A system of portable benefits, in which workers would have access to benefits outside a traditional employer-employee relationship, and be able to take them from job to job, is a vital step to ensuring that workers have stability and security in an increasingly unstable and insecure economy. A variety of leaders in both the public and private sectors have called for states to experiment with different portable benefits systems, and new developments suggest that momentum for portable benefits is growing.
Last month, Washington State Representatives Monica Stonier, Mike Sells, and Gerry Pollet sponsored a bill to create a portable benefits system. The bill (HB 2812) builds on the work of similar legislation that was introduced by former Representative Jessyn Farrell in 2017.
The Stonier bill requires businesses to make contributions to “benefit providers” for the purpose of providing benefits to workers. The businesses covered in the bill include any entity that “facilitates the provision of services by workers to consumers seeking services and where the provision of services is taxed under 1099 status.” Washington State’s Department of Labor and Industries would determine the amount to be collected for the provision of workers’ compensation. In addition to this amount, businesses must contribute an amount equal to 15 percent of the total fee collected from the consumer for each transaction of services provided, or two dollars for every hour that the worker provided services to the consumer, whichever is less. Contributions must be made monthly.
The benefit providers are required to provide workers’ compensation and, based on worker input, can provide a range of other benefits, including health insurance, paid time off and retirement benefits. Benefit providers are allowed to use up to 10 percent of contributed funds for administrative costs.
Furthermore, the bill explicitly prevents the provision of benefits from impacting worker classification decisions. The requirements on businesses and the benefits provided are not to be considered in determining a worker’s employment status or the contributing agent’s employment relationship to the worker.
HB 2812 also includes two provisions that were not included in the 2017 version. First, the bill would promote a greater understanding of the independent workforce by requiring eligible businesses to submit annual reports to the Washington State Department of Labor that disclose specific data about the business, its worker beneficiaries, and the consumers of services provided by the workers. And second, the bill would reform the state’s misclassification laws by prohibiting the following actions:
- Willfully misclassifying an employee as an independent contractor;
- Charging a misclassified employee a fee or making unlawful deductions from compensation;
- Requiring or requesting an employee to agree to or sign a document that results in misclassification;
- Forming, assisting in, or inducing the formation of a business entity or paying or collecting a fee for the use of a business entity, for the purpose of facilitating or evading detection or a violation of the Employee Fair Classification Act (EFCA); and
- Conspiring with, aiding and abetting, assisting, or advising an employer with the intent of violating the EFCA.[1]
Following the introduction of this legislation, Uber CEO Dara Khosrowshahi, SEIU 775 President David Rolf, and entrepreneur Nick Hanauer released a public letter calling on leaders to work together to create a portable benefits system. Their open letter highlights the ways in which local action will demonstrate that “a portable benefits system can empower workers and enable technology to meet the growing demand for more flexible, independent forms of work.” They go on to outline five principles that should be central to the state-level portable benefits system: flexibility, portability, universality, innovation, and independence.
This is a significant development for two reasons. First, Uber would likely be the company most affected by the Washington State legislation, so their agreement to work on legislation is a positive development and should improve the chance of passage. Second, while this largely follows the principles of the 2015 portable benefits letter organized by Future of Work Initiative Fellows Natalie Foster and Libby Reder, Uber did not sign on to that letter, so this is the first time they have publicly endorsed these principles.
Other efforts at the local, state, and federal level demonstrate the ways in which a variety of leaders and organizations are working to expand benefits to those in non-traditional work arrangements. Last week, California Assemblymember Evan Low introduced placeholder legislation that signaled his intent to develop a portable benefits system in California. This past September, the San Francisco Office of Economic and Workforce Development (OEWD) partnered with the non-profit Samaschool to launch a pilot program that provides new supports to aspiring gig economy workers. In July, Washington Governor Jay Inslee signed into law a guaranteed family and medical leave plan, which includes a provision that allows self-employed workers to buy into the system. At the federal level, Senator Mark Warner introduced the Portable Benefits for Independent Workers Pilot Program Act in the U.S. Senate, and Congresswoman Suzan DelBene introduced a companion bill in the House of Representatives last May.
These recent developments suggest that labor, business, and government alike are making progress in the effort to design innovative new structures that ensure all workers have access to benefits and financial security. These efforts mark an important step forward in modernizing our social contract to meet the needs of the 21st century workforce.
[1] Descriptions are based on the State’s formal summary of the bill.
