US Senator Mark Warner of Virginia and Rep. Suzan DelBene of Washington, both Democrats, proposed legislation on Thursday that would establish a fund to subsidize the development of portable benefits programs for the growing number of Americans making a living as independent workers in the gig economy. According to a press release from Warner’s office, the bill “establishes a $20 million grant fund within the U.S. Department of Labor to incentivize states, localities and nonprofit organizations to experiment with portable benefits models for the independent workforce”:
The Portable Benefits for Independent Workers Pilot Program Act … authorizes a total of $20 million for competitive grants to states, local governments and nonprofits for pilot projects to design, implement and evaluate new models ($15 million) or assess and improve existing models ($5 million) for portable benefits for independent workers such as contractors, temporary workers and self-employed workers.
Eligible models should provide any number of work-related benefits and protections – such as retirement savings, workers compensation, life or disability insurance, sick leave, training and educational benefits, health care, and more. In order to encourage innovative thinking on these challenging issues, programs focused solely on retirement-related benefits will not be eligible. In awarding grants, the Secretary of Labor is directed to prioritize models that can be replicated on a large scale or at the national level.
Warner has a background in the technology industry, BuzzFeed News reporter Caroline O’Donovan notes, and the gig economy has been a signature issue for him for years: For instance, he advocates a plan proposed by several economists to create a new classification of worker between “employee” and “independent contractor” to reflect the unique position of on-demand workers, granting them some of the rights of employees while retaining the flexibility they (and the companies through which they find work) currently enjoy. The bill introduced on Thursday is the next-best thing, Warner tells BuzzFeed:
For now, the idea of creating a new type of worker in the US economy is pretty much dead. But, with Warner’s help, the idea of creating a portable benefits fund has taken its place. “[Portable benefits] could evolve into a third worker classification,” Warner said. “I think it will more likely evolve into a much more flexible benefits system that would be complementary to a traditional benefits system.”
Already, organizations that make use of contractors have more options than they may realize for providing portable benefits to this segment of their workforce without running the risk of having to reclassify them as employees. States including New York and Washington are also considering legislative changes to make it easier to provide this type of benefit. Gig economy platforms are also experimenting with portable benefits design: Care.com introduced a peer-to-peer benefits platform last September, while Uber began offering drivers a way to save for retirement last year and recently began piloting an injury insurance scheme. Portable benefits are also a central plank of the “social safety net for the gig economy” proposed by Etsy last year.
Warner’s bill has been endorsed by gig economy companies Postmates, DoorDash and Lyft, as well as by the Freelancers Union, Quartz’s Sarah Kessler adds. In the current Congress, this legislation still may not get very far, but it is notable that the federal government is finally beginning to take up the debate over how to provide benefits to an increasingly disconnected and contingent workforce.