Federal Bill Seeks to Create Portable Benefits for Gig Economy Workers

Senator Mark Warner (D-VA), a lawmaker known for closely monitoring the changing nature of work, has introduced in the Senate legislation to promote innovative ways to offer portable benefits to workers in the on-demand economy. Rep. Suzan DelBene (D-WA) introduced a companion bill in the House of Representatives. The Portable Benefits for Independent Workers Pilot Program Act would direct the Labor Secretary to provide $20 million in grants to states, local governments, or nonprofit organizations that analyze and/or design the means and methods of delivering employment benefits that independent workers can maintain as they move from job to job.

In a press release announcing the bill's introduction, Sen. Warner commented: 

Whether by choice or necessity, a growing number of Americans are working without a safety net and have difficulty planning and saving for retirement, health care needs, or on-the-job injuries. The nature of work is changing rapidly, but our policies largely remain tied to a 20th century model of traditional full-time employment.

The bill would allocate $5 million to eligible entities that evaluate or improve the design or implementation of existing means of providing portable benefits. Another $15 million would be awarded for the actual design, implementation, and evaluation of new portable benefits models. A retirement-only package of portable benefits would not suffice.

The legislation defines "portable benefits" as "work-related benefits that are provided to eligible workers for eligible work in a manner that allows the worker to maintain the benefits upon changing jobs," and include:

(i) contributions on behalf of the eligible worker made by an entity (including multiple entities, if applicable) in connection with eligible work performed by the worker for the entity, including entities that facilitate the sale of such work; (ii) contributions made by the eligible worker; or (iii) a combination of the contributions described in clauses (i) and (ii).

A worker eligible to receive such a benefits package would be one "who is not a traditional full-time employee of the entity hiring the worker for the eligible work, including any independent contractor, contract worker, self-employed individual, freelance worker, temporary worker, or contingent worker."

The bill cites a number of studies about the on-demand, sharing, or "gig" economy to justify the need for portable benefits. According to the bill, many "independent workers" –e.g., independent contractors, temporary workers, self-employed individuals or those working under other contingent or alternative work arrangements—do not have access to benefits typically provided under traditional employment setups. The bill cites a 2015 study by the U.S. Comptroller General, which found that from 2006 to 2010, the contingent workforce grew from 35% to 40% of all employed workers. A 2016 study found that from 2005 to 2015, 94% of net employment growth in the U.S. economy occurred in alternative work arrangements.

Likely in response to this growth, the U.S. Department of Labor has set in motion its plan to revive the Contingent Worker Supplement (CWS) to the Current Population Survey in an effort to capture a more accurate picture of the modern workforce.

A handful of states have similarly proposed bills to promote portable benefits. Whether these or the federal legislationgain traction is uncertain. 

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.