What This Bill Does
This bill amends the Fair Labor Standards Act of 1938 to clarify when someone is an independent contractor rather than an employee. The bill instructs the Secretary (the head of the federal agency overseeing labor standards) on how to determine independent contractor status by considering specific factors about how work is performed and controlled.
Who It Affects
- Individuals who perform services for other people
- Business owners and companies that hire workers
- The Secretary of Labor (the federal official who enforces labor standards)
Key Provisions
- An individual is likely an independent contractor if they exercise substantial control (significant power to make decisions) over key aspects of how they perform their work and if they have the opportunity to earn profits or incur losses based on their own initiative or management of investment (Sec. 2)
- The Secretary may also consider someone an independent contractor if the services require specialized training or skills that the hiring person does not provide and the work is performed on a continuous basis (including seasonally) as part of an integrated unit (a connected whole) (Sec. 2)
- When making determinations, the Secretary must only look at actual practices between the worker and hiring person, not at what contracts say or what either party expects if those expectations are not regularly met in practice (Sec. 2)
What Changes
If this becomes law, the Fair Labor Standards Act will include a new definition clarifying when someone qualifies as an independent contractor versus an employee.
Important Definitions
- Independent contractor: A person who performs services for another person with substantial control over key aspects of the work and opportunity to earn profits or incur losses based on their own initiative or investment management
- Employee: Any worker who does not meet the independent contractor criteria
Effective Date
Not specified in bill text
I
118TH CONGRESS
1ST SESSION
H. R. 781
To amend the Fair Labor Standards Act of 1938 to clarify the status
of an independent contractor, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 2, 2023
Mr. FERGUSON (for himself, Mrs. MILLER of West Virginia, Mr. MIKE GAR-
CIA of California, Mr. AUSTIN SCOTT of Georgia, Mr. OWENS, Ms.
HAGEMAN, Mr. COLE, and Mr. MCCLINTOCK) introduced the following
bill; which was referred to the Committee on Education and the Work-
force
A BILL
To amend the Fair Labor Standards Act of 1938 to clarify
the status of an independent contractor, and for other
purposes.
Be it enacted by the Senate and House of Representa-
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tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Guaranteeing Inde-
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pendent Growth Act’’ or the ‘‘GIG Act’’.
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•HR 781 IH
SEC. 2. DEFINITION OF INDEPENDENT CONTRACTOR.
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Section 3(e) of the Fair Labor Standards Act of 1938
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(29 U.S.C. 203(e)) is amended by adding at the end the
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following new paragraph:
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‘‘(6)(A) The term ‘employee’ does not include an indi-
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vidual who performs services for another person as an
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independent contractor, as determined by the Secretary.
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In making such determination, the Secretary shall con-
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sider that an individual is likely to be performing services
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for another person as an independent contractor if such
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individual—
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‘‘(i) exercises substantial control over key as-
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pects of the performance of such services; and
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‘‘(ii) has the opportunity to earn profits or
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incur losses based on the exercise of initiative or
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management of investment by such individual.
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‘‘(B) In any case in which the Secretary determines
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that the considerations described in subparagraph (A) are
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not dispositive as to whether an individual is performing
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services for another person as an independent contractor,
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the Secretary may also consider that the individual is like-
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ly to be performing such services as an independent con-
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tractor if such services—
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‘‘(i) require specialized training or skills that
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such person does not provide; and
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‘‘(ii) are performed—
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•HR 781 IH
‘‘(I) on a continuous basis (including on a
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seasonal basis); and
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‘‘(II) as part of an integrated unit.
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‘‘(C) In making any determination under this para-
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graph as to whether an individual is performing services
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for another person as an independent contractor, the Sec-
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retary shall only consider actual practices between the in-
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dividual and such person, without regard to—
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‘‘(i) any contractual agreement or any other ex-
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pectation of either party that is not regularly met in
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the course of performing such services; and
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‘‘(ii) any services that the individual performs
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that—
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‘‘(I) are not for such person; and
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‘‘(II) are not substantially similar to the
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services that such individual performs for such
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person.’’.
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Æ
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