[Music] Well, not that long ago. or something like that. And so I'm like there work harder. And then the doctor's laughing at me. I'm sorry. So But
I'll familiar This subcommittee on workforce protections will come to order and that I will note a quorum is present. Without objection, the chair is authorized to call a recess at any point. The way people are doing work in America is
changing. New platforms, technologies, and business mo models have transformed the way people earn a living, giving millions of workers more flexibility, autonomy, and opportunity. Whether it's freelance writers, apt-based drivers, or
self-employed consultants, these arrangements are helping people find work that fits their lifestyle and goals. In many cases, this flexibility leads to higher job satisfaction and better work life balance. Unfortunately, outdated policies haven't
kept pace with these changes. Too many independent workers today face legal uncertainty and unnecessary restrictions that limit their ability to work on their terms. Today, we will examine the challenges faced by freelancers, self-employed individuals, and other
workers who choose to operate as independent contractors. These challenges include worker mclassification under the Fair Labor Standards Act and the fact that many independent contractors would like to have access to benefits W2 employees typically enjoy while still taking
advantage of the flexible flexible working arrangements of an independent contractor. We've seen the damaging reproductive repercussions of restrictive state laws that prevent workers from operating as independent contractors and force them to be
reclassified as traditional employees. This is especially visible after California enacted Assembly Bill 5 in 2019, which reclassified many independent contractors as employees. Due to the overwhelming negative impact the California legislature had to exempt
more than 100 professions and industries from the law. Unfortunately, states have followed California's lead with their own ownorous requirements, oftentimes with disastrous results. Despite California's terrible outcomes, the
Biden Harris administration attempted to nationalize AB5, depriving an estimated 72.7 million independent workers of clarity and consistency in the law. The 2024 independent contractor rule imposed
a confusing and complicated six factor economic realities test to determine worker classification. These factors range from the worker's skill and initiative to his or her integral uh role that they play in the company's success and the degree of permanence of
the relationship among other factors which may even include unnamed factors. This would have dramatically and drastically increased the federal government's control over the American workforce. Not only is this policy bad
for independent contractors, but it is also bad for the American economy. In fact, studies estimate a na a total national cost of 17 billion if just 15% of independent contractors are
reclassified as employees and 57 billion if 50% are reclassified. Fortunately, the Trump administration has a more common sense approach to worker classification. We look forward to working with the Department of Labor to further protect workers from
unreasonable mandates like the 2024 independent contractor rule and instead provide clear guidelines that protect legitimate independent contractors from federal overreach. Committee Republicans have solutions that we have offered as alternatives. the Modern Worker
Empowerment Act, which classifies employee versus independent contractor status, and the Modern Worker Security Act, which provides a federal safe harbor to businesses wishing to offer portable benefits to independent contractors. Additionally, there are
promising results from new portable benefits pilot programs that businesses are offering, one of which was announced last year by Door Dash in my home state of Pennsylvania. and our expert witnesses will discuss the latest research into portable benefits for independent contractors and how we can
pass legislation that protects their status while allowing them to take advantage of newly enacted portable benefits laws such as those in Utah, Alabama, Tennessee, and Kentucky. With that, I look forward to hearing more from the witnesses that we have here
today regarding these topics. And at this time, I yield to the ranking member for an opening statement. Thank you, Mr. chairman, and thank you for the witnesses being here today. The nation's labor laws establish basic worker protections like a decent wage, a
safe workplace, the right to organize, the right to collectively bargain, the right to overtime. But ever since workers won these protections at the federal level, big corporations have lobbied for loopholes. And those big corporations always try to sell those
loopholes as quote good for the workers, too. And that's exactly what we're dealing with here today. Huge profitable corporations want to create more loopholes through the Congress in our labor law in order to pretend that their
own employees are quote independent contractors. We should all be supportive of real legitimate independent contractors and supportive of America's small businesses while also noting that the Department of Labor has found that millions of American workers today are
illegally mclassified as independent contractors when they really are employees. And when that happens to them, they are stripped of their right to overtime, minimum wage, and other basic protections. According to a 2025 study from the Economic Policy
Institute, mclassification costs your average American custodial worker more than $10,000 a year. American truck drivers are deprived of about $21,000 a year when their employers mcl
classify them as contractors. Additionally, mclassifying workers as independent contractors cost the American taxpayer. Big corporations are skipping out on paying into Social Security and Medicare and workers comp. Some may claim that this is all in favor
of innovation or flexibility, but let's be clear, this is just good old-fashioned corporate tax dodging and union busting. The first Trump administration tried to make it easier for corporations to underpay workers and cheat taxpayers in this way. As Trump
left office in January of 2021, his top officials pushed forward a rule to change the legal test about whether workers are employees or independent contractors, therefore getting a lot of employers around the protections workers
have for minimum wage and overtime. The EPI estimated that that 2021 Trump rule robbed workers of $3.7 billion a year in pay and benefits. The Biden administration didn't do anything radical. They just reversed us back to
the rules that had been working for nearly 80 years. So then what did Trump do this time, winning a second time? He's getting rid of that Biden rule, which ultimately is actually what the American rule has been for nearly a century. and again is making it so that
big corporations, especially big tech, can get around paying their workers what it is they deserve. That is coincidentally right after Uber's own CEO donated about a million dollars to Trump's inauguration fund. You're going to hear in today's hearing from House
Republicans about companies like Uber and Door Dash wanting to provide so-called portable benefits. We all want big companies like Uber to provide people benefits. But what we're actually talking about here today is that those multi-billion dollar companies want to create loopholes where if they offer
some of those benefits, they can get around giving workers the right to a union, a right established nearly hundred years ago. They want to get around the rules that require that workers be paid a minimum wage and the right to overtime. In my view, Congress
should put the American worker ahead of this kind of corporate lobbying. And here is the hypocrisy in all of this. This week, the Republican budget plan aims to take health care away from over 13 million American workers. In today's
hearing, Republicans have said that they supposedly are hosting this so that workers can get a portable benefit. Well, if Republicans vote for their budget bill, millions of these gig workers will lose their healthcare. One of the most important earned benefits they already have is Medicaid, which
they can take from employer to employer. If my Republican colleagues really cared about making sure people have benefits and health care, then they would vote no, just like the Democrats are voting no in this bill to destroy Medicaid as we know it. Join me, Mr. Chairman,
please in rejecting the bill that is up for vote this week that would take health care and benefits away from millions of your constituents and mine. I yield back. Pursuant to committee rule 8C, all members who wish to insert written
statements into the record may do so by submitting them to the committee clerk electronically in Microsoft Word format by 5:00 p.m. 14 days after this hearing. And without objection, the hearing record will remain open 14 days to allow such statements and other extraneous material noted during the hearing to be
submitted for the official hearing record. I note for the subcommittee that some of my colleagues who are not permanent members of this subcommittee may be joining for today's hearing. And now for the introduction of witnesses. Our first witness is Mr. Nathan Marens,
the vice president of workforce policy at the American Trucking Association in Washington DC. Our second witness is Ms. Kim Caven, a freelance writer and editor from Morris County, New Jersey. Our third witness is Miss Laura Padin, the
director of work structures at the National Employment Law Project in Washington DC. And our final witness is Dr. Leah Palagos Vali, a senior research fellow for the Mercada Center at George Mason University in Arlington, Virginia.
We want to thank all of our witnesses for being here today and we look forward to each of your testimony. Pursuant to committee rules, I will ask that each of you limit your oral testimony to a threeminut summary of the written testimony which you have provided. As committee members may have questions for
you, the clock will countdown from 3 minutes pursuant to committee rule 8D. The committee practice, however, is that we will not cut off your testimony until you reach the 5m minute mark. I would also like to remind the witnesses to be aware of your responsibility to provide
accurate information to the subcommittee. And with that, I recognize our first witness today, Mr. Marens. You are recognized for your testimony. Good morning. Good morning, Mr. Chairman and Mr. Ranking member and members of the
subcommittee. Thank you so much for the opportunity to testify today on behalf of the American Trucking Associations. It's a privilege to be with you as you consider protections for independent contractors or as we call them IC's. Protecting the rights of IC's is vital
for our drivers, our industry, and the broader economy. In trucking, being an IC puts the individual in the driver's seat, both literally and figuratively. Truckers choose the IC model because it gives them economic opportunities and flexibility. It enables them to run
their own businesses, to select their own routes, and oftentimes make more money. Here are a couple of examples. Pamela Wday is a trucker from Pennsylvania who became an IC a decade ago because it gave her the time that she needed to raise her daughter and
also to be a caregiver for her family. Her income has lifted her family's fortunes and enabled them to buy a home. Lou Alone is an icy trucker from Minnesota. He grew up in South Sudan and came to the US as an orphan refugee. He
earned his commercial driver's license, became a company driver, and eventually purchased his own truck. He calls it his American dream, and he looks forward to passing his business on to his son one day. Across the nation, there are hundreds of thousands of stories like these. These ICs do what they do. It's
because it's what they want to do. We know from BLS data that IC's overwhelmingly uh approve of their work arrangement. More than 80% uh approve of this, and less than 10% are interested in being employees. There not a lot of 8020 issues out there. So this isn't surprising for our
industry because we know that drivers earn good livingings while retaining freedom to decide when and where they work. But unfortunately, their way of life is under attack from policy makers at both the federal and state levels. The Biden administration rewrote the standard for classifying IC's under the Fair Labor Standards Act, replacing what
was a fairly straightforward test from the first Trump administration with one that significantly muddied the waters. Secretary Labor recently took steps to rescend this Biden era rule and we strongly welcome this and urged the department to move quickly to reinstate
the standard from the first Trump administration. But changing standards from administration to administration pose significant compliance issues for everyone. To ensure that IC's can continue to engage in their chosen vocations, we need legislative solutions urgently. And one such solution is the
Modern Worker Empowerment Act, which if enacted would codify essentially the common sense framework from the first Trump administration, make it easier for everyone to know how the law applies. Congress must also reject threats to ICes, such as the PRO Act, which would
double down on California's failed experiment of AB5, which has been disastrous for ices in that state. In closing, trucking has been described as the backbone of America's economy. We have America's backs. The administration's made clear that they have our backs on this issue and now we
ask for you to have our backs. Stand ready to work with Congress on this and look forward to your questions. Thank you. Thank you. Next, we will recognize Miss Caven for her testimony. Thank you, Chairman McKenzie and Mr. Ranking Member
for this chance to testify about what we've learned since I was first here two years ago. I'm a co-founder of the grassroots coalition, Fight for Freelancers. Several of us freelance writers created the group in 2019 after California
passed a law called Assembly Bill 5. That deeply misguided law kicked off a wave of freelance busting that targeted our home state of New Jersey Next and ever since then the whole country. Today, independent contractors in all kinds of professions are raising our
voices because this kind of policym directly targets our livelihoods. Our opponents keep saying it will protect workers by stopping mclassification, but the evidence shows the main effect is hurting independent contractors. Freelance busting now
threatens the incomes and careers of tens of millions of Americans by way of the federal proact rulemaking. And right now in New Jersey, proposed rulemaking that a top labor attorney warns will eliminate every
single independent contractor in the state. This is not reasonable policymaking. And at this point, it's clear that these harms are intentional. Attorney review of what's happening in New Jersey includes words like
eviscerate. Lawyers say these interpretations far exceed general norms. In California, a state assemblyman called for the US Department of Justice to investigate discrimination in this policymaking. Members of the California Advisory
Committee to the US Commission on Civil Rights described this as a seismic change in policy with a decidedly negative impact on women, immigrants, people of color, and other disadvantaged groups politically. The promise is
always new jobs and union members. Reality is the opposite. The Orange County Register compared five years prior to the California law with 5 years after and found an 81% decline in the pace of job creation. As for union
membership, federal data shows it also went down. And independent contractors got hurt. Research by economist Leah Palagashi, who's testifying here today, showed that on average for affected professions, not only did self-employment take a 10 and a half%
hit in California, but overall employment dropped, too. I'm no expert economist, but I know what it looks like when you hurt people. New Jerseys proposed rule says point blank, the independent contractor restrictions won't create a single job. That's not
protecting me. It's wiping out my 22-year freelance career and leaving me with nothing. Yes, it's wrong to mclassify employees, but it's also wrong to force independent contractors out of business when federal data shows the vast majority of us prefer our way of
achieving the American dream. A decade of data shows this is beyond 8020. It's a 9010 common sense issue. Congress must protect our fundamental freedom to earn a living. Please pass the Modern Worker Empowerment Act and add preeemption of
state independent contractor laws. Stop these attacks on our livelihoods once and for all. Thank you. Thank you. Next, I will recognize Ms. Patton for your testimony. Thank you, Chair McKenzie. Excuse me. Thank you,
Chair McKenzie, Ranking Member Casar, and members of the subcommittee. My name is Laura Padine and I'm the director of work structures at the National Employment Law Project, a nonprofit organization dedicated to building a good jobs economy, one rooted in the fundamental belief that every job should
be a good job. I'd like to share a quote from Nicole Moore, a rid share driver and president of Rid Share Drivers United. Lyft and Uber have called us independent contractors since the beginning, but we really aren't independent. There's so little we control. Yes, we can work when we want
and choose not to accept some rides, but the algorithms behind these apps are basically 21st century robot bosses. They determine how much we earn, if we earn it at all, and really when we can earn. These same algorithms can even fire us. Across the country,
corporations are mislaboring the workers powering their businesses as independent contractors, even though the workers are not running their own businesses. and the corporations make key decisions such as where, how, and for how much money workers perform their jobs. Corporations
mclassify workers to shift the risks and costs of their business onto their workers and drive down labor costs. Mclassification deprivives workers of core rights and protections, including minimum wage, overtime, employer contributions to social security, the
right to collectively bargain, and workers compensation. Misclassification is rampant in many occupations where the where the work is already underpaid and difficult, including home care, janitorial work, delivery, construction, and more recently, apt dispatched jobs.
It's no coincidence that black immigrant and other workers of color who face discrimination and occupational segregation are over represented in these jobs. And the evidence shows that mclassification is making these already difficult jobs worse. A study of the
incomes of independent contractors in 11 lowpaying industries, including construction, home health care, and transportation, found that independent contractors are paid half to twothirds of what employees in the same industries make. A study of independent contra contractors tax filings in DC found that
a majority earn under $22,000 a year, and the most common occupations are janitors, drivers, and hair stylists. Many mclassified workers are living paycheck to paycheck. an accident or illness away from financial disaster and without the means to take a break from work or retire. Corporations are now
using technology to automate supervision and disguise the many ways they control working conditions even as they disclaim their responsibilities as an employers. Uber, Lyft, Door Dash, and Amazon use digital labor platforms and apps and algorithms to offer shifts or
assignments to workers, set their wages, surveil and assess their performance and deactivate them. industry speak for suspensions or firings if they don't meet standards. Like other so-called independent contractors, the earnings of app-based ride hail and delivery workers are shockingly low, often below the
minimum wage for the localities in which they work. And despite working in occupations with high health and safety risks, these workers have no support systems through their jobs, no paid leave, no employer provided health insurance, no workers comp if they get sick or injured. Employers who mclassify
their workers can save between 20 to 40% in payroll costs. This puts businesses that are doing the right thing and classifying their workers as as employees at a competitive disadvantage. And federal and state programs lose out on billions of dollars in tax revenue that fund critical programs like
unemployment insurance. Finally, I'd like to talk about portable benefits, which some app-based companies claim they want to offer their workers. Door Dash implemented what it calls a portable benefits savings pilot in Pennsylvania, which is which is just a savings account Door Dash sets up for
eligible drivers. This savings account dressed up as portable benefits does not replace the benefits of employment. For one thing, delivery workers earn poverty wages, so can't save any of their own money in these accounts. The bigger issue, though, is that savings accounts are no substitute for insurance-based
benefits such as unemployment insurance, health insurance, and workers compensation. By pooling risk, these insurance programs provide the stability that allow working people to weather emergencies that would otherwise be financially catastrophic. Congress should not legitimize these fake
portable benefit programs. In instead, it should strengthen our existing portable benefits programs, Medicaid, Social Security, and unemployment insurance, and promote other real models of portable benefits like union negotiated multi-employer health and
pension plans. Congress can also pro promote policies that truly empower working people like livable wages and stable and predictable schedules, paid time off, including vacation, sick leave, and family leave, meaningful benefits like unemployment insurance,
health insurance, Medicaid, Social Security, and retirements, and the right to collectively bargain. Thank you. Thank you. Lastly, I will recognize Dr. Pala Goshi for your testimony. Good morning, Chairman McKenzie, ranking
member and the me and and members of the committee. My name is Dr. Leah Palashi, and I'm a labor economist at the Marquada Center at George Mason University. Thank you for the opportunity to testify today. First, not all jobs come in the same size and shape, and that's a good thing. Last
year, 90% of all US jobs were traditional W2 jobs, and only about 10% of jobs were independent jobs, such as freelancing, consulting, or gig work. National data show a steady coexistence
of both independent and W2 jobs, meaning that the two workforces are not in conflict. They operate side by side, meeting different needs within a diverse labor market. In fact, according to the Bureau of Labor Statistics, fewer than 9% of all independent workers actually
seek a W2 job. That's why it's important that worker classification laws strike the right balance between being strong enough to address mclassification and not so restrictive that they deny legitimate freelancers the ability to work. Overly restrictive rules like ABC tests fail at meeting
that balancing act. In California, these policies were associated with significant job losses for freelancers without an accompanying increase in W2 jobs for them. Additionally, in our nationwide study using data from the Bureau of Labor Statistics, my research
team found that ABC tests cause a 6.4% decline in self-employment and importantly a 4.7% drop in W2 jobs. Now, these results are causal, meaning we can definitively say that ABC tests cause
these negative outcomes. No other studies to date have found positive employment effects from these laws. The research shows that restrictive ABC tests do not create more work opportunities. They eliminate both independent and W2 jobs. Instead, 80% of
independent workers have asked for a more promising solution, the desire to access portable benefits. But here's the challenge. While our workforce is dynamic, our benefit system is not. Most benefits remain tied to a
single employer and a traditional job structure, leaving millions of independent workers without access. That's partly because current law discourages companies and clients from offering support. If a business voluntarily provides benefits to an independent worker, it risks triggering
legal reclassification into an employee status. That legal risks makes it nearly impossible to build a new benefits model that match a new and flexible workforce. Congress can fix this. A straightforward reform clarifying that
the presence of benefits should be used in should not be used in employment classification determinations would clear the way for clients or companies to voluntarily contribute to workers benefits account without the legal risk. States have already started to forge
this path. Maryland, Pennsylvania, Georgia, Utah, Tennessee, and Alabama have made reforms that legalize access to benefits for independent workers, paving the way for bipartisan portable benefits pilot programs. In
Pennsylvania, for example, Door Dash is voluntarily contributing 4% of drivers earnings into an individual benefits account managed by the company Stride. While some may fear that portal benefits would negatively disrupt W2 jobs, research shows that is not the case.
Using Census Bureau data, my research team found that after UT passed its 2023 portal benefits law, both W2 employment and self-employment continued to grow at the same pace as before, showing that this reform gave more workers access to
benefits without harming W2 jobs. In short, portable benefits are a promising bipartisan solution. They allow properly classified independent workers, the vast majority of whom wish to remain independent, access to more financial
security without sacrificing the type of jobs that they desire. Portable benefits modernize our labor policies in a way that supports how people actually work today. Thank you, and I look forward to your questions. Thank you. Under committee rule nine, we
will now ask questions of the witnesses under the five-minute rule. And I will recognize myself first. Uh my first question goes to Mr. Marins. There are about 350,000 American truckers who are owner operators. How does the trucking industry navigate laws in California,
New Jersey, Massachusetts, and other states uh where they've made it nearly impossible to operate as an independent truck driver? Mr. Chairman, thank you for the question. In California in particular, it is next to impossible for an owner
operator to work for a motor carrier. The law is just so restrictive. If you look at the ABC test and the BP prong of that in particular, if you're doing work that's in the normal course of business of the hiring entity as an IC, it just doesn't work in California. So, it's
been very difficult for our members. Some of them have left the state. Some of them have had to change business models. and the individual drivers themselves have been injured to say the least. And I'll go to Dr. Palagashi. Uh these
nine states that have enacted an ABC test which severely limits the circumstances under which an individual can work as an independent contractor. In your written testimony, you discussed that the study found the job losses seen in those states were a result of that
ABC uh test rigidity. Does this serve as a warning for other states and what do you think we can learn as a a federal body? Yes. So, we did the first ever empirical study looking at the ABC tests uh across states that have adopted them. Like I said, the results are causal,
meaning we can definitively say that the ABC test caused these negative results. uh we believe other states that adopt them, especially with a stricter version BP prong of the ABC test will lead to uh negative results both for independent workers and W2 employees. And as I
mentioned in my testimony, worker classification laws require a balancing act to go after bad faith mclassification, but also not to be so restrictive that they prevent legitimate freelancers from working. The ABC tests
fail at meeting that balancing act. Thank you for that testimony. That's a pretty strong statement uh showing a direct causal result for job losses uh because of these ABC tests. That should be a very strong lesson for everybody else to to learn. Uh Ms. Caven, your
written testimony highlights the significant difference between policies that prevent the mclassification of employees and policies that attack entrepreneurs who prefer being their own boss. And we heard 80% of independent contractors en enjoy that work
environment. 80% 80 plus percent. Uh what recommendations do you have for the subcommittee that could draw a line between preventing mclassification and harbing independent entrepreneurs? Thank you for the question, Mr. Chairman. My biggest recommendation is to have actual
independent contractors at the policymaking table. If you look at who sits on these mclassification task forces and who's writing these mclassification reports and who's writing all these bills and all these rules, you almost never see
actual independent contractors involved and especially not from the majority of us who prefer to be self-employed. One member of my group, Fight for Freelancers, her name is Britney Vanderbilt. She's amazing. She's she's from Minnesota and she managed to
get on a task force on mclassification out there recently. Her experience was startling and we did a whole Q&A about it so people could understand. She said things like, "Whenever I brought up the fact that independent contracting offers
freedom and flexibility, other task force members or agency members would immediately try to downplay and discredit the argument." She said the idea that independent contractors choose to be independent contractors was another thing that constantly got shot
down whenever it was brought up. The level of dismissiveness and disdain toward independent contractors in this kind of policym it's absolutely breathtaking. So to me, the biggest change that could be made all across the country, state and federal level, is to
give professional, successful, independent contractors a seat at the table and make those seats meaningful. Thank you. Next, I will recognize our ranking member for five minutes of questioning. Thank you, chairman. Uh my
experience in Austin, Texas, uh recently I think shows why it's so important for us to ensure that when contractors are indeed employees and not fully and true small business owners that these oftentimes are used as loopholes by some
of the biggest corporations in the country. For example, at YouTube Music in my district, they organized a union and asked Google, who owns YouTube, to come to the bargaining table. These workers were making as little as $19 an hour for tech jobs in a city where
average rent is more than 1,500 bucks a month. But instead of bargaining with these workers in good faith, Google hid behind the contractor who employed these workers, who hid behind their contract with Google, claiming that these workers were
exclusively, you know, on their own, that they that Google had no responsibility for them. The National Labor Relations Board sided with the workers, saying Google and the contractor were actually employers, and then Google fired the workers instead of complying with the NLRB's ruling. And so
we need to be having hearings about how yes, we can protect and support independent businesses, small businesses, and self-employed people while ensuring that we don't push for rules and laws that would make it so that the Googles of the world uh don't
actually have to negotiate with their workers and follow over a century of labor law. Miss Padine, is it correct that in 2021, the Trump administration made it easier for real employees to be mclassified illegally as contractors?
Forgetting to do that. Uh, yeah. So in 2021, the Trump admin administr ad administration adopted a independent contractor rule that essentially elevated two factors and said they were more important than other factors that the Supreme Court and circuit courts
have used for decades. Um and that you know that that rule really wasn't supported by precedent and it really it focused on in particular uh control factor factor but in a way that was very narrow. It talked about whether a hiring ent entity exercise control, not whether
it had the right to control. And right to control is really important because we see big companies like Uber and Amazon reserve the right to control in their contracts and that can really limit how a true independent business person would operate. Thank you. And we've heard a lot just now here about
the ABC test which some state governments uh have used while the federal government uh has not. But can you explain how the ABC test um has protected workers in some of the states that use it? I think we've heard some of the other side on this, but can you tell
us how in your view the ABC test has played out in these states? Sure. Well, let me just say first of all, the ABC test is different from the Biden uh Biden administration's independent contractor rule. The ABC test uh is broader and it starts with a presumption that someone is an employee. And that
actually makes a lot of sense because most people are working for someone else. They're not in business for themselves. So it starts with a presumption and that presumption can be rebutted by the hiring entity if five factors are found. So it for three factors are found, excuse me. Um so it
is a broad protective test that ensures people who are who are employees are classified that way. Thank you. Uh, now let's talk about the platform workers and gig workers. In my home state of Texas, platform workers like Door Dash and Uber drivers have been found by a
recent study to oftentimes be making as little as $5 an hour. You hear about all the time, people waiting for hours and hours at work to get a ride. That is so much less than the federal minimum wage of 725 and so much less than what the city of Austin says should be the
minimum wage of about $20 an hour. Miss Padine, do you expect the portable benefits offered by some of these companies to measure up to benefits offered by Medicare, Medicaid, or any kind of comprehensive health insurance plan? No, not at all. I mean, portable
benefits is a misnomer for what these companies are offering. So, I you know, I mentioned the Door Dash program and it's come up a couple of times in this hearing. It is a savings account that Door Dash sets up for eligible workers. Door Dash contributes 4% of workers pre-tip earnings to the account. That
amounts to about $31 a month. $31 is not a meaningful contribution to the types of emergencies like disability or sickness that true benefits are intended to cover. And again, these savings accounts are no substitute for sure insurance-based benefits like social
security, Medicaid, and unemployment insurance, which are portable, and other insurance-based employment benefits like workers comp, and health insurance that pull risk and thereby help people weather emergencies that would otherwise uh destroy them. And so in summary,
we're hearing companies like Door Dash say, "We want to give you a benefit, $31 a month towards health so that they can get out of paying you overtime or minimum wage or letting you have a union." To me, that's just classic union busting behavior. And instead of
catering to the Door Dashes of the world, maybe we should try to block this Republican proposal to kick 13 million workers off of their health care. And that proposal apparently is coming to us this week. I yield back. Next, we'll go to chairman of the full
committee, Mr. Wahberg from Michigan. Thank you, Mr. Chairman, and thanks to the panel for being here. Um, Mr. Marin, your your written testimony cites a 2021 study by American Transportation Research Institute, which found
independence, schedule flexibility, choice of routes, and length of hall uh to be the key motivating factors behind choosing to be an independent trucker. On the other side, truck drivers who are traditional employees valued job
security, uh, income and benefits, a different set of, uh, benefits that they're looking for. This seems to make clear that independent truck drivers value different workplace priorities than employees. Uh, could you discuss whether
the federal government should allow independent truckers to continue as entrepreneurs? Well, thank you, Mr. Mr. Chairman for the question. You absolutely the federal government should allow IC's to continue in their occupations. As I noted in my testimony, it's what they choose. In our
industry, we have plethora of jobs available. If you're a driver, if you want to be an employee driver, we have a position for you. If you want to be an entrepreneur, create your own business, set up something that you can pass down to your family, we have opportunities for you there as well. It's really up to
the individual in our industry. There are two paths. They're both valid. you know, some work better for others. Uh, if you have more of an entrepreneurial bent to you and want to create your own business, have the schedule flexibility that you like, you just have all kinds
of additional options that you don't have as an employee, you know, that path is there for you. If on the other hand you you know want a set routine, you want to have a set route, you want to do the same thing day in and day out because that's what your personal
circumstance uh is is best for you, we have opportunities there for you as well or or have a start like the story you illustrated with of yes person coming to the country starting out as an employee and ultimately making enough to become an independent trucker.
Yes, we we definitely see that as well that individuals who start as employees, you know, realize that they could have their own business in this field and go down that path and they could go back the other way too. Absolutely. But they have choices, which is great. Thank you, uh, Dr.
Palagashi. I hope I got that close. Your testimony says that instead of pursuing restrictive worker classification laws like those contained in the ABC test, policymakers should consider reforms that make it easier for independent work workers to access
portable benefits. What problems are there in current law that restrict and discourage offering portable benefits? Thank you for the question, Representative. Currently, if you if anybody provides a benefit to an independent worker, if you're a client,
if you're a company, regulators at the state level and at the federal level will see that and that's a check mark for the employee side. So, that creates a a huge legal risk and liability of a of reclassifying the worker as an employee. So, that makes it nearly
impossible for anybody who wants to voluntarily contribute benefits into these uh to independent workers to do so. That's why anywhere where we've seen portal benefits accounts open up, it's been either through legislative changes or through a a governor approving these
programs such as in Pennsylvania, uh, Maryland, and Georgia. Again, expanding choice opportunity. Okay. Thank you. Um, Miss Cavin, I would not want to be a freelance writer because I'd starve. But you want
to be that as well as others like you. Um, in your written testimony, you use the term freelance busting uh and outlines uh associated negative impacts for individuals who choose to operate as independent
contractors like yourself who thrive on that. Uh why did you originally decide to become an independent contractor? Thank you, Mr. Chairman. Uh I had a few reasons. It was more than 20 years ago. I'd already spent a decade in staff jobs, newspaper and magazine staff jobs.
I'll tell you about just two of the reasons uh that stand out to me. One was business opportunity. Uh I got into a staff position in the marine magazines uh which are about boats, all kinds of boats, little kayaks right on up to the
biggest boats you can imagine. And what I realized was that they had staffs full of guys who knew everything in the world you could possibly know about a boat. How to drive it, build it, design it, sell it, wash it, wax it, whatever. But things like spelling a caption correctly
in an article was a little bit more challenging for those folks. So my skill set joined with their skill set. I could make a lot more money working as a freelancer for multiple magazines that needed that that kind of skill set. That turned out to be a really good bet. The uh the other reason I'll tell you about
and it's a a little bit scary and I want to preface it by saying I'm sitting right here and I'm okay today. But um many years ago back in the 1990s, I was walking into my apartment building after work one night at the newspaper and a
man that I didn't know uh he had been in and out of hospitals and mental institutions and jails for about 20 years. He was off his meds. He'd recently been in an an altercation with a police officer. He was um having visions of women drowning in pools of
blood and he had gotten hold of a serrated kitchen knife and he came up behind me as I was walking into my apartment building and I remember the knife coming around the front and I remember waking up on the ground and having to fight for my life. And not too long after that, I
was diagnosed with acute and severe post-traumatic stress disorder, which is a very normal response to a situation like that happening to a person. One of the things that helped me recover from PTSD was being able to be my own boss. Because when you're your
own boss, you can control your entire work environment. Nobody's going to come up behind you in an office, tap you on a shoulder, and ask you a question and startle you. Little things like that would be very difficult for me at that time all day long. But working from home, I could just work. I could write.
I could edit. I am I like to be a writer. You're right. I I enjoy it. And I could just do that and I could get better. And what what bothers me so much about what's going on with this freelance busting, there's so many of us who have stories maybe not identical to mine, but we have women dealing with
cancer diagnosis that are trying to deal with going to the hospital. We have moms taking care of kids who are in need because they have special needs and and they're looking for flexibility that way. Maybe we have members of Fight for Freelancers who are taking care of elderly parents. Again, this I wish we
had more time, but time is up. But and this is an example of choice. Yes. That works for you. Yes. And and very successfully. Yes. And thank you for taking the risk to come here today as well and and share that story. People seem okay so far behind me. Good. Thank
you so much. which I yield back. Thank you. Next, we will go to the ranking member of the full committee, Mr. Scott from Virginia. Thank you, Mr. Chairman. Mr. Pascali, um your testimony refers to an analysis of the impact of the ABC tests on in
multiple states. My staff consulted several economists and couldn't find any who had replicated your results. Would you be willing to make the underlying data and methods of your analysis public? Absolutely. We haven't uh the full study
is not publicly available right now, but uh I think that's probably why they couldn't replicate it, but we can. It's the the data is the Census Bureau and the Labor Bureau of Labor Statistics data. We put all the methods up. Will you be able to make that public so people could see? Absolutely. Yes. Thank
you for your question. Thank you, Miss Padine. Um, just to go over the difference between employees and independent contractors so people know. Um, if you're an employee, the employer makes a contribution to your social
security. If you're an independent contractor, does the employer make is there any employer contribution or do you have to make the whole contribution yourself? They make the whole contribution themselves. Do you have a right to organize if you're an independent contractor? No. Do you get
minimum wage or overtime? No. You get if you lose your job, do you get unemployment compensation? No. If you someone suggested that you're one injury away from disaster if you're hurt on the job, do you get workers compensation to cover medical expenses, lost wages, or
any disability compensation? No. Are you entitled as an independent contractor to a safe workplace in enforced by OSHA? No. Are you entitled to protection from the from discrimination by the EEOC under
title 7? No, you're not. Um, if employees get health insurance or pension at the place of employment, if you are an independent contractor, do you get access to those benefits? You don't. How does sick leave work if
you're an independent contractor? You don't get sick leave as an employee uh as an independent contractor. Child labor laws are enforced by the wage in our division of the department of labor. If a child is an independent contractor,
who would enforce that law? Uh, no one. Um, you mentioned um savings by the employer. If you can get somebody misqualified as an independent contractor, you'd save a lot of money, right? Estimates are between 20 10 to 30% in payroll costs.
Um, in terms of benefits, um, if you have an IRA and access to the Affordable Care Act, that's essentially the benefits you'd get in a benefit package anyway as an independent
contractor. What uh what what do these portable benefits add to that? Um, you know, I don't I don't think the portal benefit benefits really add anything. I think uh companies have been offering them in response to worker organizing around the country. Ride hail and
delivery workers are organizing to demand better wages and working conditions. And I think these companies are offering these kind of second rate fake portable benefits programs as a response to quell these demands. So, if you have an IRA and affordable care act, they'd be offering you some kind of
defined contribution plan um on a portable. I don't know what portable actually means, but um you'd get health insurance. You're not really getting anything else with these little plans. No, that I mean, thus far, the the the portable benefits plans that
have been offered are are savings accounts. Yeah. Are there any studies that show who actually chooses to be an independent contractor and who chooses to be an employee? That's a great question. So, a lot of these surveys, it really depends how the question is
asked. Um, there are surveys that find that when when asked, do you want to be an independent contractor and employee? Uh, there generally is higher favorability for independent contractor. But studies that ask people, do you want to be covered by minimum wage? Do you want your hiring entity to contribute to
uh social security for you? That asks you about the benefits of employment and if you want them to show high favorability for employment status and so when they find out what the implications are, nobody chooses to be an independent contractor. Well, more people Yes. PE when people people want
the benefits that come with employment um more so. Yes. Mr. Chairman ask unanimous consent to enter into the record an article from February 2025 of the monthly labor review on what the data says about whether workers or firms actually control the choice over
who is an independent contractor without objection. Thank you, Mr. Chairman, and I yield back. Mr. Mesmer from Indiana. Thank you, Mr. Chairman, and thank you for the witnesses for being here today. Mr. Marin, in in your written testimony, it says the 24 department 2024 Department
of Labor independent contractor rule effectively discourages efforts to improve drivers health and safety. Can you explain how this rule has such a perverse effect? Thank you, Congressman. Yes, the 2021 rule that the 2024 rule is rescended.
The 2021 rule had specific examples in the Code of Federal Regulations in the actual regulatory text itself that stated that when you have a contract between two entities and there are health and safety requirements that are made part of that contract that those
provisions themselves would not uh cause the individual to lose their status as an independent contractor. The 2024 rule removed those provisions from the regulations and significantly muddied the waters on that question. Okay. How
would the modern worker employment the modern worker empowerment act cut red tape and help trucking industry uh pro promote health and safety? So the the modern worker empowerment act, you know, looks at the two core factors that were in the 2021 rule, the level of control and entrepreneurial opportunity. And it
also has language that mirrors that previous version that was in the CFR that talks about contractual provisions relating to health and safety and compliance with other laws as well would not be deemed the level of control that would negate the employ the IC relationship. So it would protect that
relationship. Thank you. Also in that modern worker empowerment act, it proposes using two primary factors to determine independent contract contractor status. Why do you believe this strikes a balance between the workforce and the business owner? If you
look at what those the ultimate inquiry here is whether the individual is in business for themselves and those two factors you know were found in the 2021 rule as quote more probitative on the question whether there was economic dependence by the individual on the contract or the contracting entity over
the individual. So if you look at the level of control and the level of entrepreneurial opportunity that exists those two factors really do get to the core of whether this individual is in business for themselves. Okay. Thank you. Uh, Miss Cavin, in your written testimony, you discussed a flawed,
outdated analysis claiming up to 30% of independent contractors in the United States are mclassified. Can you explain why this analysis is flawed? Thank you, Congressman. Uh, yeah, I had seen an article a little over a year ago. It was in Newsweek. It was actually written by
Miss Padine's boss, the president and CEO of NELP, and it stated that a 2020 analysis found that 10 to 30% of employers mclassify employees as independent contractors. And those words, a 2020 analysis, they were a
hyperlink, but they didn't go to a 2020 analysis. They actually went to a 2009 GAO report that if you actually go and dig it up and read it, which I did, says the national extent of employee mclassification is unknown. And then it
refers to data that's as old as 1984. Now, I was 12 years old in 1984. We didn't even have laptop, computers, and smartphones. Why the heck are we making independent contractor policy here in the year n year 2025 based on
data from 1984? This makes no sense. Okay. Thank you very much. Uh Dr. Pal Goshi, in your written testimony, you indicate nearly 90% of US jobs were traditional W2 jobs last year. Based on your research, uh are independent contractor roles replacing traditional
traditional work? Thank you for your question, Representative. No, they're not replacing. The data shows that there's a steady coexistence and growth with both of them. And actually, it's not even my data. There is an IRS study on the IRS website right now. The title of the study is called is gig work
replacing traditional employment. The answer is no. And so, uh, if you look at any way you can spin the data, even epi has, uh, economic policy institute looks at it as well that the, um, that a a lot of the independent workforce is actually
supplemental income. So most, and that's what the IRS report found, too, most independent workers already have full-time W2 jobs, and they're using independent work as a an opportunity to make extra income as side side gig, so to speak. And so I've looked at the
data, IRS data, IRS report is up on there, BLS data, Census Bureau data. Uh, right now it shows that independent work and W2 employment are coexisting together. Okay, thank you. I yield back the rest of my time.
Thank you. Next, I'll go to Mr. Takano. Thank you. Uh, Miss Bedin, do you want to respond to any of the claims that uh the other uh witnesses have just made? Sure, of course. I'll respond to Miss Cavin's claim because she I think she was saying we
misrepresented misrepresented something or cited a study that was outdated. So that that figure the 10 to 30% figure uh cites to the planmatic study which is the last time DO did a national comprehensive study of mis of the scope
of mclassification. Uh and I would love for the DO to do a new rigorous apolitical study on the scope of mclassification and perhaps Miss Cavin would like to join me in petitioning them for that. But in the absence of that, we also have much more recent
state data that looks at the extent of mclassification. So for for instance, Maryland's task force on misclassification published a report earlier this year. It found uh through random audits that 35% of home healthcare workers are mclassified, 20%
of workers in landscaping, 19% of workers in janitorial work. Pennsylvania's joint task force on mclassification from 2022 found 48,000 employers in Pennsylvania mclassified at least one employee. Virginia's uh
legislative audit and review commission in 2010 found ran found based on a random audit of 1.1% of all employers in the state that a quarter of these employers had mclassified at least one worker. So again, we don't have updated
data from the DO. That is an old study and again I'd love for the DO to do a new study, but state audits are also confirm that mclassification is rampant. Well, thank you, Miss Pedine. You know, you said to ranking member Scott in his as a response um and
I'll ask the question again. Are independent contractors subject to minimum wage laws? They are not. And do independent contractors earn overtime pay? No, they're not entitled to it. So, uh, in this terrible, I don't call it a
big beautiful tax bill that they're trying to ram through the Congress in the middle of the night this week. Rep my Republican colleagues, the the provisions which would not tax overtime pay. That wouldn't apply to any independent contractor, would it? That's correct. So, independent contractors
would not benefit from this uh that provision in this tax bill. That's right. Uh, do independent contractors have protections for labor organizing? No. Um, it seems to me that uh uh you know workers are that are classified as
independent contractors are not entitled to those protections, but it would be one thing if these workers were truly meeting the definition of independent contractors. And that's the whole issue of mclassification, right? if they had significant control over their own work,
if they were in business for themselves, if they were being compensated adequately for the labor and so forth. And to be clear, independent contractors uh some independent contractors do meet these criteria, but for too many of these independent contractors, they are subject to
misclassification. And that means that these workers aren't covered by basic protections or subject to equitable wage laws. Uh, Miss Padine, what does the data tell us about the extent of me mclassification uh and the costs it imposes on workers
and their families? It's a bit of a different question, but yeah, so um I talked a little bit about what we know about the data uh from state task force, right? There's the Berilin data that I just uh discussed which found that um workers very high rates of
mclassification particularly in lowpaying occupations like home health care work uh landscaping, janitorial work, construction work. Uh Pennsylvania and Virginia's task force similarly found very high levels of mclassification. So what does this all
cost? Well, um, EPI studied the did an analysis of different jobs when they're when workers are classified as independent contractors and employees and found that independent contractor status can cost workers thousands of dollars in loss benefits like unemployment insurance and in additional
expenses independent contractors incur like paying the employer share of social security. It also costs federal and state governments billions of dollars in tax revenue. um you know a report from 2009 report estimated it was 2.7 2.72
billion in federal revenue that's lost. It seems like there's a very circumscribed set of circumstances that make independent contracting you know an advantageous situation but for many many workers it just puts them in a very disadvantaged
position. uh how will cutting the benefits like Medicaid and Social Security impact the gig economy and mclassified workers? You know, that that's a great question. So, I mean, a lot of members of Congress say they want to promote portable benefits, but House
Republicans are planning to gut the most effect one of the most effective portable benefits programs we have, Medicaid. One in five people in our country get health insurance through Medic Medicaid. Half of children are covered through Medicaid. Uh Medicaid is also a job provider paying the wages of
thousands of home healthcare aids and other direct care workers. I also want to point out that Medicaid is a lifeline to many so-called independent contractors. Again, I say so-called because if you're making that little money, uh probably means you aren't setting or negotiating the rates for your services. So, that's a strong
signal that you're mclassified. So many independent co contractors are covered by Medicaid. Uh so for instance, a study by Stride Health, which partners with lots of gig companies to offer so-called independent uh portable benefits, found that a survey of 18 18,000 app-based gig
workers found a quarter of them get health insurance through Medicaid. Uh other studies confirm this. A study I cited my testimony of independent contractors in 11 lowpaying industries found that 24% of these independent
contractors rely on Medicaid. So again, cutting this program is hurting the people uh the independent contractors that um folks say here they want to support. Well, thank you. Sorry I went over but I yield back.
Thank you, Mr. Fine from Florida. Well, thank you. Um I find some of the testimony a little bit puzzling. So, um I'm not much of a politician, but I spent 22 years starting, building and and growing companies. because I was an independent contractor and I hired a
number of them. I also I also uh employed many or contracted with many. So I have a question. So in for Miss Padine and I I s apologize if I didn't get your name right. Full unemployment by economists which I also used to teach is considered four to 5%. Um in the
state of Florida our unemployment rate right now is 3.6%. So so my question to you is um are are people like are you obligated to be an independent contractor? Do you you're stuck? You can't quit the job, the independent contracting gig, and and go get a job. Like, if I'm not happy with the terms at
Uber by law, we're forcing them to to stay in that. They're like indentured servants because I don't understand under full employment would suggest there's lots of other opportunities for them in Florida. So, they're stuck. We've mandated them that they have to work in these horrible conditions that you've laid out today. I mean, there
there aren't just there just aren't that many other good jobs out there. Okay. Well, that well the the data would suggest that not from 1984 but from 2025 would suggest that that's not the case. One of my experiences in hiring um independent contractors. I often found and I think it's why the left doesn't
like independent contractors because when they found out what they would get paid when they found out what it cost a company to hire them as an employee, they typically got angry. So, I often didn't pay my employees. This was pre-Obamacare. I often didn't give my employees health insurance. I gave them
money to buy their own health insurance even though it wasn't tax advantaged because I li I en I I saw them get so angry about what health insurance costs. See benefits and all of these things what people value what they get in their check that they bring home. Maybe they
value their gross pay. Most people just benefit their net pay. Some people value their gross pay. none of them value the 30 40 50% that the employer pays on top of it in order to hire them as employees. And I think that's why the left likes it. It'll sort of a it's
inherently a a tax. I found that folks like to be independent contractors. They would say, "I don't want all that stuff. I just want take-home pay." So So my question is to is to Miss Cavin. Um, you know, surveys show that independent workers are happier than if they were employees because they can pick their
own hours. And contrary to what we may believe, they can choose to switch being an independent contractor or something. MBO Partners estimate that the number of independent contractors making more than $100,000 annually. And by the way, they not only make $100,000 annually, they
can write off certain things associated with their independent contracting. You probably write off your laptop, your internet access at home, all maybe the part of your house that's an office, you get to write that off, too. Wouldn't get to do it if you were an employee, but you can as an independent contractor. So, they're not only making more than
$100,000 annually. It rose from 3 million in 2020 to 4.7 million in 2024. That's, you know, over 50%. Um, so clearly people like it. How would you recommend Congress ensure more workers
continue to see that kind of income growth? It's nice to meet you. Thank you for the question. Uh I am one of those successful independent contractors and the thing that has cost me more time and money than anything else since 2019 is having to come to places like this on my
own time and my own dime to rebut some of the things that are coming from the opposition. Miss Padine wants to talk about the Planmatics study. She thinks 1984 is too old. While the Planmatic study's data was done back in the 1990s, not much
recent either. The Planmatics study also didn't interview any independent contractors. It did include the viewpoints of the AFL CIO and the Economic Policy Institute, which claimed that the typical career paradigm is characterized by lifetime employment with a single employer, steady advances
up the job ladder, and a pension upon retirement. I don't know many people who've lived that life. Neither does the US Bureau of Labor Statistics, which found in 2023, people have an average of 12.7 jobs over their working lifetime. She also said we should be looking at
state reports. Let's talk about my home state of New Jersey, shall we? In July of 2019, there was the report of Governor Murphy's task force on mclassification in my home state of New Jersey that kicked off this whole wave of freelance busting we're still enduring today in
New Jersey. What we had was a situation of circular report writing, Congressman, where the New Jersey report cites NELP's studies as the foundation for its claims, and then NELP's studies come along and cite the New Jersey report as the basis for its claims. But the
foundational data is still really old. And in the New Jersey report, they even mischaracterized other data. The first two lines of the New Jersey report said, "Misclassification is the practice of illegally and improperly classifying workers as independent contractors
rather than employees. This practice has increased by approximately 40% in the last 10 years." Well, the footnote for that 40% in the New Jersey report cites a Harvest Review, Harvard Business Review article. The author of that
article actually wrote this. The use of independent contracting has grown dramatically over the past decade with one estimate suggesting it has increased by almost 40%. And there is a Grand Canyon size difference between those two claims. And I'm out of time, but the
good news is you're going to get to deduct your expenses to come here and talk to us. Thank you, Mr. Chairman. Thank you. Next, we have Miss Miller from Illinois. Thank you. Good morning and thank you all to each of our witnesses for their testimony. Before I begin, I'm going to
uh um address something that I hadn't planned. Miss Padine, you just spouted a Democrat lie that we are trying to cut Medicaid. Uh we are not going to cut Medicaid. We are dealing with waste, fraud, and abuse. The American people
want us to do that. That is why we won the election. Americans want benefits for citizens and for vulnerable Americans. So, I just want to get that out there since we heard that lie spouted again. Excuse me. Independent
contractors play a vital role in our economy. Many small businesses are started by individuals who are passionate about something and independent contracting allows them to pursue their passion while simultaneously investing in local and
state economies. In fact, independent contracting allows for increased flexibility from standard nine-to-five jobs, giving job flexibility to folks like full-time caregivers and stay-at-home moms, individuals who might
otherwise be excluded from the workforce. Furthermore, independent contracting provides those in retirement with the opportunity to contribute to society while also enjoying time with family and doing things they love.
Democrats. Democrats, on the other hand, seem intent on further regulating this industry, forcing millions to exit the workforce. The first Trump administration implemented a rule to allow more flexibility in independent
contracting in January of 2021. While the Biden Harris Department of Labor overturned that rule last year, it is good to see the new Trump administration returning flexibility to independent contractors and promoting
economic growth. So, Mr. Marins, your organization represents millions of truck drivers. Could you please explain in more detail how ever changing labor rules from administration and administration have negatively impacted the trucking industry?
Thank you for the question, Congresswoman. This is what we would refer to as regulatory whiplash. If you don't know what the standard is going to be in the future relative to what it is today, how do you plan? How do you structure your
businesses? You know, if you're a hiring entity, if you're an individual, how do you know that you're going to have certainty that the rules that exist for you today for your vocation are going to be there in the future? So this causes tremendous uh difficulty in planning for
both individuals and the hiring entities and there are you know knock-on effects that come on you know after that as well and businesses extend all kinds of capital to pay for lawyers accountants and that like to try and figure out where the rules are now where they're going to be in the future you know to do
contingency planning. Individuals in some instances have that capability in some instances they don't. It's much harder on the individual. So it puts them at a disadvantage and makes it much more difficult for them to be in ICU. I can only imagine. Miss Caven, could you talk more about how the PROACT will hurt
specific groups of people in freelance industries and how unions have negatively impacted your industry? Thank you, ma'am. It's nice to meet you and I've seen you on TV fighting for us. Thank you for what you're doing for independent contractors. Uh the
challenge we have with the proact is it contains the ABC test that is based on what happened in California. And I think that anybody who thinks that's a good idea should go and read the report that just came out a few months ago from the members of the California Advisory Committee to the US Commission on Civil
Rights. Um it was a surprise that that report was released. The the committee itself didn't release a report. there was some drama behind the scenes and these members of the committee after hearing all the testimony they wrote their own report because they said the world needed to know about the compelling evidence they've heard. Their
recommendations were that lawmakers should be extremely cautious before adopting the ABC test at the national level. Uh the experience of California shows that shifting to this test has serious negative consequences. Um it said states should avoid some of the
pitfalls California fell into. It says that further study is needed into the disproportionate impacts of these kinds of labor laws on minorities. So to answer your question, ma'am, the folks pushing these kinds of policies, the folks pushing all this freelance busting, and yes, that does include some
of the unions, the impact that it's having on people like us is that it's hurting us. This is not reasonable policymaking, and we need Congress to stop it. Thank you for your testimony. And I just want to say that we are here to fight for choice and opportunity.
Thank you, ma'am. Thank you, Mr. Gruffman from Wisconsin. Okay. Uh we'll start with Mr. Marin's. Um they tried to change uh President Trump's administrative rule regarding
independent workers uh the Biden administration from Trump's rule. Could you would you prefer us go back for the Trump rule and can you give us just a two quick anecdotes as to why it was better why more more freedom obviously
President Trump a real freedom lover uh why it's important to have that freedom for uh independent contractors. Thank you Congressman for the question. So the the the Trump era rule looked at two core factors for determining whether you're an independent contractor under the Fair Labor Standards Act. That's the
level of control and entrepreneurial opportunity. These really are the two core factors that get at the ultimate question of whether you're in business for yourself. The other factors are probitative of that question, but these two are more proative. And just give me a real quick example of the type of jobs
people do who want the freedom. In our industry, it's, you know, individuals who drive trucks primarily. Yeah. You know, a lot of truck drivers are independent contractors, right? Uh, you several hundred thousand in the
nation are independent contractors. That's a lot. Yeah. Out of several million drivers. Yes. They have free They're free to do it, right? They're making their own choice. They are. Absolutely. Yes. What are some of the benefits that people see in the freedom of being an independent contractor? You own your own business. You set your own
hours. You decide what route you're going to haul, what kind of freight you're going to haul, what um you know, how often you're home, those kinds of things. You have more freedom than you would have as an individual employee driver. So, it's an indiv individual choice. It's up to the individual. I
hate people who hate freedom. Uh Mr. uh Dr. They gave me this one. Paul V. Lee. Um, last year Door Dash announced a pilot program to provide portable benefits to independent workers in Pennsylvania. Georgia also has a pilot
program. What are the takeaways you get from the program? So, thank you for your question, Representative. One of the takeaways that we see from the program is that uh workers are using the money m um mostly for time off and emergency savings. uh
that makes sense given the data that most app-based workers are full-time W2 employees so they don't use it to buy health insurance contributions and so forth. So that's actually less than 10% of expenses. Um 89% of the program
participants said they're happy with the pro program. It's it's been very beneficial to them. And then one other thing that was quite important because it asked a survey question specifically to these uh participants and it asked if you prefer to be independent contractors with these portable benefits or be an
employee with Door Dash with you know the full benefits that come with being an employee what would you prefer? 91% of the program participants said that they would want to remain independent. Again, that makes sense because 90% of Dashers only work 10 hours a week on
Door Dash because they're employees elsewhere or they have a full-time job elsewhere. So, they're not treating these jobs as full-time W2 jobs. They might have another job already. They're treating it as side gigs. You mean there pe But there are people out there who don't want them to have this freedom,
right? I think that there is a misunderstanding about the type of workers who are on app-based work. Uh I think there are full-time freelancers like Miss Cavin over here uh who are doing it as you know their full-time job but the
majority of the app-based world is using it as a side gig. And that's clear. There's no murky kind of data here like there is with the mclassification kind of issues that we just heard. The the the data is pretty clear on this. The IRS is pretty clear on this. Most of those app-based workers are using it as
side gigs. Uh you know the growth that we've seen in independent work through app-based work has been from people who have full-time jobs elsewhere and who are using the app-based platforms as a way to make side income. Do you think part of the problem is maybe some of these administrators who don't want you
to use it as outside income don't understand how many people in our society do have side jobs and as the result they don't they don't sympathize uh with people who need an or who just want to work a little harder need another 10 12 hour a week thing. Do you think that's why they're removed from
reality and trying to crack down on this? I I that's a great question. I would again based on my understanding and my research is that there's a misunderstanding about what is true what the data is telling us and then what people who want to come up with
solutions think as well. So I think it would be really important for uh for everybody involved to look at the data, look at the research, see what workers are actually doing and again you get full-time uh workers um and then but the appbased
world is is mostly side gigs. That's what I think. Uh, Miss Cavin, uh, did the Biden administration shift from the Trump area independent contractor role, uh, create uncertainty for businesses and independent workers? And how does that uncertainty affect the average
guy's life? Yes, sir, it did. And the problem is it creates a chilling effect where companies are afraid to work with independent contractors because they can't figure out how to do it and stay within the bounds of the regulatory language. Okay. How does that affect,
say, give me an example of the type of job somebody does who's less likely to be able to do that job because of the uncertainty. Well, freelance writers, I mean, look at what happened. If you look at what happened in California, we don't even have to imagine there's a person sitting right behind me, Lisa Rothstein,
who's a freelance illustrator in California and got hobbled by the freelance busting law out there. um we have uh thou thou there's thousands of members of these groups that have come forward and said that they're having
these problems. So it's not even we don't have to imagine what's going on. The data is clear at this point. The anecdotal evidence is clear. It's all pointing in the same direction. People are getting hurt. Okay. And and it's just because philosophically I g I guess you think the government just likes to pigeon hole
everybody into the employee uh metric just because it results from more control of the government. Well, what they seem to be doing, especially with the ABC test, is they keep trying to edit it and interpret it in ways that make it stricter and stricter and stricter so that they're actually
weaponizing it against people who want to choose to be independent contractors. um what the uh top labor attorney in New Jersey wrote about what they're trying to do with this in my state right now. He said the proposed regulation departs in a dramatic manner from virtually
every other test for IC status under federal law and the laws in every state that they're just they're editing it and monkeying with it and trying their level best to make it all impossible for us to be able to function. Thank you. I'm sorry. Give the acting ranking member a minute
and then the next person takes a mile. I'm just kidding. Great, great questions and appreciate the dialogue from everybody. So, thank you. Uh we will go to our final questioner of the day. Uh we have Mr. Kylie from California. Uh thank you, Mr. Chair. Uh there has
been in the recent years a allout assault on uh the right to earn a living in this country and on workers rights that began in California uh and then uh became national during this last administration. But right now we have an opportunity to not only swing the pendulum back on the towards the side of
workers uh but to keep it there by enacting changes into statute that will actually protect workers rights and the right to ear. Uh I was in California when AB5 passed. It is probably the single most anti-worker law in modern American history. Uh the Democrat
witness just uh provided a very clear demonstration of that when she attacked the tens of millions of Americans uh who choose to be independent contractors saying these aren't good jobs. Uh never mind the fact that almost everyone who is in those positions says that this is the way uh that they this is the the
path the career path that they've chosen uh for themselves. Uh but you know in California when AB5 passed the results were immediate. It was a uh the government coming in and directly taking away people's choices and their economic freedom. We talk about Door Dash and
Lyft drivers and Uber drivers and folks who are on these platforms and it was terrible for them. Uh yes, but let's say that you're someone who's good at website design. You wanted to offer those services to the world for people to hire you. The government said no, you're not allowed to do that. Or let's say you're someone who's good at planning events. you wanted to offer
your services as a wet event planner for weddings or whatever the case may be. No, the government says comes in and says you're not allowed to do that. Let's say you're someone who has a nice white beard and a jolly disposition and you want to offer your services to malls to be a Santa at Christmas time. The government comes in and says you're not allowed to do that. Not to mention
truckers and realers and uh and hundreds of other professions. So, not only is it an assault on economic freedom, though we've seen that this law is both politically and economically poisonous, uh, Julie Sue, uh, the reason she was installed by President Biden at the
Department of Labor is that the Senate rejected her nomination on a bipartisan basis. And I believe it was the oversight of this committee, uh, exposing what she had done with AB5 that was largely responsible for that. What's more, I asked Miss Sue when she was here if she happened to know which state had
the highest unemployment. She didn't know, even though she was herself the former labor secretary in California, that the answer was California. I also asked her, did she know what state has the highest poverty rate? She didn't know. The answer was California. I asked her which state had seen the slowest growth in wages for workers. She didn't
know that, even though she was the California labor secretary. The answer was California. So, and it's precisely because of laws like AB5 that have served to diminish, uh, opportunity in the state. So, uh, Miss Caven, you've gone into this a little so far, but you
have talked to so many freelancers in your state of New Jersey, certainly in California, across the country. We have Lisa here as one example, um, who have been harmed so badly by this law, uh, and have lost their ability to earn a living, to provide for their families. I remember Vox which actually
editorialized in favor of AB5. Uh then they had to stop working with dozens of their writers as soon as the law uh took effect. Can you share with us a couple other stories of people who have suffered under these uh restrictions on their rights? Yes, Congressman. In fact,
there's one just out of California this weekend that I was talking with. Uh she's the uh she runs a nonprofit opera in California and after AB5 hit, she got walloped and couldn't keep going and the
state came up with some kind of a fund money out of the pandemic money uh to help people like her. Well, Governor Nuomo just cut that, too. So, she's now going out of business now 5 years later after AB5 because of AB5. It just took this long to get
there. Uh during the pandemic there was in California music festivals that shut down and people thought it was because of the pandemic but it wasn't. They came out and said it was because they couldn't put those music festivals on because of AB5. Musicians, uh actors, so many people get affected by this. It's
it's hard to even comprehend. I I heard you read the list of more than 600 affected professions on the in the well of the House of Representatives. It's shocking to people how many different types of professions get affected by this kind of freelance busting. It's horrible. Yeah. And one of the
interesting things about AB5 is that even its own authors uh had to acknowledge uh how truly idiotic the law was by coming back and adding a hundred different exemptions. So it's interesting we hear from the other side, oh no, this is all about protecting workers. So why did you then go in and
remove those supposed protections from a hundred different professions? What what do you make of the fact that the law had to be so uh amply amended? I think that it's and Lorena Gonzalez, who was the primary sponsor, came out and said we were right and she was wrong when it came to the freelance writers in
California. And what's worse, Congressman Kylie, is when you look at federal legislation like the PRO Act, what's going on with regulatory rulemaking in New Jersey right now, there are no exemptions. So all these awful effects that we've seen in California, that's with more than a
hundred professions getting partial or full exemptions from that freelance busting. We're not going to have any we're all going to get hit. This is going to be horrific if this keeps going on and we really really need Congress to pass the Modern Worker Empowerment Act
to actually protect us. I couldn't agree more, though I'm slightly biased as the author of that measure. Uh but thank you for your tremendous leadership of the freelancer community and for fighting for workers rights. Thanks to our friends from Arcadus for uh showing us what we all all knew but now have the empirical evidence for of how harmful
this law is. And let's pass the Modern Worker Empowerment Act and the Modern Worker Security Act. I yield back. Thank you. We will now move to closing remarks and I'd like to recognize the ranking member for his closing statement. Uh well, thank you, Mr. Chairman. Um,
let me just say it's very curious that the Republican party is looking to Well, we'll see what they can do with this bill. I've been just sitting here reading about the trouble over uh coming to terms over passing uh this big ugly
uh tax bill, this big ugly uh budget reconciliation bill. Um, but I I found it ironic that uh the way that they're trying to put uh put a I guess a a nice face on an ugly bill
is to is to try to throw in some things uh that might attract uh you know lower income people uh to say that there's something in this bill for them. And one of them is you know let's let's uh not tax overtime pay. Um but as we know uh
independent contractors can't take advantage of uh that provision. They won't they don't get paid overtime pay. Um and the idea behind this legislation actually is to make employment
um uh more about independent contractors uh putting people uh you know not under uh the federal uh labor standards act protections uh for minimum wage for
overtime pay. um but to actually narrow the eligibility of the American citizenry who is eligible to overtime pay. So what good is not taxing overtime pay if uh that's one part of what the
right hand is doing, but the left hand is trying to push through legislation to actually make it more difficult to earn overtime pay. Oh, great. On the one hand, we're not going to tax your overtime pay, but on the other hand, we're going to make it we're going to try to make it less possible for you to
be uh a a uh uh you know uh someone who can earn overtime pay under the protections of the Fair Labor Standards Act. Now, people say this is about choice. Uh it's about the freedom to choose or freedom to choose. Well, um
let's let's understand that uh that good paying jobs that pay a living wage, that have health care, that have uh the protections of the Fair Labor Standards Act, uh meaning overtime pay, um meaning safe working conditions, um meaning that
you can organize uh and have the benefits of the union. And there's all this fetishization over uh the good union o of the manufacturing jobs that we had during the 1960s and 70s and the 50s. But let's remember that a greater
share of those jobs uh were because uh unions had greater strength in our country and uh workers were able to organize and unions helped Americans get jobs that allowed them to uh to sustain
a family. um that type of job is less and less available today. um and uh independent contract work. uh if that's all that ordinary Americans are are able to have, uh it's it's not going to be
sustainable and they're not going to have the the ability to meet uh the expenses of of of all the things they need to do to be an independent contractor, uh to be an Uber or Lift driver, to own your own car, uh to uh
well, let's just take the example of the trucker uh to independent contractor truckers. Um yeah, sure you can deduct uh expenses uh in a way that someone who is an employee cannot, but you got to be in a very special circumstance, a
special set of circumstances or a select circumstances to be able to actually uh be in I think a position of advantage over an employee. Uh I would say for the great majority of ordinary Americans who
are who are uh in the situation of being independent contractors uh they would appreciate I think having the opportunity to have the protections of being an employee um financially um for their health uh for their safety. So
with that, Mr. Chairman, I yield back. Thank you. Uh well, I appreciate all of our testifiers who were here today and uh really enjoyed the vigorous conversation uh that was had at times. It was uh a little bit uh active. Uh but
we appreciate the engagement from everybody uh both questioners and testifiers. Uh, I'll say this in response to the closing statement from the acting ranking member and uh, what I see on display is that our party, the
Republicans, want to support a wide array of job options that are out there for people. We support good paying full-time jobs with benefits. Uh, that is the overwhelming majority of people in this country and that works for so many people, but it doesn't work for
everybody. And for those other individuals that want to choose to be an independent contractor or a freelancer or participate in the gig economy, they are making that choice because the benefits outweigh all of the negatives or perceived negatives that our
opposition has towards these jobs. And so they love the flexibility, they love the extra income that they can be making on the side. they have uh the choice and ultimately they are choosing and 80% of them are saying that they enjoy their
work situation. But this is what we see all day every day in the halls of Congress right now is that the Republicans in this administration are for all of the American people and the opposition, the Democrats want to choose the wrong side of 8020 issues every
single time. And I will let them do that. You can do that. That is your right to be in the 20% minority and say that we want to stop innovation. We want to stop people from being able to do what they choose to do. We want to stop all of these advances that are being
made in society today. That is your choice. You can be on the wrong side of those things. And so I think we have an opportunity here as we see that we can provide clarity for the 70 million independent workers across this country
to remove barriers that often prevent them from accessing things like portable benefit options. The modern worker empowerment act would clearly define the law between independent contractor and employee giving workers more predictability and job creators more
certainty. As a previous witness told this subcommittee in March, legislation is a highly preferable way to go about amending the FLSA. I look forward to working with subcommittee members to import advance this important bill. The modern worker security act is a common
sense first step to allowing independent contractors to access benefits that can take with them from job to job. This bill makes clear that the presence of benefits does not necessarily make an individual an employee. and my state of Pennsylvania is leading the way in a
bipartisan effort to actually allow uh portable benefits through a landmark pilot program. And it's shown promising results uh in its early stages. So going forward, I look forward to working with all members of this subcommittee to hopefully advance the interests of all
Americans and not be the ones that want to pick and choose what type of job arrangements employees can have at their disposal in our economy. We have a vibrant, dynamic, growing American economy under this legislative body. The Congress, the Republicans, and the
Donald Trump administration want empowerment and advances in income for everybody, not just for the tiny few. And with that, I will close by saying that I again would like to thank all of our witnesses for taking the time to stand with the majority, the over 80% of
people that want these options. And I will say that this without objection, there will be no further business. And the subcommittee stands adjourned.