Federal Legislation
Congress Enacts Worker Classification Reforms
February 20, 2026
Congress has enacted the Modern Worker Empowerment Act (H.R. 1319) and the Modern Worker Security Act (H.R. 1320), which amend federal labor laws to clarify the classification of employees versus independent contractors. The Empowerment Act establishes a two-factor test focusing on control over work details and entrepreneurial risk, excluding certain compliance factors from employee status determinations. The Security Act prohibits considering portable benefits provision when determining employment status, protecting businesses offering benefits to independent contractors without triggering reclassification risks. These legislative changes aim to reduce compliance costs, support flexible work arrangements, and expand access to portable benefits programs.
- Procurement professionals should anticipate increased use of independent contractors due to clearer classification criteria, potentially impacting contract structuring and labor cost management.
- Businesses offering portable benefits can continue such programs without risking employee reclassification, encouraging innovative benefits models for contract workers.
- Agencies and contractors should review labor compliance policies to align with the new two-factor test and updated definitions under the Fair Labor Standards Act and National Labor Relations Act.
- Organizations involved in workforce planning and contract labor management may find opportunities to leverage flexible staffing models supported by these reforms.
Congress should act to protect and strengthen the [independent contractor] model by seizing opportunities, such as the Modern Worker Empowerment Act, to enhance our workforce and empower the next generation of safe and qualified transportation workers.
— Nathan Mehrens, Vice President for Workforce Policy, American Trucking Associations
Legalizing access to benefits does not lead to more workers being classified as independent contractors. The portable-benefits law had no negative impact on labor market composition, but it did give more workers security without sacrificing autonomy.
— Dr. Liya Palagashvili
Recently, app-based corporations have co-opted the term 'portable benefits' for corporate programs that are neither 'portable' nor 'benefits.' Instead of legitimizing these fake portable benefits programs, policymakers should be bolstering and expanding insurance-based portable benefits systems and ensuring those benefits are available to everyone who works for someone else, including app-based workers.
— Laura Padin, National Employment Law Project
Agencies
House of Representatives, Committee on Education and Workforce, House Committee on Education and Workforce, Subcommittee on Workforce Protections, Department of Labor
Vendors
DoorDash, Stride
Contracts
Locations
Sources
- H. Rept. 119-505 - MODERN WORKER EMPOWERMENT ACT · congress · Feb 20
- H. Rept. 119-506 - MODERN WORKER SECURITY ACT · congress · Feb 20
- H. Rept. 119-505 - MODERN WORKER EMPOWERMENT ACT · congress · Feb 20
- H. Rept. 119-506 - MODERN WORKER SECURITY ACT · congress · Feb 20
- H. Rept. 119-505 - MODERN WORKER EMPOWERMENT ACT · congress · Feb 20