DoorDash drivers in Pennsylvania can now take advantage of benefits as if they were employees, as part of a temporary pilot program.
Utah has gone even further by now offering all of the state’s gig workers access to portable benefits as part of a first-of-its-kind public-private effort.
After partnering with the benefits platform Stride, these states are blazing a path forward that allows independent workers to gain access to benefits if they need them without sacrificing their independent status.
These are examples of how policymakers are recognizing that they can address the concerns of independent workers without forcing them back into outdated models of work. Other states and Washington, D.C., should take note.
What happened
Last week, DoorDash announced its new portable benefits savings pilot program that covers retirement savings; health, dental, and vision insurance; and paid time off.
Any Pennsylvania Dashers who earns at least $1,000 in the second quarter of the year (excluding tips) through the platform are eligible to open a Stride Save account. Participants then receive deposits equal to 4% of their pre-tip earnings, and they can contribute personal funds as well.
In a statement, DoorDash President said,
We’re proud that dashing has helped millions of people achieve greater financial security, but we know that outdated rules have meant there are trade-offs for those who dash more consistently and may be missing out on important benefits. Instead of settling for the way it has always been done, we can continue to try new things and expand the safety net in ways that provide both flexibility and security.”
Meanwhile, Stride announced that it would launch its first statewide portable benefits program in Utah. Republican Governor Spencer Cox noted,
From gig employees to traditional entrepreneurs, Utah workers and companies will have newfound flexibility with this portable benefits tool. I’m pleased that Utah will be the first state in the nation to implement this inventive legislative approach to employee benefits.
This comes on the heels of the Utah legislature passing a bill to create a voluntary portable benefits program in 2023. Importantly, this plan can’t be used to determine an individual’s worker classification status. In addition, another bill would establish an “independent contractor benefits tax credit,” giving independent contractors two pathways to obtain portable benefits.
What does this mean?
These two red and blue state efforts are important and welcome. Policymakers on both sides of the aisle recognize that independent contractors should be respected and supported, not forced back into outdated modes of employment.
Flexibility, not benefits, is the primary motivator for most gig workers. Even in the broader independent workforce, flexibility is paramount. More often than not, independent workers have access to benefits through their primary jobs, spouses, or family members. For example, DoorDash noted that “the average Dasher spends less than 4 hours per week on delivery, and the vast majority of Dashers have other sources of income or responsibilities that already provide them with access to benefits like retirement savings or healthcare.”
Yet perhaps about a quarter of independent workers have access to no benefits. These are the individuals that could use a common-sense policy approach.
My colleague, Gabriella Hoffman, testified during a congressional hearing about the importance of portable benefits:
Employers typically offer employees limited choices, a few health insurance packages, and one or two retirement savings options. When the employee’s relationship with the employer ends, so does his or her access to these benefit programs. In contrast, portable benefits typically follow the worker and not the employer. This allows workers to transfer the benefits they’ve accrued at their current job to a new one without losing coverage.
She noted that the idea enjoys popular support.
The Journal of Economic Perspectives found that 80% of self-employed U.S. workers would support a voluntary portable benefits program. A March 2023 survey found that 85% of Massachusetts ride-share drivers support these measures.
In addition, similar proposals are floating around in Massachusetts, Minnesota, New Jersey, Virginia, West Virginia, and Wisconsin.
Private companies are innovating in this area of portable benefits in response to state and federal efforts that seek to reclassify independent workers as employees.
We hope to see more states and companies embrace the idea of voluntary portable benefits plans that give freelancers options without forcing them to give up the flexibility that they depend on.