The Left’s Sudden About-Face on Portable Benefits for Contractors
On the question of independent contractor protection, a once-promising road of bipartisanship faces the wrecking ball of politics as usual
This article is the last in a three-part series on the worker classification debate. The first and second articles can be found here and here.
Previously in this series, I’ve discussed a way to end the ongoing disagreement over independent contractor classification, as well as some of the unseen industries that get overlooked in the debate. Regardless of whether someone is in a “traditional” contracting position—such as being a real estate agent or a financial adviser—or works as a delivery driver in the gig economy, the threat of forcible reclassification as an employee looms large across the American economy.
More than any other factor, American workers care most about flexibility when it comes to their jobs—even exceeding salary and benefit concerns. Given that working as a 1099 contractor provides some of the most flexibility and autonomy of any working arrangement, it’s safe to predict that interest in contracting status will only grow in the years ahead. But with the criticism coming from the political left about the dearth of benefits available to contractors, these roles are under constant threat.
As previously noted, however, this “employees-with-benefits” vs. “contractors-with-no-benefits” dichotomy is a false choice. In fact, there’s a way to protect independent contractor status while at the same time providing a system for these workers to obtain access to more benefit offerings. But what once seemed like a promising bipartisan road out of this seemingly intractable conflict has now run into a political buzzsaw.
The concept has been called a portable benefits system. It could take various forms, but one version uses SEP-IRA style accounts that both companies and contractors can contribute to. These funds can then be used by the workers for things like paid sick leave, retirement plans or even health insurance.
While many gig companies like Uber have actively endorsed the idea of a portable benefits model, there remains a problem under the law: Providing such a benefits system to workers could be used as legal fodder to argue that these workers really are employees after all. Therefore, the best way to enact a portable benefits system is to couple it with a legal “safe harbor” for independent contracting status, which clarifies that a company that voluntarily agrees to participate in a portable benefits system does not automatically convert any contractors that receive such benefits into employees.
For the past decade or so, the idea of tethering independent contractor protection to portable benefit offerings has percolated in the pages of opinion journals and think tank land. But today, this concept no longer remains confined to white papers, since numerous states have recently enacted portable benefits pilot programs or legislative packages.
One of the most notable examples has been Pennsylvania, in which Democratic Gov. Josh Shapiro partnered with DoorDash in July 2024 to launch a portable benefits pilot program in the Keystone State. The program applied to all DoorDash drivers who had made at least 100 deliveries and earned over $1,000 in a three-month period prior to the pilot’s enactment. These drivers then became eligible to receive up to 4% of the amount they earned on the platform during a 12-month period. These funds were deposited into accounts managed by Stride, a portable benefits platform. In turn, workers could use these funds for things like retirement saving, health and dental insurance, and paid time off.
The early returns are in from Pennsylvania’s program, and the news is quite positive. A report commissioned by DoorDash, which surveyed workers who participated in the program, found that two-thirds of participants gained access to benefits they otherwise would not have had, while 77% felt more financially secure (this number would rise to 91% if the pilot were permanent).
In the same month that Pennsylvania’s program launched, Utah became the first state to enact portable benefits legislation. Since then, Tennessee and Alabama have followed suit legislatively, while Maryland and Georgia have launched pilot programs of their own.
What these states have in common, ironically, is what they do not have in common. Maryland is one of the deepest blue states in America; Alabama and Tennessee are two of the reddest; Georgia and Pennsylvania are purple swing states. (In Massachusetts, another deep blue state, a portable health insurance benefit fund was established as part of a 2024 settlement between Uber and Lyft and the Massachusetts Attorney General’s Office.)
But despite this clear bipartisan support and promising start, it sadly appears that the political left may be suddenly aligning itself against the idea. In Congress, Sen. Bill Cassidy (R-La.) recently introduced a portable benefits bill, which by all rights would have seemed destined to garner its own bipartisan support. After all, in recent sessions of Congress, Democratic senators such as Mark Warner (D-Va.) and Michael Bennet (D-Co.)—as well as Maine independent Angus King—have cosponsored versions of portable benefits bills.
But so far, Cassidy’s effort has met unanimous Democratic opposition in committee. Sen. Bernie Sanders (I-Vt.), in a committee hearing on the bill, gave away the real rationale behind the left’s sudden about-face, stating: “These bills are about giving corporations the freedom to deny workers the right to form a union.” (Independent contractors are generally ineligible for unionization under the National Labor Relations Act.)
Bipartisan momentum for portable benefits may abruptly be stalling in the states now, too. Wisconsin’s GOP legislature recently passed portable benefits legislation, which now sits on Democratic Gov. Tony Evers’ desk. But because the legislation was passed by a Republican-led legislature, Evers is expected to veto the bill as of this writing.
Americans have grown increasingly dour and cynical about politics in modern decades. Examples like the left’s switcheroo on portable benefits for contractors show why. After all, in our system of democratic governance, the rise of the portable benefits model seemed like an example of the system working.
Nonpartisan think tanks and other policy wonks thought deeply about the problem for years, seeking to find a way to help both companies and workers. After a period of time marinating in the policy petri dish, the Overton Window gradually shifted to the point where lawmakers across the country—and across the political divide—began enacting the idea into law. What started as a groundswell at the state level—our “laboratories of democracy” in action—seemed to be making its way to Congress with promising political winds at its back.
And then, suddenly, momentum stalled, an about-face occurred, and we are seemingly back to ground zero. Sadly, in the end, it’s the workers who will suffer most.
C. Jarrett Dieterle is a nonresident senior fellow at the R Street Institute and a legal policy fellow for the Manhattan Institute.
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