On July 7, 2025, Senators Bill Cassidy (R-LA) and Tim Scott (R-SC) introduced a legislative package aiming to provide certain portable benefits to workers classified as independent contractors. “Portable benefits” is an umbrella term for various benefit programs that follow workers from job to job, rather than being tied to a specific employer. The legislative package is framed as an effort to address the rise of nontraditional work arrangements and the gig economy, in which workers are typically not classified as employees and therefore lack access to certain guaranteed workplace rights or longstanding employment-based benefits like health care and retirement benefits. While misclassification of workers as independent contractors represents a significant problem, the legislative package fails to address this important issue in the gig economy. Instead, the bills would institutionalize a second-tier status for independent workers and entrench their exclusion from the full protections and benefits guaranteed to traditional employees.

Independent Retirement Fairness Act

Senator Cassidy’s Independent Retirement Fairness Act amends the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986. The bill would allow independent workers to participate in retirement savings plans reserved for employees—specifically, Pooled Employer Plans (PEPs) and Simplified Employee Pension (SEP) plans—without affecting their status as nonemployees. In effect, the bill would allow employers to offer limited, voluntary benefits on their own terms while avoiding obligations like the minimum wage, overtime pay, unemployment insurance, and collective bargaining rights.

Modern Worker Empowerment Act

Introduced by Senator Scott, the Modern Worker Empowerment Act establishes a single employment test under federal law for determining who is an employee versus an independent contractor. The bill amends the Fair Labor Standards Act of 1938 to change the definition of employee using the common-law test, which offers a loose and flexible definition of employee relationships that allows employers to more easily classify workers as contractors and avoid the obligation of providing their workers with employee benefits they deserve.

Unlocking Benefits for Independent Workers Act

The Unlocking Benefits for Independent Workers Act was introduced by Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Cassidy to create a legal “safe harbor” for companies and platforms that provide portable benefits, protecting them from being sued for worker misclassification. The Act would help to cement independent contractor status for workers who, in many cases, should be entitled to employee status and the accompanying protections and benefits.

Work without stable benefits and misclassification should not be accepted as inherent to the modern workforce. The rise of the gig economy and nontraditional, independent work is not simply the natural result of a changing workforce but by the design of employers who seek to employ a labor force without the burden of providing the protections and benefits associated with employee-employer relationships. These arrangements should not be accepted as a new form of work that demands an upheaval of labor and employment laws; they must instead be recognized as an acceleration of worker misclassification.

The misclassification of workers as independent contractors is already a pervasive issue in the U.S. that affects millions of workers and costs government agencies billions of dollars each year. An analysis from the National Employment Law Project focusing on state-level reports on misclassification estimated that as many as 10–30% of employers misclassify their workers. An earlier study commissioned by the Department of Labor in 2000 found that as many as 30% of employers misclassified at least some workers.

EPI has estimated the cost of independent contractor status to workers in several commonly misclassified occupations. For example, as a W-2 employee, a truck driving job is worth $60,498, while an independent contractor receiving the same wage, but no supplemental pay or benefits earns $38,965—$21,533 less. Misclassification therefore not only has serious labor rights implications but also affects workers’ economic security.

Against this landscape, the portable benefits proposals led by Senators Cassidy and Scott ultimately serve as a veil for further misclassification by incentivizing employers to default workers to independent contractor status, denying them the rights and benefits offered to employees. By accepting portable benefits as a substitute for traditional employment protections, policymakers legitimize a second-tier employment status that lacks the benefits workers deserve under the law. This approach does not empower workers—it entrenches corporate efforts to cut costs by avoiding responsibility.

Justifications for portable benefits often rely on the claim that granting workers employee status with the accompanying benefits would strip them of the flexibility they value. This argument rests on a false dilemma that workers must choose between flexibility and employment protections. There is nothing in the Fair Labor Standards Act (FLSA) that prohibits flexible scheduling for employees. The FLSA guarantees minimum labor standards but does not dictate fixed hours or rigid nine-to-five schedules. In a Bureau of Labor Statistics 2019 survey, 57% of wage and salary workers had a flexible schedule with the ability to vary start and stop times. Of these workers, 35% could frequently change their schedule; 46% could occasionally change their schedule; and just 19% rarely had the opportunity to change their schedule. Flexibility is not inherently tied to independent contractor status; it is a feature of job design, not legal classification. By promoting the myth that flexibility and employee protections are mutually exclusive, employers and their advocates distract from the real issue: their refusal to grant workers the rights they may be legally owed.

While surveys show that workers value schedule flexibility, research demonstrates that workers overwhelmingly prefer stable, full-time employment with benefits. A report from the National Employment Law Project found that 79% of people surveyed said they would prefer to have one stable full-time job instead of having more than one job with schedule and location flexibility. Further, polling by the global management consultant firm McKinsey & Company found that contract, freelance, and temporary workers would overwhelmingly prefer to have permanent employment, with first-generation immigrant (76%), Latinx (72%), Asian American (71%), and Black (68%) respondents most strongly favoring permanent employment. While workers value flexibility, surveys consistently show that they prefer the benefits and stability that come with employment.

Senator Cassidy has suggested that legal and regulatory barriers are a reason that independent contractors are not offered employer-provided benefits. He also said that fear of lawsuits from workers over misclassification are supposedly intimidating gig companies into not providing benefits. However, if these employers truly wanted to offer benefits even to workers who regularly work as independent contractors or freelance on “gigs,” there are systems available to facilitate that. For instance, they could contribute to multiemployer benefit plans for their workers, especially for industries with high rates of freelance or contract work. Companies do not need “safe harbor” from employee classification enforcement in order to do the right thing.

All types of workers genuinely need more access to benefits. We should support gold standard proposals to achieve this, not riskier plans that primarily benefit employers. Taking the motivation behind these bills in good faith, they are responding to a dilemma: How can all workers receive the benefits they sorely need and deserve to have retirement security, health care, and other important safety nets? If members of the Senate HELP Committee are truly committed to worker flourishing, they would crack down on misclassification, strengthen collective bargaining, and pass pro-union legislation.