HR1320-119

What This Bill Does

The Modern Worker Security Act changes federal worker-classification analysis by separating benefits from employee-status determinations. For any federal law, a determination of whether an individual is an employee of a person must be made without considering whether that person provides a benefit to the individual. The bill defines benefits broadly to include portable protections that the worker can keep after leaving the work relationship; benefits commonly provided to full-time employees such as workers' compensation, skills training, professional development, paid leave, disability coverage, health insurance, retirement savings, income security, and short-term savings; and financial or nonfinancial contributions made by the hiring person, the individual, or both toward those benefits.

Who Benefits and How

Companies using independent contractors benefit because they can offer benefits or contribute to benefits without that fact counting toward employee classification under federal law. Independent workers benefit if businesses become more willing to provide portable benefits, training, paid-leave-like protections, health coverage contributions, retirement savings, income security, or short-term savings support without risking reclassification. Portable-benefit providers benefit from a clearer federal pathway for contractor benefit arrangements. Businesses testing worker-benefit models benefit because the bill removes one classification risk from voluntary benefit offerings.

Who Bears the Burden and How

Workers trying to prove employee status bear a burden because benefit provision could not be used as evidence of employment under federal law. The Department of Labor, NLRB, IRS, and other federal agencies that apply employee-status tests must disregard benefit provision when making classifications. Unions and worker advocates may object that employers could provide limited benefits while avoiding employee obligations. Courts must apply the exclusion across federal statutes and interpret the bill's broad benefit definition.

Key Provisions

• Provides that federal employee-status determinations cannot consider whether the hiring person provides benefits.
• Defines covered benefits to include portable protections retained after the work relationship ends.
• Includes workers' compensation, training, paid leave, disability coverage, health insurance, retirement savings, income security, and short-term savings.
• Covers financial or nonfinancial contributions made by the hiring person, the worker, or both.
• Provides a federal classification shield for voluntary contractor benefit arrangements.
• Requires federal agencies and courts to disregard benefit provision when deciding whether a worker is an employee.