The bill reduces legal ambiguity and litigation risk by anchoring FLSA coverage to the common-law test, but it risks removing wage-and-hour protections and enforcement options for many gig and freelance workers and may shift costs onto workers and taxpayers.
Gig and freelance workers and small-business owners will have clearer rules for who is an FLSA employee because the bill ties employee status to the familiar common-law test, reducing legal uncertainty about coverage.
Small-business owners may face fewer ambiguous misclassification disputes because courts are directed toward the established common-law test, lowering litigation risk and compliance costs.
Gig and freelance workers could lose FLSA protections (minimum wage, overtime, and other statutory safeguards) if courts apply a narrower common-law test that favors independent-contractor status.
Gig, freelance, and other underpaid workers may have fewer wage-and-hour remedies because a shift toward resolving fewer misclassification claims could limit enforcement avenues and private lawsuits.
Small-business owners may reduce payroll costs if more workers are classified as independent contractors, but this can shift costs (healthcare, income instability) onto workers and increase demand on taxpayers and public programs.
Based on analysis of 2 sections of legislative text.
Clarifies that 'employee' under the FLSA is determined by the usual common-law rules and inserts unspecified language into the definition of 'employ.'
Official title: Amend the Fair Labor Standards Act of 1938 to harmonize the definition of employee with the common law.
Introduced July 9, 2025 by Tim Scott · Last progress July 9, 2025
Changes the Fair Labor Standards Act definitions by specifying that whether someone is an “employee” is to be determined using the usual common-law test, and inserts additional unspecified language into the statutory definition of “employ.” The bill is a short technical amendment that narrows/clarifies how courts and agencies should decide worker classification under federal wage and hour law.