Empowering the Modern Workforce: Legislative Reforms for a Dynamic Economy

By Isabel Soto

As the economy becomes more complex and demands in the labor market change, the structures, rules, and regulations around work should evolve along with the economy to promote dynamism and flexibility. The current reality, however, is one of a modern economy with its potential limited by an outdated legislative structure. More and more workers are calling for a flexible workplace where they can have much clearer control over their own time. Despite the policy landscape around this type of work being an unfriendly one, growth in independent work and self-employment, such as freelancing and contracting, continues to rise.  

There isn’t a question as to whether independent workers want to be categorized as such. The self-employed report high levels of satisfaction, far more than their traditionally employed counterparts. There is the added benefit that the self-employed model allows for labor force participation from individuals who would be unable to work in a rigid traditional employment-only system. Individuals with significant disabilities, seniors, care takers, and parents of small children can remain attached to the labor force with a more flexible model of work. Independent work has also served minority communities particularly well. Both the Black Chamber of Commerce and the US Hispanic Chamber of Commerce as well as Asian American organizations have come out to oppose efforts to undermine self-employment/independent work at the state level. This is no surprise given that nationally, 50 percent of Hispanics, 40 percent of Black Americans, and 35 percent of Asian Americans engage in independent work.  

While this model certainly has its benefits, two central challenges around independent work remain. A lack of a clear distinction between employee and independent work, and access to benefits. A clear definition is needed to keep this type of flexible work available even as some opponents try to eliminate it, and an updated benefits structure could bring even more individuals into the labor force by making self-employment an even more viable option.  

Fortunately, there are legislators who are listening to what workers want and focus on enabling a modern and accessible labor market for all. For over a decade Congressman Kiley has worked at the state and federal level to remove barriers to work. This month, Congressman Kiley introduced the Modern Worker Empowerment Act (H.R. 1319) and the Modern Worker Security Act (H.R. 1320). The former provides definitional clarity under the Fair Labor Standards Act (FLSA) and the latter prevents the availability of benefits from being considered in whether an individual is or is not an employee. Taken together these bills would allow for freer choice in how individuals work in addition to encouraging innovation in the benefits space.  

The current model is such that even if a hiring entity would like to provide benefits to an independent worker they contract with, it comes at great risk to themselves and the workers. This is because it could trigger reclassification to an employee-employer relationship, effectively harming both parties and stripping away worker flexibility. The Modern Worker Security Act bridges this gap. If benefits are offered, they could be freely taken without concerns around losing self-employment status.  

Clarity under the FLSA would provide a level of stability for the self-employed instead of the current status quo which is marked by ambiguity and high risk of reclassification. The Modern Worker Empowerment Act also smooths out some of the confusion around other agencies’ definitions as they pertain to independent workers. This change is a step toward a more harmonious understanding of worker classification that is closer in line with the current IRS definition which does provide a fair degree of flexibility.  

It is time for all Americans to have the freedom to work the way they want and freedom from government encroachment on how they support their families. Providing definitional clarity and allowing benefits to be provided to independent workers will be to the benefit of all. Our economy needs to be agile, and our workers need greater flexibility. Both can be accomplished through changes to the status quo and with leadership from dedicated policy champions.