HRPA-Supported Bills Would Simplify Worker Classification, Provide Benefits

Rep. Kevin Kiley (R-CA) introduced two bills that would simplify worker classification under labor and employment laws and allow companies to provide certain benefits to independent contractors without creating a full employment relationship. 

Why it matters: The bills would provide much needed legal certainty to worker classification while offering an HRPA-supported middle-ground approach to providing needed benefits for contractors. 

Simpler, less restrictive worker classification standard: The first bill, the Modern Worker Empowerment Act, would codify a new standard for worker classification under federal and employment law. 

• Two-factor test: A worker would be classified on the basis of (1) the extent of control the employer exercises over the worker, and (2) the worker’s entrepreneurial opportunities and risks. This standard is very similar to the first Trump administration’s independent contractor rule.

• Ending regulatory ping-pong: The long-standing legal murkiness of worker classification has led to a series of conflicting regulations across different administrations over the last 20 years. Legislation codifying a simpler standard - and prohibiting the consideration of other factors, as this bill does - could put an end to such flip-flopping and uncertainty. 

Benefits without losing contractor classification: The second bill, the Modern Worker Security Act, would permit employers to provide certain benefits to contractors without creating a full employment relationship under the law. HR Policy has consistently advocated for this type of approach for nearly a decade. 

• Scope of allowable benefits: The bill would allow employers to provide workers’ compensation, skills training, paid leave, disability coverage, health insurance, retirement savings, and other benefits traditionally limited to full-time employees. 

• Benefits without losing flexibility: As the nature of work evolves and the gig economy continues to grow, providing a safety net for contractors has become increasingly necessary.

  • However, current law prevents employers from providing benefits to contractors without losing the desired flexibility (by both parties, in most cases) that gig work provides or creating a full employer-employee relationship sought by neither party. 

The big picture: Substantial labor and employment law reforms such as these continue to be longshots in the current hyper-partisan legislative environment. The Association is currently advocating for both bills in Congress in hopes that meaningful progress can be made.