A group of Republican senators have released legislation that would make it easier for companies to provide benefits like healthcare to independent workers, the latest move in the fight over the treatment of independent workers and the gig economy.

Sens. Bill Cassidy (R-LA), chairman of the Senate Health, Education, Labor, and Pensions Committee, Tim Scott (R-SC), and Rand Paul (R-KY) announced the plan this week. The legislation is meant to modernize labor laws in the U.S. and make it easier for millions of independent and gig workers to access so-called “portable benefits.”

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“Our labor laws are over 100 years old, but they are dictating the contractor, contractee, the independent contractor economy,” Cassidy told the Washington Examiner during an interview.

Cassidy said that the legislation would affect some 27 million workers who aren’t tethered to a specific employer but rather work as independent contractors or gig workers, for instance, truck drivers or rideshare drivers.

Essentially, the legislation establishes a federal safe harbor allowing companies to voluntarily offer benefits without taking on employment liabilities, such as workers compensation and unemployment. The safe harbor applies to any benefit commonly provided to full-time employees, such as retirement and healthcare benefits.

Cassidy said that some of these companies want to give their workers benefits, but they are nervous that they will run afoul of the law and get in trouble.

“So we’re trying to modernize our labor laws so it actually works for the labor so the independent contractor can get their retirement, can get their healthcare through their job, and don’t endanger the nature of that job by entering into what might be perceived by some as an employer-employee relationship,” Cassidy said.

Liya Palagashvili is a senior research fellow and director of the Labor Policy Project at the libertarian Mercatus Center at George Mason University. Palagashvili told the Washington Examiner that the current problem is that if a company or client of an independent worker wanted to provide benefits, they wouldn’t be able to do so because regulators at the IRS or Department of Labor could interpret that as being a nod to them being an employee of the company.

“So it’s pretty explicit, like it’s actually on the IRS website, saying that if you provide benefits to independent worker, we will use that for the check mark of for that worker being a potential employee,” she said.

Palagashvili said that some states have already started to pass laws that would allow companies to offer portable benefits to independent workers. Utah was the first to do so in 2023.

“To do this, it was very simple bill — it just said the presence of benefits to independent contractors can’t be used to determine whether that worker is an employee or an independent contractor,” she said.

Passing legislation like this at the federal level would be a big win for companies that are hoping to offer portable benefits to workers.

For instance, Jim Guthrie, director of operations at trucking company Prime Inc., which is the nation’s largest temperature-controlled carrier, told the Washington Examiner that many truck drivers choose the business model of an independent contractor.

“So as an industry, we’re favorable to any benefits that we can offer to improve the lives and improve the financial benefit to any of the drivers that choose to work with us,” Guthrie said.

“But the way the classification laws are structured, it precludes us from offering some of those benefits or grouping anything together to come up with benefit packages,” he added.

Independent workers aren’t just Uber or Lyft drivers. Palagashvili pointed out that, within the independent worker landscape, gig economy platforms like rideshare apps account for less than 10% of the overall independent workforce.

“The majority of workers who are independent workers are in professional and business services, followed by healthcare and financial services, and real estate agents,” she said.

Organized labor has been opposed to portable benefits plans, arguing that it allows companies to avoid providing full protections for workers.

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Cassidy acknowledged that unions oppose the move, which means Democrats will generally not support the legislation, but has hopes that this could end up getting some bipartisan support.

“I do think we get them to a point where they say, wait a second, this isn’t anti-union — it’s pro-worker, and there is some rationale of updating 100-year-old laws to address a new reality in the workplace,” Cassidy said. “So I’d like to think that we can get, ultimately, this to be bipartisan.”