Self-employment provides women with many benefits, like flexibility and financial freedom. However, company-provided workplace benefits such as health care, unemployment, and disability are off-limits to flexible workers. 

Doing so jeopardizes their independent contractor employment status and could place hiring companies in hot water. Other available benefits are too costly for many independent workers.

This is a problem that Congress has set out to tackle.

Today, Chairman of the Senate Health, Education, Labor, and Pensions Committee, Republican Senator Dr. Bill Cassidy of Louisiana, released a white paper outlining reforms to federal law that clear the way for independent contractors to gain access to critical benefits.

This paper follows a request that Dr. Cassidy made to stakeholders last year for ways that Congress could clarify and modernize federal law to increase workers’ access to portable benefits. 

Independent Women joined many other groups in submitting comments that focused on how women uniquely depend on independent contracting and why portable benefits, which allow companies and individuals to voluntarily pay into benefits plans that stay with the individual rather than being tied to one employer, could be a game-changer for many women. 

We expanded on our comments in this Portable Benefits policy focus. 

In a press statement, Dr. Cassidy explained,

Labor and employment laws designed for a different time no longer address the needs of today’s independent workers. Such laws were intended to provide workers clarity, certainty and security—not to make them out of reach.

 

Modernizing labor and employment laws will allow independent workers to receive benefits without disrupting the traditional employment model, fulfilling the promise of American labor and employment law.

Key Highlights 

The new report, Portable Benefits: Paving the Way Toward a Better Deal for Independent Workers, begins by explaining why portable benefits are needed for independent workers:

Workers actively choose independent work over traditional roles, citing flexibility, dependent care obligations, and personal care circumstances as chief reasons… eighty percent would like access to portable benefits. As a significant and growing segment of the U.S. workforce, independent workers are poorly served by nearly century-old labor and employment laws that prevent them from receiving common workplace benefits.

Over 70 million Americans are considered flexible workers in the U.S. As freelancers, entrepreneurs, and even gig workers, Americans who choose to work for themselves now comprise over a third of the U.S. workforce.

By law, employees have access to workplace benefits, not independent contractors (IC). But just who falls into this category?

For decades, federal agencies, administrations, and courts have battled over that determination. The report detailed the legislative and regulatory history of the independent contractor status. Even today, the current rules in place leave both employers and independent workers in the dark.

We agree with Dr. Cassidy that workers need clarity and certainty, such as what the Trump 1.0 administration delivered in 2021 when it adopted a rule to determine independent contractor status based on two core factors. This rule was rescinded and replaced by a more rigid and confusing rule last year.

Once we can establish who qualifies as an independent contractor, policymakers can figure out how to reform the laws and rules to expand portable benefits to those workers without risking their loss of that independent status.

As the report notes:

Congress should consider decoupling the provision of benefits from the fear of potentially ruinous misclassification lawsuits by establishing a safe harbor for providing benefits in federal law. Congress should further evaluate whether affirming that providing benefits to independent workers does not trigger employment status under federal law would help spur state and private sector innovation that supports workers.

The paper proposes that Congress should:

  • Establish a safe harbor for companies so they can offer portable benefits to independent workers without the fear of misclassification lawsuits, as the Utah portable benefits law did.
  • Institute a single employment test under federal law. 
  • Increase health care coverage options for independent workers, such as allowing independent workers to join association health plans. 
  • Empower independent workers to participate in retirement plans, like pooled employer plans and single-employee pension IRAs, that are already available.

The good news is that states like Utah, Pennsylvania, Tennessee, and Georgia are moving in this direction by reducing regulatory barriers to voluntary portable plans or creating pilot programs. Independent Women has been a strong advocate of these efforts. Legislation is moving in other states as well.

At the federal level, in the U.S. House of Representatives, Congressman Kevin Kiley introduced both a federal portable benefits bill (Modern Worker Security Act) and legislation to codify a reasonable independent contractor definition (Modern Worker Empowerment Act) to deliver clarity and certainty to the business community. My colleague Jennifer O’Connell expounded on them here.

We will watch to see the next steps in the Senate, but based on this report, we can be sure that this committee is moving in the right direction.