Animals developing in the wild encounter a range of environmental conditions, and so developmental mechanisms have evolved that can accommodate different environmental contingencies. Harsh environmental conditions cause Caenorhabditis elegans larvae to arrest as stress-resistant "dauer" larvae after the second larval stage (L2), thereby indefinitely postponing L3 cell fates. HBL-1 is a key transcriptional regulator of L2 vs. L3 cell fate. Through the analysis of genetic interactions between mutations of hbl-1 and of genes encoding regulators of dauer larva formation, we find that hbl-1 can also modulate the dauer formation decision in a complex manner. We propose that dynamic interactions between genes that regulate stage-specific cell fate decisions and those that regulate dauer formation promote the robustness of developmental outcomes to changing environmental conditions.