WASHINGTON – Sens. Mike Lee (R-UT) and Mike Braun (R-IN) introduced the 21st Century Worker Act, a comprehensive bill to address confusion with current labor policy and promote flexible work arrangements. The proposed legislation establishes a bright line test to determine a worker's status, providing clarity and enabling businesses and workers to embrace flexibility.
Existing labor policy in the United States is often convoluted, as different tests and laws evaluate whether an individual is an employee or an independent contractor. Due to the potential liability risk, this inconsistency hinders businesses from hiring independent contractors. The Biden administration's approach also undermines alternative work arrangements, assuming they are exploitative or unfair, even though many workers prefer such arrangements. In fact, nearly one in three American workers participate in contract work, which generates around 5% of the country's GDP.
The 21st Century Worker Act establishes a clear and consistent bright line test for federal labor and tax law. By outlining the most common factors for classifying workers as independent contractors or employees, this test eliminates ambiguity and empowers businesses and workers to pursue flexible arrangements confidently.
The bill also includes a provision for workers and businesses to mutually elect worker status when they do not fit cleanly into the conventional classifications. Recognizing that the government can't anticipate every work arrangement, this provision ensures fairness and flexibility.
To assess the impact of harmonizing other laws with this bright line test, the 21st Century Worker Act calls for a comprehensive study by the Government Accountability Office (GAO). This study will analyze how aligning additional legislation with the proposed test will affect workers and payors, providing valuable insights for future policy decisions.
Of the bill, Sen. Mike Braun said, "One in three Americans are gig workers and as an entrepreneur myself, I have long been a strong supporter of independent contractors and the gig economy here in the Senate. I'm glad to join Sen. Lee in updating outdated labor policy to reflect changing work arrangements through the 21st Century Worker Act."
Of the bill, Ryan Walker, Vice President of Government Relations, Heritage Action, said, "The Department of Labor's recently proposed rule to redefine how independent contractors are defined continues the Biden administration's war on American workers, which limits employment opportunities and flexibility through costly regulations and heavy-handed enforcement. Fortunately, Senator Lee's 21st Century Workers Act would block Biden's damaging policy and permanently replace it with a clear definition that allows workers to find employment arrangements that work best for them. All Senators should support this effort and push back against the Left's attempts to force all workers into its preferred one-size-fits-all employment structure."
Of the bill, Alfredo Ortiz, Job Creators Network President & CEO, said, "Senator Lee's 21st Century Worker Act would ensure that millions of Americans who choose to be an independent contractor can continue to enjoy the flexibility that designation provides. After decades of confusion, Senator Lee's bill would provide small business owners with much-needed clarity regarding who is and is not an independent contractor."
Of the bill, the Direct Selling Association & Utah Direct Selling Coalition, said, "We applaud Senator Lee for introducing this legislation that will help create clarity for direct sellers in Utah and across the United States. The independent contractor status of salesforce members has been recognized for decades and this legislation will create harmonization across statutes for specific recognition that direct selling is a truly independent business. This bill is even more important in the current uncertain regulatory landscape and we are proud to support it."