Empowering the Modern Worker

Labor Department and Labor LawHouse Education and Workforce Subcommittee on Workforce Protections · May 20, 2025 · 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 at▶ 1:01:57

Who spoke

• Chairman (Rep. Mackenzie, R-PA)▶ 1:01:57: Opened by arguing outdated policy hasn't kept pace with flexible work arrangements▶ 1:01:57, criticized California's AB5 and the 2024 independent contractor rule's six-factor test▶ 1:03:24▶ 1:04:04, and touted the Modern Worker Empowerment Act and Modern Worker Security Act plus Pennsylvania's DoorDash portable benefits pilot▶ 1:05:41.

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

• Nathan Mehrens, American Trucking Associations▶ 1:12:50: Testified that over 80% of independent contractor truckers approve of their arrangement and fewer than 10% want employee status▶ 1:14:42, welcomed DOL's move to rescind the Biden rule▶ 1:15:08, and later said California's ABC test makes it "next to impossible" for owner-operators to work with motor carriers▶ 1:30:03.

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

• Laura Padin, National Employment Law Project▶ 1:19:49: Argued app-based "portable benefits" like DoorDash's savings account (about $31/month) are no substitute for insurance-based benefits▶ 1:23:57▶ 1:38:01, 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 protections▶ 1:47:57.

• Dr. Liya Palagashvili, Mercatus Center▶ 1:25:12: Said only about 10% of US jobs are independent work and fewer than 9% of independent workers want a W2 job▶ 1:25:43, presented her research finding ABC tests cause a 6.4% drop in self-employment and 4.7% drop in W2 jobs▶ 1:26:32, and said Utah's 2023 portable benefits law didn't harm W2 employment growth▶ 1:28:46.

• Rep. Walberg (R-MI), full committee chairman▶ 1:39:33: Asked Mehrens about trucker motivations and Palagashvili about legal risks discouraging companies from offering benefits▶ 1:42:01.

• Rep. Scott (D-VA), full committee ranking member▶ 1:46:37: Questioned Palagashvili's data replicability▶ 1:47:01 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 provisions▶ 1:51:58 and asked Kavin about a "flawed" 30% misclassification statistic traced to a 2009 GAO report using 1984 data▶ 1:54:31.

• 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 provision▶ 1:58:47▶ 1:59:13, and asked about Medicaid's role for gig workers, citing a Stride Health survey finding a quarter of app-based workers rely on Medicaid▶ 2:02:29.

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

• 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 rules▶ 2:10:45.

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

• 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 Su▶ 2:23:44, and asked Kavin for further examples of harmed freelancers▶ 2:24:09.

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 benefits▶ 1:08:42, and noted Uber's CEO donated about $1 million to Trump's inauguration fund▶ 1:09:41.

• 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 businesses▶ 1:22:57.

• 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 causal▶ 1:26:32.

• 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 coverage▶ 1:47:57.

• Kavin challenged a widely cited "10 to 30%" misclassification figure, tracing its hyperlink to a 2009 GAO report ultimately relying on 1984 data▶ 1:54:31; Padin countered with more recent state audits, including Maryland finding 35% of home health workers misclassified▶ 1:57:26.

• Rep. Fine described paying independent contractors extra cash instead of tax-advantaged health insurance because employees "got angry" learning the employer cost of benefits▶ 2:04:19.

• Palagashvili said a DoorDash Pennsylvania pilot survey found 89% of participants satisfied and 91% preferred remaining independent contractors rather than employees▶ 2:16:44▶ 2:17:05.

• 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 writers▶ 2:26:06.

Metadata

CommitteeHouse Education and Workforce Subcommittee on Workforce Protections
Chamber / CongressHouse · 119th Congress
DateMay 20, 2025
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