Rep. Kevin Kiley (R-CA) has introduced two worker classification bills. One would clarify what constitutes an independent contractor as compared to an employee. The other would create a safe harbor that would allow an employer to provide benefits to independent contractors without risking a worker’s classification as an employee.

A similar but not identical proposal has been offered by Sen. Bill Cassidy (R-LA). Sen. Cassidy is chairman of the Senate’s Health, Education, Labor, and Pensions (HELP) Committee, the committee that would have jurisdiction over the issue, should it be introduced. The Cassidy proposal is currently in the form of a white paper, which is open to comment by interested stakeholders. Like the Kiley bill, the Cassidy proposal would create a safe harbor for employers who choose to offer portable benefits to the independent contractors they hire. It also suggests a statutory definition of independent contractor, to standardize the rules by which workers are classified as employees or as independent contractors.

The first Kiley bill, H.R.1319, the Modern Worker Empowerment Act, creates a definition of independent contractor. Under the definition, the entity hiring the worker does not exert significant control over the way the worker performs the work, and the worker has all the opportunities and risks of entrepreneurship. The bill also specifically denies regulators the authority to consider, when determining the worker’s classification, whether the hiring entity requires compliance with legal, statutory, or regulatory requirements; health and safety standards; insurance coverage; or compliance with contractually-agreed to performance standards.

The second Kiley bill, H.R.1320, the Modern Worker Security Act, establishes a safe harbor that allows companies to choose to provide benefits to independent contractors without the provision of benefits being used as a factor in determining the worker’s classification as an independent contractor. Under the terms of the bill, the company could pay for (or contribute to the cost of) such benefits, including workers’ compensation, skills training, professional development, paid leave, disability coverage, health insurance coverage, retirement savings, income security, and short-term savings.

Prospects: Worker classification is a largely partisan issue, and so with the GOP in control of the House and Senate, and with President Trump in the White House, there is at least an even chance that this legislation could move through the legislative process. There is, however, opposition to these proposals and so acceptance, even by an all-GOP Congress, is far from assured, especially given the need for at least seven Democratic Senators to support it (to clear the Senate’s 60-vote filibuster threshold). Plus, it is unlikely that either the Kiley bills or the Cassidy proposal can move until after the reconciliation bill process has been completed.

NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org