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The bill trades clearer, forward-looking classification rules and predictable treatment for employers and some workers (including explicit NLRA protections for FLSA employees) against risks that many gig and freelance workers will lose employee protections, face greater income instability, and endure transitional enforcement and fairness issues for past periods.
Employers and workers (including gig and freelance workers) gain a clearer, uniform standard for worker classification across wage and labor laws, reducing future legal uncertainty and making hiring/classification decisions more predictable.
Businesses (especially small firms and platforms) and independent contractors get a statutory definition of contractor status that lets firms set performance standards (deadlines, insurance, safety requirements) without automatically converting those workers to employees.
Workers who meet the FLSA employee test gain explicit National Labor Relations Act (NLRA) protections to organize and bargain collectively, expanding union protections for more workers.
Gig and freelance workers risk losing employee protections (overtime, minimum wage, benefits) if classified as independent contractors under the new rules.
More workers treated as contractors may face greater income instability and fewer workplace protections (e.g., unemployment, benefits, scheduling protections), increasing economic vulnerability for low-income and gig workers.
Employers could impose 'entrepreneurial' or managerial requirements (risk-taking, business-like conditions) to justify contractor status, effectively reducing worker protections while appearing to comply with the law.
Introduced February 13, 2025 by Kevin Kiley · Last progress February 13, 2025
Changes how federal law decides whether a worker is an employee or an independent contractor by creating a two-part federal test: (1) the hiring party must not exercise significant control over how the work is done, and (2) the worker must face entrepreneurial opportunities and risks. The bill also bars four specific factors (legal/regulatory compliance requirements, stricter health/safety standards, insurance requirements, and contractually required performance standards) from being used to show employee status, and it requires the National Labor Relations Act to use this same test for future classification decisions. The new rules apply to determinations made on or after the law’s enactment date.