Empowering the Modern Worker

Labor Department and Labor LawHouse Education and Workforce Subcommittee on Workforce Protections · 2025-05-20 · 119th Congress
The House Education and Workforce Subcommittee on Workforce Protections held this hearing, "Empowering the Modern Worker," to examine how independent contractor classification rules affect freelancers, gig workers, and truckers, and to discuss legislative proposals like the Modern Worker Empowerment Act and Modern Worker Security Act alongside state portable benefits pilot programs. Begins at 1:01:57
Transcript
Highlights

Title

Independent contractor classification and portable benefits for gig workers

Purpose

The House Education and Workforce Subcommittee on Workforce Protections held this hearing, "Empowering the Modern Worker," to examine how independent contractor classification rules affect freelancers, gig workers, and truckers, and to discuss legislative proposals like the Modern Worker Empowerment Act and Modern Worker Security Act alongside state portable benefits pilot programs. Republicans argued that restrictive classification tests like California's AB5 and the Biden-era independent contractor rule harm workers who choose independent contracting, while Democrats argued that "misclassification" strips workers of wage, benefit, and organizing protections and that Republican-backed portable benefits programs are inadequate substitutes. Begins at1:01:57

Who spoke

Chairman (Rep. Mackenzie, R-PA)1:01:57: Opened by arguing outdated policy hasn't kept pace with flexible work arrangements1:01:57, criticized California's AB5 and the 2024 independent contractor rule's six-factor test1:03:241:04:04, and touted the Modern Worker Empowerment Act and Modern Worker Security Act plus Pennsylvania's DoorDash portable benefits pilot1:05:41.

Ranking Member (Rep. Casar, D-TX)1:06:37: Said corporations use "independent contractor" loopholes to dodge minimum wage, overtime, and payroll taxes1:07:07, cited EPI figures that misclassification costs custodial workers over $10,000/year and truckers about $21,000/year1:07:50, and linked the hearing's timing to a Republican budget bill he said would strip health coverage from over 13 million workers1:10:31.

Nathan Mehrens, American Trucking Associations1:12:50: Testified that over 80% of independent contractor truckers approve of their arrangement and fewer than 10% want employee status1:14:42, welcomed DOL's move to rescind the Biden rule1:15:08, and later said California's ABC test makes it "next to impossible" for owner-operators to work with motor carriers1:30:03.

Kim Kavin, freelance writer, Fight for Freelancers co-founder1:16:08: Said AB5 triggered nationwide "freelance busting"1:16:34, cited an 81% decline in California job-creation pace post-AB5 per the Orange County Register1:18:32, and described becoming an independent contractor partly to recover from PTSD after a violent attack1:44:46.

Laura Padin, National Employment Law Project1:19:49: Argued app-based "portable benefits" like DoorDash's savings account (about $31/month) are no substitute for insurance-based benefits1:23:571:38:01, cited state task force findings of high misclassification rates (e.g., 35% of Maryland home health workers)1:57:26, and said independent contractors get no minimum wage, overtime, unemployment, or workers' comp protections1:47:57.

Dr. Liya Palagashvili, Mercatus Center1:25:12: Said only about 10% of US jobs are independent work and fewer than 9% of independent workers want a W2 job1:25:43, presented her research finding ABC tests cause a 6.4% drop in self-employment and 4.7% drop in W2 jobs1:26:32, and said Utah's 2023 portable benefits law didn't harm W2 employment growth1:28:46.

Rep. Walberg (R-MI), full committee chairman1:39:33: Asked Mehrens about trucker motivations and Palagashvili about legal risks discouraging companies from offering benefits1:42:01.

Rep. Scott (D-VA), full committee ranking member1:46:37: Questioned Palagashvili's data replicability1:47:01 and walked Padin through a list of protections independent contractors lack (Social Security match, overtime, unionizing, OSHA, EEOC)1:47:57.

Rep. Mesmer (R-IN)1:51:58: Asked Mehrens how the 2024 DOL rule discourages health-and-safety contract provisions1:51:58 and asked Kavin about a "flawed" 30% misclassification statistic traced to a 2009 GAO report using 1984 data1:54:31.

Rep. Takano (D-CA)1:56:42: Had Padin confirm independent contractors don't get minimum wage or overtime and wouldn't benefit from a no-tax-on-overtime provision1:58:471:59:13, and asked about Medicaid's role for gig workers, citing a Stride Health survey finding a quarter of app-based workers rely on Medicaid2:02:29.

Rep. Fine (R-FL)2:03:25: Questioned whether Florida's 3.6% unemployment rate undercuts claims workers are "stuck" as contractors2:03:53 and asked Kavin about rising six-figure-earning independent contractors2:06:08.

Rep. Miller (R-IL)2:09:03: Disputed Padin's Medicaid-cut characterization as a "Democrat lie"2:09:03 and asked Mehrens about "regulatory whiplash" from shifting federal rules2:10:45.

Rep. Goodwin/Gruffman (R-WI)2:14:19: Asked Mehrens about reverting to the Trump-era rule2:14:19 and Palagashvili about DoorDash pilot takeaways, including 91% of participants preferring to stay independent2:16:44.

Rep. Kiley (R-CA)2:21:10: Called AB5 "the single most anti-worker law in modern American history"2:21:31, cited statistics on California's unemployment, poverty, and wage growth under former Labor Secretary Julie Su2:23:44, and asked Kavin for further examples of harmed freelancers2:24:09.

Key moments

Chairman Mackenzie cited a study estimating a national cost of $17 billion if 15% of independent contractors are reclassified as employees, rising to $57 billion at 50%1:05:00.

Ranking Member Casar cited EPI's estimate that the 2021 Trump independent contractor rule cost workers $3.7 billion a year in pay and benefits1:08:42, and noted Uber's CEO donated about $1 million to Trump's inauguration fund1:09:41.

Kavin said a top New Jersey labor attorney warned proposed state rulemaking would "eliminate every single independent contractor in the state"1:17:34.

Padin said employers who misclassify workers can save 20–40% in payroll costs, creating competitive disadvantage for compliant businesses1:22:57.

Palagashvili testified her team's nationwide study found ABC tests cause a 6.4% decline in self-employment and a 4.7% drop in W2 jobs, calling the results causal1:26:32.

Rep. Scott's rapid-fire questioning established that independent contractors receive no employer Social Security contribution, no minimum wage/overtime, no unemployment compensation, no workers' comp, and no OSHA/EEOC coverage1:47:57.

Kavin challenged a widely cited "10 to 30%" misclassification figure, tracing its hyperlink to a 2009 GAO report ultimately relying on 1984 data1:54:31; Padin countered with more recent state audits, including Maryland finding 35% of home health workers misclassified1:57:26.

Rep. Fine described paying independent contractors extra cash instead of tax-advantaged health insurance because employees "got angry" learning the employer cost of benefits2:04:19.

Palagashvili said a DoorDash Pennsylvania pilot survey found 89% of participants satisfied and 91% preferred remaining independent contractors rather than employees2:16:442:17:05.

Rep. Kiley said California's AB5 required over 100 exemptions after passage, and that its own primary sponsor, Lorena Gonzalez, later said "we were right and she was wrong" regarding freelance writers2:26:06.

Metadata

CommitteeHouse Education and Workforce Subcommittee on Workforce Protections
Chamber / CongressHouse · 119th Congress
Date2025-05-20
TypeHearing
Witnesses
Mr. Nathan Mehrens — Vice President, Workforce Policy, American Trucking Associations
Ms. Kim Kavin — Freelance Writer and Editor
Ms. Laura Padin — Director of Work Structures, National Employment Law Project
Dr. Liya Palagashvili — Senior Research Fellow, Mercatus Center at George Mason University
Videoyoutube
Transcript216 caption blocks · 15,447 words · 2:35:53 runtime
EventCongress.gov 118267