H. Rpt. 119-506 accompanies financial services legislation titled "Modern Worker Security Act". Financial bills regulate banks, securities markets, consumer finance, insurance, housing finance, cryptocurrency, or anti-money-laundering. The Education and Workforce Committee's report explains the financial regulatory changes, the problems they address, the compliance implications for institutions, and potential effects on consumers and markets. Financial services reports often balance industry concerns against consumer protection goals.
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House Report 119-506 - MODERN WORKER SECURITY ACT
[House Report 119-506]
[From the U.S. Government Publishing Office]
119th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 119-506
======================================================================
MODERN WORKER SECURITY ACT
_______
February 20, 2026.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Walberg, from the Committee on Education and Workforce, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1320]
The Committee on Education and Workforce, to whom was
referred the bill (H.R. 1320) to ensure that the provision of
portable benefits to an individual is not considered in
determining whether such individual is an employee of a person,
having considered the same, reports favorably thereon with
amendments and recommends that the bill as amended do pass.
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Modern Worker Security Act''.
SEC. 2. PROHIBITION ON CONSIDERATION OF BENEFITS.
(a) Prohibition.--Beginning on the date of enactment of this Act, for
the purposes of any Federal law, a determination of whether an
individual is an employee of a person shall be made without considering
whether such person provides a benefit to the individual.
(b) Benefit Defined.--In this Act, the term ``benefit'' includes--
(1) a benefit, including a protection, that is provided to an
individual for work performed for another person that the
individual may maintain without regard to whether the
individual continues to perform work for such person;
(2) a benefit, including a protection, that is commonly
provided to a full-time employee (such as workers'
compensation, skills training, professional development, paid
leave, disability coverage, health insurance coverage,
retirement savings, and short-term savings); and
(3) a contribution, financial or otherwise, with respect to a
benefit described in paragraph (1) or (2) that is--
(A) made on behalf of an individual by a person in
connection with work performed by the individual for
the person;
(B) made by the individual; or
(C) made through a combination of subparagraphs (A)
and (B).
Amend the title so as to read:
A bill to prohibit the consideration of benefits when
determining whether an individual is an employee of a person.
PURPOSE
To ensure that the provision of benefits to an individual
is not considered in determining whether such individual is an
employee of a person.
COMMITTEE ACTION
115TH CONGRESS
First Session--Hearing
On February 16, 2017, the Committee on Education and
Labor's Subcommittee on Workforce Protections held a hearing
titled ``Federal Wage and Hour Policies in the Twenty-First
Century Economy.'' The hearing explored how outdated Fair Labor
Standards Act (FLSA) rules and restrictions affecting
independent-contractor status hinder flexibility, innovation,
and job growth in the modern economy. Testifying before the
Subcommittee were Ms. Christine Walters, Sole Proprietor, FiveL
Company, Westminster, MD; Mr. Andy Brantley, President and
Chief Executive Officer, College and University Professional
Association for Human Resources, Knoxville, TN; Ms. Rhea Lana
Riner, President, Rhea Lana's Franchise Systems Inc., Conway,
AR, on behalf of the International Franchise Association; and
Mr. Andrew Stettner, Senior Fellow, The Century Foundation,
Washington, DC.
118TH CONGRESS
First Session--Hearing
On April 19, 2023, the Subcommittee on Workforce
Protections held a hearing titled ``Examining Biden's War on
Independent Contractors.'' The hearing evaluated the advantages
of independent contracting, the economic risks of California's
AB 5 and similar reclassification proposals, and legislative
options to safeguard flexible work opportunities for workers
and businesses. Testifying before the Subcommittee were Ms.
Tammy McCutchen, Senior Affiliate, Resolution Economics, New
Market, TN; Ms. Kim Kavin, Freelance Writer and Editor, Morris
County, NJ; Dr. Liya Palagashvili, Senior Research Fellow,
Mercatus Center at George Mason University, Fairfax, VA; Ms.
Karen Anderson, Founder, Freelancers Against AB5, Dana Point,
CA; Ms. Laura Padin, Director of Work Structures, National
Employment Law Project, Washington, DC; and Mr. David Long,
Chief Executive Officer, National Electrical Contractors
Association, Washington, DC.
Second Session--Hearing
On April 11, 2024, the Subcommittee on Workforce
Protections held a hearing titled ``Unlocking Opportunity:
Allowing Independent Contractors to Access Benefits.'' The
hearing explored allowing businesses to provide portable,
customizable benefits to independent contractors without
triggering employee reclassification. Testifying before the
Subcommittee were Ms. Kristin Sharp, Chief Executive Officer,
Flex Association, Washington, DC; Ms. Gabriella Hoffman, Senior
Policy Analyst, Independent Women's Forum Center for Economic
Opportunity, Alexandria, VA; Dr. Liya Palagashvili, Senior
Research Fellow, Mercatus Center at George Mason University,
Fairfax, VA; and Dr. Katie Wells, Postdoctoral Fritz Fellow,
Tech and Society Initiative, Georgetown University, Washington,
DC.
119TH CONGRESS
First Session--Hearings
On March 25, 2025, the Subcommittee on Workforce
Protections held a hearing titled ``The Future of Wage Laws:
Assessing the FLSA's Effectiveness, Challenges, and
Opportunities.'' The hearing examined whether the FLSA remains
effective in today's economy and explored reforms to modernize
outdated regulations. Testifying before the Subcommittee were
Ms. Tammy McCutchen, Senior Affiliate, Resolution Economics,
New Market, TN; Ms. Paige Boughan, Senior Vice President and
Director of Human Resources, Farmers and Merchants Bank,
Hampstead, MD, on behalf of the Society for Human Resource
Management; Mr. Jonathan Wolfson, Chief Legal Officer and
Policy Director, Cicero Institute, Richmond, VA; and Mr. Andrew
Stettner, Director of Economy and Jobs, The Century Foundation,
Washington, DC.
On May 20, 2025, the Subcommittee on Workforce Protections
held a hearing titled ``Empowering the Modern Worker.'' The
hearing examined how federal worker-classification rules and
benefit restrictions affect the nation's independent
contractors and considered legislative reforms to provide
modern workers both flexibility and security. Testifying before
the Subcommittee were Mr. Nathan Mehrens, Vice President,
Workforce Policy, American Trucking Associations, Washington,
DC; Ms. Kim Kavin, Freelance Writer and Editor, Morris County,
NJ; Dr. Liya Palagashvili, Senior Research Fellow, Mercatus
Center at George Mason University, Arlington, VA; and Ms. Laura
Padin, Director of Work Structures, National Employment Law
Project, Washington, DC.
First Session--Legislative Action
On February 13, 2025, Representative Kevin Kiley (R-CA)
introduced H.R. 1320, the Modern Worker Security Act with
Representative Mark Messmer (R-IN) as an original cosponsor. On
July 23, 2025, the Committee on Education and Workforce
considered H.R. 1320 in legislative session and reported it
favorably, as amended, to the House of Representatives by a
recorded vote of 19-16. The Committee adopted by voice vote an
Amendment in the Nature of a Substitute (ANS) offered by
Representative Kiley that made minor technical changes to the
bill.
COMMITTEE VIEWS
INTRODUCTION
Independent contractors are self-employed individuals
contracted to perform work or provide services to a person or
business. The independent workforce encompasses a wide variety
of workers\1\ and has been growing rapidly. According to the
Internal Revenue Service and the Treasury Department, from 2001
to 2016, the share of workers with independent contracting
income grew by 22 percent.\2\ According to McKinsey's American
Opportunity Survey, from 2016 to 2022, the independent
workforce jumped from 27 percent of the employed population to
36 percent.\3\ There are now an estimated 73.3 million
independent workers in the United States.\4\
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\1\These include over 120 professions such as translators, youth
sports coaches, golf caddies, certain healthcare workers, financial
advisors, cartoonists, musicians, tutors, writers, direct sellers,
delivery drivers, electricians, software developers, fitness
instructors, nannies, graphic designers, photographers, and
nutritionists, among others.
\2\https://www.mercatus.org/research/policy-briefs/unleashing-
portable-benefits-solutions.
\3\https://www.mckinsey.com/featured-insights/sustainable-
inclusive-growth/future-of-america/freelance-side-hustles-and-gigs-
many-more-americans-have-become-independent-workers.
\4\https://mycreditsummit.com/gig-economy-statistics/.
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Independent contractors are not ``employees'' and are
therefore not covered by statutes such as the Fair Labor
Standards Act (FLSA), the Family and Medical Leave Act (FMLA),
or the Employee Retirement Income Security Act (ERISA).\5\ Only
employees are subject to certain wage-and-hour rules and may
access benefits offered to employees such as an employer-
sponsored retirement account, child care allowance, leave (paid
or unpaid), life insurance, or health insurance, among others.
Independent contractors are not eligible to participate in
employer-sponsored retirement and health benefit plans under
ERISA.
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\5\Since 1938, the FLSA has defined the term ``employee'' as ``any
individual employed by an employer,'' the term ``employer'' as ``any
person acting directly or indirectly in the interest of an employer in
relation to an employee,'' and the term ``employ'' as ``to suffer or
permit to work.'' 29 U.S.C. Sec. 203.
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PORTABLE BENEFITS FOR INDEPENDENT CONTRACTORS
The term ``portable'' or ``flexible'' benefits generally
refers to state-level policies or private-sector actions that
allow independent contractors to maintain their nontraditional
work arrangements while also accessing some benefits that are
offered to traditional employees, i.e., those covered as
employees by the FLSA, the FMLA, ERISA, and other labor and
employment statutes. Many portable benefits models attach the
benefits to the worker rather than the employer, thus making
the benefits ``portable.''
A 2020 survey of rideshare drivers showed that 67 percent
of drivers prefer to get benefits with their independent
contractor status intact instead of receiving benefits through
traditional employment. Eighty-six percent of drivers say the
reason they work in app-based driving is to have scheduling
flexibility. Eighty-six percent of respondents also said they
would not be able to drive if they were not offered a flexible
schedule. Lastly, 70 percent of drivers said they would not
continue driving if they were forced into a traditional
employee arrangement.\6\
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\6\https://www.uber.com/newsroom/driver-poll/.
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In February 2023, the Mercatus Center published a policy
brief titled ``Flexible Benefits for a Flexible Workforce:
Unleashing Portable Benefits Solutions for Independent Workers
and the Gig Economy.''\7\ Among other findings, the brief
concluded that attempts by states to reclassify independent
contractors as employees are not desirable because of the
changing workforce and because so many workers engage in
independent work (roughly one in 10 workers do so as their
primary source of income, and one in three use it to supplement
their income). The brief stated:
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\7\https://www.mercatus.org/research/policy-briefs/unleashing-
portable-benefits-solutions.
[R]eclassification policy is a tool of the past
attempting to solve the challenges of the future.
Access to portable benefits is the only sustainable
solution in the long run if the nature of work
continues to change and flexible and diverse forms of
work become the new norm. It is the best solution to
help workers who choose to become entrepreneurs and
self-employed small business owners.\8\
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\8\Id.
The brief also offers policy reforms to remove legal
barriers across federal and state jurisdictions. It focuses on
three design principles: 1) participation in portable benefits
programs should be voluntary; 2) contributions should come from
multiple sources, i.e., customers, organizations, businesses,
and workers themselves; and 3) benefits accounts should be tied
to the individual as opposed to a business.
STATE EFFORTS TO EXPAND PORTABLE BENEFITS
States have responded to the rising demand for independent
workers to access benefits while maintaining their flexible
schedules. Pennsylvania, Utah, Alabama, Tennessee, Kentucky,
Washington and several others have either enacted some form of
portable benefits program at the state level, announced a
public-private partnership, or debated a proposal in the
legislature.
Pennsylvania
In 2024, Pennsylvania and DoorDash conducted a statewide
portable benefits savings pilot program in which DoorDash
workers (Dashers) in the state accessed benefits through
Stride, a financial technology company, from April through
September 2024.\9\ The pilot program was later extended until
March 2025.\10\
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\9\https://www.prnewswire.com/news-releases/stride-launches-first-
ever-independent-worker-contributions-program-for-portable-benefits-
302106507.html.
\10\https://commonwealthfoundation.org/research/portable-benefits-
for-gig-workers/.
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Eligible expenses covered under the pilot program included
retirement, health, and paid time off. Once a Dasher earned
$1,000, he or she became eligible for portable benefits,
allowing him or her to take the benefits to future work
arrangements. According to DoorDash survey data, 23 percent of
Dashers utilized the pilot program, and 89 percent of those
utilizing the program viewed it as beneficial overall.
An NDP Analytics report on the pilot program stated:
The portable benefits program enhances Dashers'
financial security and well-being in various ways.
About 87% of enrollees in the portable benefits pilot
program had saved more than 50% of the deposits as of
early October [2024]. The share of enrollees who save
(87%) is much more than the number of Americans
expecting a tax refund who say they plan to save it
(28% of taxpayers). With the monetary benefits, Dashers
can afford to take time off that would benefit their
mental and physical health and work productivity.
Estimates show that nearly 23% of the civilian labor
force in the U.S. lacks access to paid sick leave, with
higher shares among the lowest-paid workers, part-time
workers, and female cohorts. Based on DoorDash's pilot
program, Dashers, on average, could build up a $400
fund within a year from the contributions. . . . 37% of
all adults in the U.S. struggle with a theoretical $400
unexpected expense.\11\
\11\https://ndpanalytics.com/wp-content/uploads/Portable-Benefits-
Report-December-2024.pdf.
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Utah
In March 2023, Governor Spencer Cox (R-UT) signed into law
the ``Portable Benefits Plan,'' or S.B. 233, which passed the
legislature almost unanimously.\12\ The law allows for
voluntary participation in a variety of portable benefits
plans, clarifies that contributions to a portable benefits plan
may not be used as a criterion for determining worker
classification as an independent contractor or employee, and
specifies that portable benefits plans are not evidence of an
employment relationship or business liability.\13\ S.B. 233
stands as the first voluntary portable benefits law enacted at
the state level. Following Utah's enactment of S.B. 233, a
Libertas Institute report recommended that Utah build on the
work of S.B. 233 and strengthen the incentives for
participation in portable benefits plans through tax incentives
for firms and individuals who contribute to these plans.\14\
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\12\https://le.utah.gov/2023/bills/static/SB0233.html.
\13\https://le.utah.gov/2023/bills/static/SB0233.html.
\14\http://libertas.org/policy-papers/FlexibleBenefitsReport.pdf.
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Alabama
On April 10, 2025, Alabama enacted SB 86, which provides a
safe harbor for portable benefits available to independent
contractors and makes portable benefits tax deductible for both
contributing businesses and recipients.
Tennessee
On March 20, 2025, Tennessee enacted H.B. 494, which
authorizes marketplace platforms to provide medical and other
insurance benefits to independent contractors. This bill
empowers businesses to offer and fund portable benefit
accounts, giving entrepreneurs greater transparency and control
over their health care.\15\
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\15\https://americansforprosperity.org/press-release/americans-for-
prosperity-tennessee-
applauds-the-passage-of-property-rights-protection-act-and-flexible-
benefit-accounts/.
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Kentucky
In 2024, Kentucky enacted H.B. 465 allowing portable
benefits plans. H.B. 465 generally allows public or private
entities to contribute funds to portable benefits plans for
independent workers without changing their classification to
employee.\16\
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\16\https://apps.legislature.ky.gov/record/24rs/hb465.html.
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Washington State
Washington enacted benefits programs specifically for app-
based workers such as Uber and Lyft drivers. Washington's H.B.
2076, enacted in 2022, requires rideshare companies to provide
rideshare drivers with paid sick leave, unemployment financial
assistance, paid family leave, and a statewide minimum earnings
guarantee, all while maintaining the rideshare drivers' status
as independent contractors.\17\
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\17\https://thehill.com/homenews/3256469-washington-passes-first-
ever-state-law-creating-
minimum-pay-for-ride-sharing-companies/.
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WORKFORCE HEARING ON INDEPENDENT CONTRACTORS
On May 20, 2025, the Subcommittee on Workforce Protections
held a hearing on ``Empowering the Modern Worker.'' Experts on
issues affecting independent workers testified about
independent contractor challenges. Dr. Liya Palagashvili from
the Mercatus Center noted that access to portable benefits was
a win for workers that did not undermine traditional
employment:
Importantly, legalizing access to benefits does not
lead to more workers being classified as independent
contractors. My analysis of Utah's 2023 Portable
Benefits Bill shows that after the bill was enacted, W-
2 employment continued to grow at the same pace as
before the law, and the growth rate of self employment
also remained unchanged. The portable-benefits law had
no negative impact on labor market composition, but it
did give more workers security without sacrificing
autonomy. This demonstrates that portable benefits
complement, rather than compete with, traditional
employment benefits. Congress can take steps to
accelerate portable benefits by allowing independent
workers to open portable benefits accounts and by
enabling clients and platforms to make voluntary
contributions to those accounts.\18\
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\18\Empowering the Modern Worker: Hearing Before the Subcomm. on
Workforce Protections of the H. Comm. on Educ. & Workforce, 119th Cong.
(2025) (statement of Liya Palagashvili, Senior Research Fellow,
Mercatus Ctr. at George Mason Univ., at 4).
Regarding the Pennsylvania portable benefits pilot program,
Dr. Palagashvili stated during the hearing, ``One of the
takeaways that we see from the program is that workers are
using the money mostly for time off and emergency savings. That
makes sense given the data that most app-based workers are
full-time W-2 employees, so they don't use it to buy health
insurance contributions, and so forth.'' She continued, ``89
percent of the program participants said they're happy with the
program. It's been very beneficial to them . . . . 91 percent
of the program participants said that they would want to remain
independent.''\19\
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\19\Id. (Palagashvili testimony).
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MODERN WORKER SECURITY ACT
On February 13, 2025, Representative Kiley introduced H.R.
1320, the Modern Worker Security Act. The bill provides a
federal safe harbor for businesses offering benefits to
independent workers by providing that a determination of worker
classification cannot consider whether the business provides a
portable benefit to the worker.
CONCLUSION
As more and more Americans continue to join the independent
workforce, Congress must consider policies that support
freelancers, platform-based independent workers, independent
truckers, and other self-employed workers. Part of the solution
is to remove the risk attached to offering benefits to
independent contractors. While pilot programs now exist in
several states, and some states have enacted laws, Congress
could make clear that the presence of benefits is not a factor
when determining worker classification. The Modern Worker
Security Act achieves this goal.
H.R. 1320 SUMMARY
H.R. 1320 provides a safe harbor for businesses who offer
benefits to independent contractors by providing that in
determining whether an individual is an employee of the
business, such a determination must not consider whether the
business provides a portable benefit to the individual.
H.R. 1320 SECTION-BY-SECTION SUMMARY
Section 1 identifies the short title of the bill as the
Modern Worker Security Act.
Section 2 clarifies that the presence of benefits provided
by companies or other entities that utilize employees or
independent contractors is not a factor in determining the
classification of a worker for the purposes of any federal law.
Section 2 defines ``portable benefits'' as those provided to an
individual for work performed for another person or business
which the individual may maintain without regard to whether the
individual continues to perform work for such person or
business. Section 2 also defines ``work-related benefit'' as
benefits, including protections, of a type that are commonly
provided to full-time employees, or a contribution that is made
on behalf of an individual by a person or business in
connection with the work performed by the individual.
EXPLANATION OF AMENDMENTS
The amendment in the nature of a substitute is explained in
the body of this report.
APPLICATION OF LAW TO THE LEGISLATIVE BRANCH
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. H.R. 1320 ensures that the provision of benefits to an
individual is not considered in determining whether such
individual is an employee of a person, including for eligible
employees of the legislative branch.
UNFUNDED MANDATE STATEMENT
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act of 1974, Pub. L. No. 93-344 (as amended
by Section 101(a)(2) of the Unfunded Mandates Reform Act of
1995, Pub. L. No. 104-4), the Committee traditionally adopts as
its own the cost estimate prepared by the Director of the
Congressional Budget Office (CBO) pursuant to section 402 of
the Congressional Budget and Impoundment Control Act of 1974.
The Committee reports that because this cost estimate was not
timely submitted to the Committee before the filing of this
report, the Committee is not in a position to make a cost
estimate for H.R. 1320.
EARMARK STATEMENT
H.R. 1320 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House rule XXI.
ROLL CALL VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
In accordance with clause (3)(c) of House of
Representatives rule XIII, the goal of H.R. 1320, the Modern
Worker Security Act, is to ensure that the provision of
benefits to an individual is not considered in determining
whether such individual is an employee of a person.
DUPLICATION OF FEDERAL PROGRAMS
No provision of H.R. 1320 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF
THE COMMITTEE
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the body of this report.
REQUIRED COMMITTEE HEARING
In compliance with clause 3(c)(6) of rule XIII of the Rules
of the House of Representatives the following hearing held
during the 119th Congress was used to develop or consider H.R.
1320: On May 20, 2025, the Subcommittee on Workforce
Protections held a hearing on ``Empowering the Modern Worker.''
NEW BUDGET AUTHORITY AND CBO COST ESTIMATE
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, a cost estimate was not made
available to the Committee in time for the filing of this
report. The Chairman of the Committee shall cause such estimate
to be printed in the Congressional Record upon its receipt by
the Committee.
COMMITTEE COST ESTIMATE
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 1320.
However, clause 3(d)(2)(B) of that Rule provides that this
requirement does not apply when, as with the present report,
the Committee has requested a cost estimate for the bill from
the Director of the Congressional Budget Office.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
H.R. 1320, as reported by the Committee, makes no changes
to existing law.
MINORITY VIEWS
INTRODUCTION
H.R. 1320, the Modern Worker Security Act, would provide
that, during any assessment of a worker's status as an employee
or independent contractor for purposes of any federal law, a
court or agency will not consider whether the putative employer
provided compensation in the form of what the bill calls a
``benefit.'' Instead of addressing any actual problem for
workers and their families, the bill would advance a misguided
agenda to distract public attention from poverty-level
compensation and likely misclassification by unscrupulous
companies.
This bill is opposed by the AFL-CIO, National Employment
Law Project, National Partnership for Women and Families,
National Women's Law Center Action Fund, and The Association of
Union Constructors.
KEY ISSUES
Benefits Related to Employment
Traditional full-time employment often entails a
compensation package with both regular pay and other non-wage
compensations, such as health insurance, vision and/or dental
insurance, life insurance, and a retirement savings plan, which
are frequently summed up as ``benefits.''\1\ Some are required
under state or federal law, and some are provided
voluntarily.\2\ Among the reasons for such benefits is that
employers have greater purchasing power than individuals in the
market for insurance and other services, and employers'
purchase of such benefits is accorded tax preferences, making
it cheaper for employers to provide non-cash compensations that
workers value highly.\3\
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\1\Employee Benefits: The Complete Guide for Businesses, Extensis
HR (June 21, 2024), https://extensishr.com/resource/blogs/employee-
benefits/.
\2\Id.
\3\Ellen O'Brien, Employers' Benefits from Workers' Health
Insurance, 81 Milbank Q.5 (2003).
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Independent contractors--people who are in business for
themselves--take on the risks and burdens associated with any
business, including the costs of health insurance and a
retirement savings plan that would otherwise be covered in part
or whole by employers as benefits for their employees.
Independent contractors can assemble all manner of products
from the private market to cover retirement, health insurance,
casualty insurance, and the like.\4\ Public policy can also
assist people in business for themselves to level up their
access to such benefits. The Health Insurance Marketplace
established pursuant to the Patient Protection and Affordable
Care Act\5\ is one obvious example.\6\ Some states allow
independent contractors to be eligible for universal benefit
programs, such as California's CalSavers program, a state
retirement savings program open to independent contractors,
unemployed jobseekers, and employees of small employers that do
not offer retirement savings benefits.\7\ Another example is
New York's Paid Family Leave Program, which secures income and
benefit continuity during time off to bond with a newly born,
adopted, or fostered child, care for a family member with a
serious health condition, or assist loved ones when a spouse,
domestic partner, child, or parent is deployed abroad on active
military service.\8\
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\4\Benefits Basics for Self-Employed Workers, Fidelity (Oct. 31,
2024), https://www.fidelity.com/leaming-center/personal-finance/
benefits-for-freelancers.
\5\Pub. L. No. 11-148 (2010).
\6\See generally FAQs: Health Insurance Marketplace and the ACA,
KFF.org, https://www.kff.org/faqs/faqs-health-insurance-marketplace-
and-the-aca/ (last visited Aug. 21, 2025).
\7\The CalSavers Retirement Savings Trust Act, Cal. Gov't Code
Sec. 100000 et seq.
\8\New York State Paid Family Leave, Paid Family Leave NY, https://
paidfamilyleave.ny.gov/ (last visited May 15, 2025).
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Misclassification
The value of non-cash compensations factors significantly
when businesses elect to misclassify their workers as
independent contractors rather than employees. The Economic
Policy Institute (EPI) examined some of the occupations most
prone to misclassification and found that being erroneously
classified as an independent contractor was costly for such
workers. For example, a misclassified truck driver annually
loses $21,533-$38,965; a janitorial and cleaning worker,
$7,228-$10,214; and a call center worker, $8,155-$11,539.\9\
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\9\Adewale A. Maye et al., Misclassifying Workers as Independent
Contractors Is Costly for Workers and States, Econ. Pol'y Inst. (Jan.
22, 2025), https://www.epi.org/publication/misclassifying-workers-2025-
update/.
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Misclassification enriches employers at the expense of
workers and the broader public. Law-breaking employers can save
an estimated 30% in labor costs and taxes.\10\ A 1996 study put
the loss of federal revenues at $1.6 billion in 1984 ($5.0
billion today).\11\
---------------------------------------------------------------------------
\10\Nat'l Emp. L. Proj., Independent Contractor Misclassification
Imposes Huge Costs on Workers and Federal and State Treasuries 1 (Oct.
2020), https://s27147.pcdn.co/wp-
content/uploads/lndependent-Contractor-Misclassification-Imposes-Huge-
Costs-Workers-Federal-State-Treasuries-Update-October-2020.pdf.
\11\Gen. Accounting Off., GAO/T-GGD-96-130, Issues in Classifying
Workers as Employees or Independent Contractors (June 20, 1996),
https://www.gao.gov/assets/t-ggd-96-130.pdf.
---------------------------------------------------------------------------
The practice appears to be widespread. Although estimates
vary, at least 10%-20% of employers are currently
misclassifying their employees as independent contractors
instead of employees.\12\ A Department of Labor study put the
number as high as 30%.\13\
---------------------------------------------------------------------------
\12\Nat'l Emp. L. Proj., supra note 10.
\13\Lalith De Silva et al., Planmatics, Inc., Independent
Contractors: Prevalence and Implications for Unemployment Insurance
Programs, Prepared for the US Department of Labor Employment and
Training Administration (2000), http://wdr.doleta.gov/owsdrr/00-5/00-
5.pdf.
---------------------------------------------------------------------------
Legal Tests of Employment Status
To determine whether a worker has been properly classified
as an independent contractor or is instead an employee for the
purposes of a given law, courts and agencies typically consider
a list of factors or questions. In this analysis, the courts
and agencies probe the totality of the circumstances of the
relationship between the business and the worker in order to
arrive at a conclusion under the relevant law. For most federal
laws, such as the National Labor Relations Act (NLRA)\14\ and
the Internal Revenue Code (IRC),\15\ the core question is a
common law test of control.\16\ The Fair Labor Standards Act
(FLSA)\17\ includes a broader set of arrangements under its
``economic realities'' test.\18\ These tests share a common
principle: no list of factors is exhaustive, and no single
factor alone determines the outcome of what is typically a
holistic assessment of the facts of any particular case.
---------------------------------------------------------------------------
\14\Pub. L. No. 74-198, 49 Stat. 449 (1935) (codified at 29 U.S.C.
Sec. 151 et seq.).
\15\U.S. Code, tit. 26.
\16\See FedEx Home Delivery v. NLRB, 849 F.3d 1123, 1125 (D.C. Cir.
2017); Topic No. 762, Independent Contractor vs. Employee, IRS.gov,
https://www.irs.gov/taxtopics/tc762 (last visited July 31, 2025).
\17\Pub. L. No. 75-718, 52 Stat. 1060 (1938) (codified at 29 U.S.C.
Sec. 201 et seq.).
\18\United States v. Rosenwasser, 323 U.S. 360, 363 (1945) (quoting
81 Cong. Rec. 7,657 (1938) (remarks of Sen. Hugo Black)). The FLSA's
definition of ``employ'' is a standard of ``striking breadth'' that
``stretches the meaning of `employee' to cover some parties who might
not qualify as such under a strict application of traditional agency
law principles.'' Nationwide Mut. Ins. Co v. Darden, 503 U.S. 318, 323
(1992).
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FIGHTING A PHANTOM PROBLEM
The Majority claims that this bill is needed to enable
independent contractors to access the same kinds of non-cash
compensations that many traditional employees enjoy. ``While
independent contractors might in some cases have access to
traditional W2 employee style benefits separately through
another job [or] through a spouse, many currently cannot access
benefits as an independent contractor,'' explained bill sponsor
Rep. Kevin Kiley (R-CA) during the markup of this bill. ``And
if they do, they in some cases actually risk being reclassified
as a result, which might even make it, uh, no longer viable,
uh, to pursue their line of work.''\19\
---------------------------------------------------------------------------
\19\H. Comm. on Educ. & Wrkf. Dems., Markup: HR. 1319, HR. 1320,
HR. 4366, HR. 4312, HR. 4307, at 2:20 (YouTube, July 23, 2025), https:/
/www.youtube.com/watch?v=-zyO0krKLNk (statement of Rep. Kevin Kiley
introducing Amendment in Nature of a Substitute for H.R. 1320).
---------------------------------------------------------------------------
The problem with this statement is that it does not match
reality. If there is any federal law that prohibits companies
from offering non-cash compensations to independent
contractors, the Majority has not, to date, mentioned it in any
hearing on this topic. If such a law exists, this bill does not
name it, much less repeal or amend it.
In fact, there is no danger that payment in the form of
non-cash compensations would transform legitimate contractual
arrangements into employment relationships. Neither the NLRA
nor FLSA employment test includes any mention of the form in
which compensation is provided. IRS Form SS-8, used to elicit
information about supposed contractual arrangements for an IRS
determinatiod of possible misclassification, does include a
question about whether non-cash compensation was provided; it
is one among 61 questions, several of which have sub-
questions.\20\ Even so, this question is not, by itself,
dispositive:
---------------------------------------------------------------------------
\20\Form SS-8 (rev. Dec. 2023), IRS.gov, https://www.irs.gov/pub/
irs-pdf/fss8.pdf (last visited July 31, 2025).
Some factors may indicate that the worker is an
employee, while other factors indicate that the worker
is an independent contractor. There is no ``magic'' or
set number of factors that ``makes'' the worker an
employee or an independent contractor and no one factor
stands alone in making this determination. Also,
factors which are relevant in one situation may not be
relevant in another. The keys are to look at the entire
relationship and consider the extent of the right to
direct and control the worker.\21\
---------------------------------------------------------------------------
\21\Independent Contractor (Self-Employed) or Employee?, IRS (June
2, 2025), https://www.irs.gov/businesses/small-businesses-self-
employed/independent-contractor-self-employed-or-employee.
Under the IRS's test, then, a firm and self-employed
contractor entering into a truly arms-length contractual
arrangement should have ample evidence of the legitimacy of
that arrangement and nothing to fear from agreeing that some
portion of the contractual compensation be delivered as a non-
cash benefit.
This is the second Congress during which the Majority has
offered this legislation. Despite two hearings and now one
markup, the Majority has yet to offer any evidence whatsoever
that paying an independent contractor through non-cash
compensations has ever changed or will ever change a legitimate
business-to-business contracting arrangement into an employment
relationship.
BENEFITING BOSSES, NOT WORKERS
To address this problem that is not a problem, the Majority
proffers a solution that solves nothing. The Majority describes
this bill as though it does something straightforward: enable
independent contractors to receive from their clients the same
sort of non-cash benefits, such as health insurance, that
employees receive from their employers. Setting aside that
nothing currently bars such unorthodox compensation
arrangements, the only real benefit that this bill would secure
is to hand businesses a roadmap to misclassifying workers,
getting away with it, and calling it an act of generosity.
``Benefits'' Beyond Benefits
This bill redefines the word ``benefit'' to something much
broader than the term's ordinary meaning. The word benefit in
the employment context ordinarily invokes expensive non-cash
compensations such as health insurance and pensions.
Accordingly, the bill's definition of benefit does include some
familiar employment-related benefits: workers' compensation,
disability coverage, health insurance coverage, and retirement
savings. That much, at least, would cover the improbable
scenario of a finn extending its health insurance policy, say,
to cover an independent contractor in addition to the firm's
employees.
The bill does not, however, limit its scope to the benefits
for which employer purchasing power and tax preferences make a
meaningful difference. The bill's definition of benefit
includes several items that depart significantly from the
ordinary meaning of employment-related benefits:
Section 2(b)(1) provides that the term
benefit includes ``a benefit, including a protection''
(neither of which is further defined) provided by a
business in a means that is portable (that is, in a
form ``that the [independent contractor] may maintain
without regard to whether the [independent contract]
continues'' to be engaged in a work for the business).
Section 2(b)(2) provides that the term
benefit includes the usual employment-related benefits,
with a parenthetical list mentioning not just the usual
benefits but also a few oddballs: skills training,
professional development, paid leave, and short-term
savings.
Section 2(b)(3) expands the definition
further to include ``a contribution, financial or
otherwise, with respect to a benefit'' of'' the sort
described in section 2(b)(1)-(2) ``made on behalf of''
a worker.
The definition is on its face so capacious that it could
contain virtually any compensation at all provided to a worker
in a supposed independent contracting relationship, belying the
sales pitch of the bill as enabling independent contractors to
gain access to expensive benefits traditionally associated with
employment, such as health insurance.
The ``Benefit'' of Required Training
Of particular concern is the inclusion of ``skills
training'' and ``professional development'' in the definition
of benefit. Courts applying the FLSA economic realities test
often distinguish between true independent contractors and
those who are actually employees by examining the worker's
preexisting skillset. A distinguishing trait of a true
independent contractor is the possession of ``specialized'' and
``unique training'' enabling the contractor to do work ``that
no other worker could perform.''\22\ By contrast, if a worker
receives the training required for the rendering of services
primarily from the entity needing that work from the worker,
the worker is likely an employee of the entity.\23\
---------------------------------------------------------------------------
\22\Werner v. Bell Family Med. Ctr., Inc., 529 F. App'x 541, 544
(6th C.tr.2013).
\23\See, e.g., Acosta v. Off Duty Police Servs., 915 F.3d 1050,
1056 (2019) (finding evidence of employment status where security
guards performed simple tasks subject to short-term training provided
by putative employer); Keller v. Miri Microsystems LLC, 781 F.3d 799
(Mar. 26, 2015) (finding evidence supportive of employment status where
satellite dish installers performed work that did not require
specialized skills and where firm required training to ensure
performance within a company's specifications).
---------------------------------------------------------------------------
This bill would remove any consideration of training or
professional development from all federal employment tests. In
doing so, the bill would upend decades of established law and
fundamentally rewrite the distinction between employees and
independent contractors. Businesses would be encouraged to
misclassify unskilled workers as independent contractors, given
that the businesses could comfortably provide the necessary
training without any worry of it being considered as evidence
of the economic reality of the relationship.
This is, in fact, the second bill put forward by the
Majority this Congress that would give employers a free pass
from wage and hour protections with respect to required
training. Earlier this year, this Committee marked up H.R.
2262, the Flexibility for Workers Education Act, which would
carve out time spent participating in education or training
related to employment from the calculation of a worker's
compensable time for the purposes of minimum wage and overtime.
That bill would enable employers to schedule training essential
to the job and get away with not paying their employees for the
time.
Whereas H.R. 2262 would enable businesses to provide
required training and not pay for their employees' time, this
bill would enable businesses to call such training a valuable
benefit that they are graciously allowed to extend to their
putative contractors. True independent contractors in business
for themselves, marketing their services and unique skills, can
set their own rates and, accordingly, factor the cost of their
own professional development in their rate and likely deduct
the cost as a business expense. They do not need a
misclassification grift disguised as a gift.
Lipstick on a Piggybank
This bill's definition of benefit could encompass something
as simple as a direct deposit of cash in a savings account.
Cash ticks all the boxes in section 2(b) of the bill:
Portability: No benefit is as portable as
cash.
Short-term savings: Cash in a savings
account is a classic form of short-term savings.
Paid leave: For people legitimately in
business for themselves, the standard advice for
setting a freelance rate (in other words, the amount of
cash compensation to require in a contract) typically
counsels contracting at an amount that accommodates
reasonably anticipated vacation and sick time.\24\ Cash
segregated from the base rate and provided under the
header of ``paid leave'' could easily just be cash
deposited in an account and withdrawn on a day that the
putative independent contractor opts not to work.
---------------------------------------------------------------------------
\24\See, e.g., Sean Cope, How To Set Your Freelance Rate and
Project Pricing, Upwork (May 28, 2024), https://www.upwork.com/
resources/how-to-set-your-freelance-rate; Shel Perkins, Calculating a
Freelance Rate, AIGA: The Pro. Assoc'n for Designers, https://
www.aiga.org/
resources/calculating-a-freelance-rate (last visited Aug. 7, 2025).
---------------------------------------------------------------------------
Contributions toward any of the ``benefits''
defined in the section: Cash dropped into a savings
account can be used to contribute to the cost of any of
the more expensive benefits traditionally associated
with employment, in addition to the less orthodox
``benefits'' such as short-term savings.
Given that the direct deposit of into a bank account is
already a widely-used means of paying independent
contractors,\25\ it is not clear why any legislation would be
needed to protect the status of contracting relationships paid
that way. Calling it a ``benefit'' neither improves the degree
of actual benefit it provides to independent contractors nor
has any consequence at all for the legal relationship between
the contracting parties.
---------------------------------------------------------------------------
\25\How To Pay 1099 Workers, Paychex (Apr. 22, 2025), https://
www.paychex.com/articles/
payroll/how-to-pay-1099-workers.
---------------------------------------------------------------------------
Exercising Control, Calling It a Benefit
This bill could empower businesses to offer or withhold
these ``benefits'' in the exercise of managerial control. For
example, Uber Eats has a rewards program called ``Uber Eats
Pro,''\26\ which sorts delivery workers into status tiers based
on restaurant and customer ratings and allots points based on
the number of completed deliveries, which increase during lunch
and dinner shifts. With the right combination of status and
points, workers can become eligible for ``rewards'' that
include not only access to the best-paying deliveries but also
cash back for gas, discounts on oil changes, Costco gold
membership, 15% off dental and vision insurance through a
third-party partner, and even tuition coverage.\27\
---------------------------------------------------------------------------
\26\Deliver with Uber: Perks and Rewards, Uber, https://
www.uber.com/us/en/deliver/uber-pro/ (last visited Apr. 23, 2025).
\27\Uber Eats Pro Terms and Conditions, Uber (Oct. 31, 2024),
https://www.uber.com/legal/en/document/?country=united-
states&lang=en&name=uber-eats-pro-terms&uclick_id=a8dad3b6-1cd6-4f9b-
9327-6bb98a0d7773.
---------------------------------------------------------------------------
Dangling benefits like this that are conditional on
delivery of services in accordance with a firm's performance
demands could be evidence of control by the firm and a lack of
a truly independent business status for the worker. This bill,
however, would take all such evidence off the table, handing
companies powerful new tools for exercising significant control
while evading labor and employment laws.
THE GIG PLATFORMS' GET-OUT-OF-JAIL-FREE CARD
The idea of disentangling non-cash benefits such as health
care insurance and retirement income support from employment
has circulated for a long time, often as a call for universal,
publicly administered systems. More recently, privately
administered ``portable benefits'' for gig workers have been
discussed in policymaking circles. Gig platform companies such
as Uber and DoorDash have urged policymakers to adopt a status/
benefit tradeoff: rewriting employment law so that workers
performing services managed by their mobile applications are
declared independent contractors, not employees, while
requiring the companies to provide certain benefits designed to
be ``portable'' from app to app.\28\ In contrast to past
proposals for public universal benefits, the portable benefits
campaign can be seen as an extension of the gig platform
companies' drive to immunize themselves from employment
law.\29\ This bill, in fact, seems particularly tailored to
advance that effort by the gig platform companies.
---------------------------------------------------------------------------
\28\See infra text accompanying notes 41-50.
\29\See infra text accompanying notes 46-53.
---------------------------------------------------------------------------
Gig Platforms
A variety of businesses use smartphone apps to create
platforms matching people in need of a service with workers
seeking to provide it. Of particular concern for this bill are
those that use digital interfaces (such as mobile apps) to
provide consumers with a specific service with prices and other
characteristics of services (timing, quality) set by the
platform, which also provides a network of workers to provide
those services as independent contractors.\30\ Examples include
well-known consumer-facing businesses providing personal
transportation (Uber and Lyft), food delivery (DoorDash), and
home maintenance and care (Handy).
---------------------------------------------------------------------------
\30\David Weil & Tanya Goldman, Labor Standards, the Fissured
Workplace, and the On-Demand Economy, 20 Persps. on Work 26 (2016),
http://www.fissuredworkplace.net/assets/Weil_Goldman.pdf.
---------------------------------------------------------------------------
Scope of the On-Demand Economy
The gig platforms are not a significant source of work in
the economy. On-demand economy workers comprise less than one
percent of the U.S. workforce, according to academic,
government, and industry surveys.\31\ According to the Current
Population Survey, there are approximately 16.9 million self-
employed people in the country, making up about 10.3 percent of
the total working population.\32\ Other sources suggest higher
counts of gig workers,\33\ but trends over time in the size of
the workforce identifying as self-employed also suggest that
gig work has been less impactful on the workforce than
headlines might suggest.\34\
---------------------------------------------------------------------------
\31\A December 2015 paper by economists Alan Krueger and Seth
Harris estimated about 600,000 workers or 0.4 percent of the total U.S.
workforce. Seth Harris & Alan Krueger, A Proposal for Modernizing Labor
Laws for Twenty-First-Century Work: The ``Independent Worker'' (Dec.
2015), http://www.hamiltonproject.org/assets/files/
modernizing_Labor_Laws_for_twenty_
first_century_work_krueger_harris.pdf. A June 2015 study conducted by
the McKinsey Global Institute estimated that ``less than 1 percent'' of
the U.S. working age population are workers operating through ``digital
marketplaces for services''. McKinsey Global Institute, Connecting
Talent with Opportunity in the Digital Age (June 2015), http://
www.mckinsey.com/global-themes/employment-and-growth/connecting-talent-
with-opportunity-in-the-digital-age.
\32\Committee staff calculations based on Labor Force Statistics
(CPS): Table A-9. Selected Employment Indicators, Bureau of Lab.
Stats., https://www.bls.gov/webapps/legacy/cpsatab9.htm (last visited
May 2025).
\33\Molly Weston Williamson, Understanding the Self-Employed in the
United States, Ctr. for Amer. Progress (Sept. 21, 2023), https://
www.americanprogress.org/article/understanding-the-self-employed-in-
the-united-states/.
\34\Larry Mishel, Claims of an Exploding Gig Economy Are
Contradicted by the Lack of Growth of Self-Employed Workforce, Econ.
Pol'y Inst. (Oct. 28, 2015), https://www.epi.org/publication/the-rise-
of-the-gig-economy-has-not-led-to-a-rising-number-of-self-employed-
workers/.
---------------------------------------------------------------------------
According to a study of gig workers from the JPMorgan Chase
Institute, 58.3 percent of transportation gig workers had
earnings in only three or fewer months during the survey year--
suggesting gig workers either turned to gig work only
temporarily or used it to meet a discrete financial goal as
opposed to engaging in it over the course of the full year.\35\
The same study found that gig work does not appear to be
replacing traditional sources of family income. Among workers
who participated in the gig economy at any point during the
past year, average gig earnings were only 20.5 percent of total
observed take-home income in any month of that year.\36\ This
finding is consistent with other studies that suggest workers
engage in gig work only to supplement their income.\37\ The
most recent data from the Federal Reserve's Survey of Household
Economics and Decisionmaking found ``only 12 percent of gig
workers (2 percent of all adults) said they earned more than
half of their income from gigs over the prior month.''\38\
---------------------------------------------------------------------------
\35\Diana Farrell, Fiona Greig, & Amar Hamoudi, The Online Platform
Economy in 2018: Drivers, Workers, Sellers, and Lessors, JPMorgan Chase
Inst. (Sept. 2018), https://www.jpmorganchase.com/content/dam/jpmc/
jpmorgan-chase-and-co/institute/pdf/institute-ope-2018.pdf.
\36\Id.
\37\Killing the Myth of the Gig Economy, Ctr. for Econ. & Pol'y
Rsch. (June 8, 2018), https://cepr.net/killing-the-myth-of-the-gig-
economy/.
\38\Fed. Rsrv., 0523, Economic Well-Being of U.S. Households in
2022 (May 2023), https://www.federalreserve.gov/publications/files/
2022-report-economic-well-being-us-households-202305.pdf.
---------------------------------------------------------------------------
The pay from gig work is typically low. In a 2018 paper
analyzing Uber driver pay after accounting for fees and
commissions, the EPI found that Uber drivers were earning only
$9.21 in comparable pay per hour on average when compared to
the wages reported by regular W-2 employees.\39\ Given these
low rates of pay, concerns have been raised in recent years
about the dependence of gig platform companies on vulnerable
worker groups, including migrant workers, who are often
excluded from traditional worker protections.\40\
---------------------------------------------------------------------------
\39\Larry Mishel, Uber and the Labor Market: Uber Drivers'
Compensation, Wages, and the Scale of Uber and the Gig Economy, Econ.
Pol'y Inst. (May 15, 2018), https://www.epi.org/
publication/uber-and-the-labor-market-uber-drivers-compensation-wages-
and-the-scale-of-uber-and-the-gig-economy/.
\40\See Niels van Doorn, Fabian Ferrari, and Mark Graham, Migration
and Migrant Labour in the Gig Economy: An Intervention (July 5, 2022),
https://journals.sagepub.com/doi/10.1177/09500170221096581.
---------------------------------------------------------------------------
Flouting the Law
Uber and Lyft blatantly ignored local taxi and livery
regulation, creating crises with local governments in which
they prevailed by mobilizing their customer base through the
apps to complain to policymakers about any effort to police the
rogue platforms.\41\
---------------------------------------------------------------------------
\41\See Rick Claypool, Pub. Cit., Disrupting Democracy: How Uber
Deploys Corporate Power to Overwhelm and Undermine Local Government
(May 16, 2016), https://www.citizen.org/wp-content/uploads/uber-
disrupting-democracy-corporate-power-report.pdf; Jason Koebler, Uber
Became Big by Ignoring laws (and It Plans to Keep Doing That),
Motherboard: Tech by Vice (Sept. 11, 2019, 5:33 P.M.), https://
www.vice.com/en/article/8xwxyv/uber-became-big-by-ignoring-laws-and-it-
plans-to-keep-doing-that; Olivia Solon, How Uber Conquers a City in
Seven Steps, The Guardian (Apr. 12, 2017), https://www.theguardian.com/
technology/2017/apr/12/why-everyone-hates-uber-seven-step-playbook.
---------------------------------------------------------------------------
Challenges to the platforms' classification of workers as
independent contractors surfaced quickly, but litigation
brought by workers was effectively quashed by the companies'
use of forced arbitration clauses.\42\ To short-circuit
government enforcement, gig platforms moved aggressively to
rewrite employment laws around their model. Ride-hailing apps
framed themselves as transportation network companies (TNCs)
and won TNC laws in multiple states that preempted local
regulation and declared their drivers as independent
contractors.\43\ The ``Handy bill'' campaign went further,
seeking state laws exempting all app-based service labor
platform companies from employment law.\44\ A Colorado law even
allows app-based ``health-care worker platforms'' to provide
short-term health care worker staffing such as nurses to
hospitals and other health care facilities on an independent
contractor basis.\45\
---------------------------------------------------------------------------
\42\Katherine V.W. Stone, Uber and Arbitration: A Lethal
Combination, Econ. Pol'y Inst. (May 24, 2016), https://www.epi.org/
blog/uber-and-arbitration-a-lethal-combination/.
\43\See Joy Borkholder et al., Nat'l Emp. L. Proj., Uber State
Interference: How
Transportation Network Companies Buy, Bully, and Bamboozle Their Way To
Deregulation (Jan. 2018), https://s27147.pcdn.co/wp-content/uploads/
Uber-State-Interference-
Transportation-Network-Companies-Buy-Bully-Bamboozle-Their-Way-to-
Deregulation.pdf; Owain James, Uber and Lyft are Lobbying States to
Prohibit Local Regulation, Mobility Lab (July 24, 2018), https://
mobilitylab.org/2018/07/24/uber-and-lyft-are-lobbying-states-to-
prohibit-local-regulation/; Gali Racabi, State TNC and MC Legislation:
Preemption and Employment Status of Drivers, OnLabor (Oct. 19, 2018),
https://onlabor.org/state-tnc-and-mc-legislation-
preemption-and-employment-status-of-drivers/.
\44\See Sarah Kessler, Handy Is Quietly Lobbying State Lawmakers to
Declare Its Workers Aren't Employees, Quartz at Work (Mar. 30, 2018),
https://qz.com/work/1240997/handy-is-
trying-to-change-labor-law-in-eight-states/; Lydia DePillis, For Gig
Economy Workers in These States, Rights Are at Risk, CNN Money (Mar.
14, 2018, 4:54 P.M.), https://money.cnn.com/2018/03/14/news/economy/
handy-gig-economy-workers/index.html.
\45\S. Bill 22-210, 73d Gen. Assemb., 2d Reg. Sess. (Col. 2022).
---------------------------------------------------------------------------
Gig Platforms and the ``Portable Benefits'' Campaign
As negative stories began to surface about working
conditions in gig platform work, sexual assault allegations by
Uber passengers, and other issues at Uber and its ilk,\46\ gig
platform companies rolled out a campaign with allies from the
nonprofit and labor fields. The launch was a 2015 public
letter, with signatories including platform CEOs, leaders of
two SEIU locals, wealthy businessman Nick Hanauer, and a few
nonprofit worker activists, sketching basic principles for a
portable benefit model that they touted as a better fit for
``the changing nature of work in Americaw.''\47\
---------------------------------------------------------------------------
\46\See, e.g., Madison Malone Kircher, How Uber Got Here, N.Y.
Mag.: Intelligencer (Mar. 8, 2017), https://nymag.com/intelligencer/
article/dramatic-history-ride-hailing-app-uber-and-ceo-kalanick.html;
Uber Faces Lawsuit Over Passenger Safety, Alleged Sexual Assaults, CBS
News (Oct. 9, 2015), https://www.cbsnews.com/sanfrancisco/news/uber-
faces-lawsuit-over-passenger-safety-alleged-sexual-assaults/; Rebecca
Burns, The Sharing Economy's `First Strike': Uber Drivers Turn Off the
App, In These Times (Oct. 22, 2014), https://inthesetimes.com/article/
the-
sharing-economy-first-strike-uber-drivers-turn-off-the-app.
\47\Common Ground for Independent Workers, From the WTF? Economy to
the Next Economy (Nov. 9, 2015), https://wtfeconomy.com/common-ground-
for-independent-workers-83f3fbcf548f.
---------------------------------------------------------------------------
The call for portable benefits was linked from the outset
with the platform companies' drive to exempt themselves from
labor and employment law. The public letter called not just for
portable benefits offerings but also counseled resolution of
worker-related issues ``through policy development, not
litigation.''\48\ Additionally, the release of the letter was
followed the same day by an issue brief published by
conservative think tank R Street, one of the signatories of the
letter, promoting a benefits/status tradeoff for gig platforms,
framed as needed ``in light of ongoing litigation in
California.\49\ (That ``ongoing litigation'' was likely
Dynamex, a California employment law case that ultimately
resulted in a revised test under state law for distinguishing
between independent contractors and employees.\50\)
---------------------------------------------------------------------------
\48\Id.
\49\Ian Adams, R Street, R Street Shorts No. 15, The Flexible
Future of Work (Nov. 2015); R Street Brief Refines Principles for the
Future of Work in the Sharing Economy, R Street (Nov. 10, 2015),
https://www.rstreet.org/commentary/r-street-brief-refines-principles-
for-the-
future-of-work-in-the-sharing-economy/.
\50\Dynamex Ops. West, Inc. v. Superior Ct., 416 P.3d 1, 232
(2018).
---------------------------------------------------------------------------
Coinciding with a multi-state political campaign backed by
the gig companies following a 2020 ballot initiative to carve
gig drivers out of California employment law,\51\ gig companies
also began to back state portable benefits legislation, which
has been introduced in at least ten states.\52\ The National
Employment Law Project (NELP) characterizes that effort as
misleading:
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\51\Edward Ongweso, Jr., Gig Companies Spend Millions on Anti-Labor
PACs in Illinois and New York, Motherboard: Tech by Vice (Nov. 19,
2020, 9:00 A.M.), https://www.vice.com/en/article/m7avyp/gig-companies-
spend-millions-on-anti-labor-pacs-in-illinois-and-new-york; Faiz
Siddiqui & Nitasha Tiku, Uber and Lyfl Used Sneaky Tactics to Avoid
Making Drivers Employees in California, Voters Say. Now, They're Going
National., Wash. Post (Nov. 17, 2020), https://www.washingtonpost.com/
technology/2020/11/17/uber-lyft-prop22-misinformation/; Sarah Ashley
O'Brian (@saraashleyo), Twitter (Nov. 17, 2020, 5:44 P.M.), https://
twitter.com/saraashleyo/
status/1328831485621772290.
\52\State Net Insights, State Lawmakers Taking More Interest in
Portable Benefits for Gig-Economy Workers, Lexis Nexis (May 4, 2023),
https://www.lexisnexis.com/community/insights/legal/capitol-journal/b/
state-net/posts/state-lawmakers-taking-more-interest-in-portable-
benefits-for-gig-economy-workers.
Recently, app-based corporations have co-opted the
term ``portable benefits'' for corporate programs that
are neither ``portable'' nor ``benefits.'' Corporations
like Uber, Lyft, DoorDash, and Amazon classify their
app-based workers as independent contractors in part so
they can avoid providing employment-based benefits like
workers' compensation, unemployment insurance, paid
leave, and health insurance. Responding to worker
demands for better working conditions and benefits, the
corporations are offering stingy, second-rate stipends
or savings accounts for app-based workers and calling
them ``portable benefits.'' Instead of legitimizing
these fake portable benefits programs, policymakers
should be bolstering and expanding insurance-based
portable benefits systems and ensuring those benefits
are avalable to everyone who works for someone else,
including app-based worker.\53\
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\53\Laura Padin, Why Workers Need Real Portable Benefits, Nat'l
Emp. L. Proj. (Mar. 24, 2025), https://www.nelp.org/insights-research/
why-workers-need-real-portable-benefits/.
One specific form of the kind of ``portable benefits''
initiatives NELP decries is a recent six-month pilot program in
Pennsylvania mounted by DoorDash, in which Door Dash would
contribute 4% of workers' pre-tip earnings to a ``benefit
savings account''\54\ managed by an intermediary, the fintech
firm Stride, with a savings account provided by an FDIC-insured
bank.\55\ DoorDash directly deposited a premium payment to
eligible Dashers from DoorDash into a no-fee savings account,
and Stride apparently offered additional services such as
consumer-facing information about retirement and health saving
and spending goals.\56\ Stride collected data on debit card
purchases and had a quick survey prompt for any electronic
money transfers asking for the purpose, but (as with any cash
withdrawal) it had no way to track usage of the dollars from
third-party withdrawals.\57\ At the end of the pilot, more than
half the funds remained in the savings accounts; of the dollars
that were spent, a small fraction was used for ``health-related
expenses'' (10.3%) or retirement savings (3.7%).\58\
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\54\Aliyah Schneider, DoorDash Is Testing a Program in Pa. That
Will Help Pay for Dashers' Benefits, But Advocates Call It `Pennies',
Charl. Obs. (Apr. 4, 2024), https://www.charlotteobserver.com/news/
business/artic1e287373600.html.
\55\Stride Health, Stride Launches First-Ever Independent Worker
Contributions Program for Portable Benefits, PR Newswire (Apr. 3,
2024), https://www.pmewswire.com/news-releases/stride-launches-first-
ever-independent-worker-contributions-program-for-portable-benefits-
302106507.html.
\56\Nam D. Pham, NDP Analytics, A Promising New Approach for App-
Based Work: Doordash's Portable Benefits Savings Pilot Program in
Pennsylvania (Dec. 2024), https://assets.ctfassets.net/trvmqu12jq2l/
5hkohxwxFbvL52cllqWQgT/c6b2aa9f7990f262580483529
eb4354c/Portable--Benefits_Report_December_2024_1_.pdf.
\57\Id. at 6.
\58\Id.
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Underneath all the branding, the essence of the ``portable
benefit savings account'' is that it is a savings account with
cash deposited inside. DoorDash did not grant drivers coverage
under the health insurance package that DoorDash provides to
its corporate employees or any access to the other benefits it
provides employees, such as vision, dental, disability, and
life insurance, free lunch and dinner five days a week, free
drinks, free snacks, and discounted gym membership.\59\
DoorDash did not provide any ``benefit'' at all, as the term is
traditionally understood. DoorDash did, technically, provide a
portable benefit, inasmuch as the ultimate portable benefit is
cash.
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\59\DoorDash Benefits, Levels.fyi, https://www.levels.fyi/
companies/doordash/benefits (last visited July 17, 2025).
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Although the bill is written to draw attention to the sorts
of offerings in which employees benefit from the larger
purchasing power of their employers (namely health insurance
and retirement savings), the language of the bill broadens the
meaning of benefit so broadly that it would encompass this
DoorDash savings account scheme without adding meaningful
traditional benefits.
CONCLUSION
For the reasons stated above, Committee Democrats
unanimously opposed H.R. 1320 when the Committee on Education
and Workforce considered it on April 9, 2025. We urge the House
of Representatives to do the same.
Robert C. ``Bobby'' Scott,
Ranking Member.
Suzanne Bonamici,
Mark DeSaulnier,
Jahana Hayes,
Summer Lee,
Members of Congress.
[all]