‘A Total Win-Win’: Kevin Kiley Touts Legislation Providing ‘Security And Benefits’ To Independent Workers

Forbes Breaking News

During a House Education and Workforce Committee hearing prior to the congressional recess, Rep. Kevin Kiley (R-CA) spoke about the bills he proposed to support independent contractors.

Transcript

00:00Some outstanding work on supporting independent workers, freelancers who comprise about a third

00:07of the American population at this point. That number is fairly likely to grow. I think it's

00:12very important that right now we take advantage of the opportunity to put protections for

00:18independent workers into statute, which is why I've introduced the Modern Worker Empowerment Act,

00:22Modern Worker Security Act, which I know you mentioned in the introduction. So before getting

00:25into that, though, would you mind just giving us a brief recap of the effect that the attacks on

00:32independent workers have had in California with AB5, as your institute has shown, and then the threat

00:38posed by the Biden administration's effort to sort of mimic that legislation? Mr. Chairman, thank you.

00:44I think the key thing to remember is after California passed AB5, a number of businesses,

00:50including businesses that no one would consider the businesses that Mr. Cesar is calling or abusing

00:56their workers, the New York Times told photographers, freelance writers in California they wouldn't work

01:01with them anymore because they didn't want to have to provide the benefits that California was going to

01:05require them to provide those workers for just a small amount of work. And so people in the film

01:10industry, people in lots of industries who are making significant sums of money lost their positions.

01:15And so people in your district were losing their jobs. Truckers were told,

01:18you are no longer going to be allowed to move products from the ports out of the ports,

01:23including when we had massive port challenges of moving goods during COVID. We had people who

01:28were unable to move those goods because those workers knew the risks and the benefits that they

01:32were taking upon themselves in starting the business. And then California's legislature came in

01:37and they said, we're not going to allow you to make that decision anymore. We're going to protect

01:41you from yourself. We're going to protect you from making money because we think we know better

01:45what your relationship with another business ought to look like. And the reality is we don't do that

01:50in most places in America. We would allow an individual who wants to contract with someone

01:55to do work at their house to hire who they choose to work with and to come to an arrangement for how

02:00much that's going to cost. If suddenly anybody who was coming to do HVAC work at my house,

02:04I had to provide them with, I was legally required to provide them with the same employee benefits

02:09that workers who work with me at the Cicero Institute receive from our organization,

02:13that would change the entire calculus of how much I'm willing to pay them, what I'm willing to pay

02:17them, what I'm willing to do. And we need to allow people to have those interactions. And so I thank

02:20you for proposing those bills. I think both of those bills will go a long way toward helping workers

02:25in states across the country who want to be independent workers, to be able to be independent

02:30workers, to work with those businesses and not discourage those businesses from hiring them.

02:35Absolutely. And so one of the bills seeks to actually provide a clear sort of common law-based

02:39standard for being an independent worker, which is what has prevailed in this country for a very long

02:44time. And, you know, that, of course, the Trump administration had a similar standard in its first

02:50instantiation, which this legislation essentially seeks to restore, but to do so in a durable way so that

02:57we don't have the uncertainty that comes with the new administration coming in and potentially

03:00changing the rules. But then the other bill deals with this topic of portable benefits that you've written a lot

03:05about. So could you just tell us a little more about what those are and why, under current law,

03:11sometimes employers or, I should say, hiring entities are discouraged from offering them to

03:16independent workers? Yeah. So as Ms. McCutcheon mentioned, one of the factors at the very end of

03:22the Wage and Hour Division's rule on independent contracting, that's the current regulation that's

03:26obviously being challenged right now, but the one from the last administration explicitly says we can

03:30consider whatever additional factors we want to. But one of the factors that has traditionally been

03:34considered in deciding whether a worker is an employee or not is whether there's benefits that

03:39are provided to those workers. And your bill would explicitly say that the mere provision of access

03:44to benefits, if that is the arrangement that the worker and the hiring entity want to do, is not going

03:49to be considered as a factor in determining whether that person's an employee. So I'll give you an

03:53example. If an individual worker has a spouse who has, as I mentioned earlier, a health savings account or

03:59retirement account, and their employer does not fill the entire account, but they would prefer to have the

04:04tax preferences of having those dollars put into the health savings account. Maybe they recognize

04:09that they can actually save tax dollars by putting it in the account from the business directly, and

04:13then they don't have any of the business taxes that Mr. Cesar is worried about. In those circumstances,

04:18right now, if they put that money in, if the business puts money into the health savings account,

04:22so you have a business in town that asks someone to do computer repair for them on an independent basis,

04:27they put money in that health savings account, right now that could be a factor that the labor

04:31department considers employment, even though the worker will benefit by getting the tax preferences

04:36of putting that money directly into the health savings account. And so that's what the portable

04:40benefits concept is, is allow workers to have an arrangement with the hiring entity to put dollars

04:45into those accounts so that the worker can get the benefits from those types of retirement and other

04:50types of savings accounts. And the business can interact in the relationship in the best way that gives

04:55both the worker and the business the relationship that they want.

04:58Yeah, it's a total win-win. I mean, under current law, the dynamic you describe is sort of a no-good

05:03deed goes unpunished. Whereas if you want to provide this level of security and benefits to

05:08an independent worker, then that might cause, you know, the entire relationship to be re-characterized

05:15in a way that's in neither the interest of the hiring entity or of the worker. And so what we're trying

05:20to do is provide a safe harbor to prevent that from happening. Thanks so much for your work on this

05:23topic. I yield back. Mr. Owens from Utah.

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