Pending Legislation Regarding Independent Contractor Benefits

Congress is considering legislation that would allow businesses to provide health- and safety-related benefits to gig-economy workers during the coronavirus pandemic without creating an employer-employee relationship. Under current law, businesses that provide additional relief like paid leave and other benefits to independent contractors could potentially trigger an employer-employee relationship under state or federal law. The new bill would shield businesses from misclassification lawsuits if they provide gig workers with personal protective equipment, training, paid leave and other benefits during the pandemic.

The $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act took the first step in this direction, significantly expanded unemployment insurance benefits for U.S. workers impacted by the coronavirus outbreak, extending eligibility to nontraditional workers such as independent contractors, gig workers and the self-employed. However, gig workers and other independent contractors typically aren’t entitled to unemployment compensation and other benefits provided to employees.

Supporters of the Helping Gig Economy Workers Act of 2020 say the bill will protect independent contractors while helping the economy during the crisis. Opponents voice concerns regarding the impact on businesses.

Classifying workers as independent contractors or employees was already a contentious issue in the workplace before the rise of the gig economy, and the extension of benefits to independent contractors is at the heart of the controversy. Developments over the last few years have only muddied the waters more. For example, California lawmakers passed AB 5 to provide workplace protections to more people by requiring businesses to reclassify many independent contractors as employees. Though AB 5 targets on-demand workers like drivers for ride-hailing and delivery services, other independent contractors such as freelance journalists and truck drivers are covered by the law. In contrast, a recent federal opinion letter made it easier for employers to classify a worker as an independent contractor under the Fair Labor Standards Act.

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