Modern Worker Empowerment Act
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The bill would rewrite the federal test for deciding whether a worker is an independent contractor or an employee under the Fair Labor Standards Act and the National Labor Relations Act, focusing the standard on whether a business controls how the work is done rather than its final result.
Because employee status determines who qualifies for minimum wage, overtime pay, and collective-bargaining rights, the change could shift large numbers of gig, freelance, and contract workers out of those protections nationwide.
What this bill would do
What it would do
The bill would amend the Fair Labor Standards Act to add a new test for independent-contractor status: a worker is an independent contractor if the hiring party does not exercise significant control over the details of how the work is performed (regardless of control over the final result) and the worker has entrepreneurial opportunities and risks, such as discretion to exercise professional judgment. It would bar several factors from being used to classify someone as an employee, including requirements to follow legal or safety rules, carry insurance, or meet contractual performance deadlines. The bill would then apply this same Fair Labor Standards Act test to employee classification under the National Labor Relations Act. The amendments would apply to any independent contractor-versus-employee determination made on or after enactment. The bill does not change any other wage, hour, or bargaining provisions of either law, and does not address state-law worker classification tests.
Key provisions
- 1Would establish a new two-part independent-contractor test under the Fair Labor Standards Act based on lack of control over work details and presence of entrepreneurial opportunity/risk
- 2Would prohibit using legal/regulatory compliance, stricter safety standards, insurance requirements, or contractual performance deadlines as factors showing employee status
- 3Would apply the Fair Labor Standards Act's new independent-contractor test to employee classification determinations under the National Labor Relations Act
- 4Would apply the new classification standard to any employee/contractor determination made on or after the date of enactment
Who would be affected
Workers classified or seeking classification as independent contractors—including gig-economy, freelance, and contract workers—along with the businesses that hire them, would be directly affected. The Department of Labor and the National Labor Relations Board, which enforce these laws and adjudicate classification disputes, would apply the new standard.
Why it matters
Whether a worker is an employee determines eligibility for minimum wage, overtime pay, and the right to unionize and bargain collectively. A narrower control-based test could make it easier for businesses to classify workers as contractors, potentially removing wage and bargaining protections for workers who would otherwise qualify as employees under current federal standards.
What would change
Changes to existing law
Amends Fair Labor Standards Act of 1938 (29 U.S.C. § 203(e)) (Sec. 2)
Adds a new independent-contractor test focused on lack of control over work details and entrepreneurial risk, and bars certain factors from indicating employee status.
Amends National Labor Relations Act (29 U.S.C. § 152(3)) (Sec. 3)
Directs that the Fair Labor Standards Act's new independent-contractor test be used to determine employee status under this Act.
Agencies directed to act
Effective dates
- The new employee/independent-contractor classification standard
How implementation would work
The Department of Labor and the National Labor Relations Board would apply the new statutory test in place of their existing multi-factor tests when investigating wage claims, adjudicating unionization disputes, or issuing guidance. Because the standard is set directly in statute rather than through rulemaking, agencies would not need to issue new regulations to apply it, though they may update internal guidance and case-by-case determinations to align with the new control-based and entrepreneurial-risk criteria starting on enactment.
Legislative status & sources
Latest action
Placed on the Union Calendar, Calendar No. 431.
Official CRS summary
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This bill specifies a legal standard for determining whether an individual is considered an independent contractor rather than an employee for the purposes of federal labor laws that address issues such as the federal minimum wage, overtime compensation, and collective bargaining. The rights and protections provided by these laws exclusively apply to employees.
Under the bill, an individual is considered an independent contractor if (1) another individual or entity does not exercise significant control over the details of how the individual's work is performed, without regard to any control the other individual or entity may exercise over the final result of the work performed; and (2) while performing such work, the individual has opportunities and risks inherent with entrepreneurship (for example, the discretion to exercise professional judgment).
The bill also sets forth factors that may not be used to determine whether an individual is an employee. Specifically, factors such as whether another individual or entity requires the individual to meet certain legal, health and safety, insurance, or performance requirements may not be used to make such a determination.
Legislative subjects
Labor and Employment; Labor standards; Self-employed
Committee report
H. Rept. 119-505