility of contract work suits both sides, and that overzealous regulation could force layoffs or raise consumer prices.

Last month’s ruling, issued by U.S. District Judge Marcia Crone, sided with business groups who argued the Labor Department overstepped its authority in rescinding the previous Trump-era standard, which leaned heavily on two criteria: the worker’s control over their work and their opportunity for profit or loss. The Biden administration’s version asked regulators to weigh at least six economic realities, including the worker’s investment, permanence of the relationship, and degree of control—notably making it harder for companies to justify non-employee classifications.

“Right now, we’re in regulatory limbo. Companies that changed policies to comply with the new rule may be asking, ‘What now?’” said Michael Lotito, a labor attorney at Littler Mendelson. “If you don’t know which standard to apply, you risk legal exposure either way.”

Major gig economy firms including Uber and DoorDash have closely watched the back-and-forth. In a brief statement, a DoorDash spokesperson said the company was “reviewing the developments and will work with policymakers to support drivers’ flexibility.” Worker groups see it differently. “This is a setback for millions of workers on the margins,” said Terri Gerstein, director of the NYU Wagner Labor Initiative.

While the administration has defended the rule as necessary to close loopholes that allow worker misclassification, the legal setbacks add pressure ahead of the November presidential election. The Labor Department, for its part, has not signaled whether it will appeal Judge Crone’s order, but officials have stated that they “remain committed to fighting for workers’ rights in every venue.”

For now, that venue won’t include agency enforcement action—at least until the courts offer clarity. In the meantime, the nation’s employers, gig workers, and labor advocates remain in a holding pattern, awaiting the next round in a prolonged battle to define the future of work.