Tennessee amends contractor benefit contributions in new law

On February 24, 2025, the Tennessee State Legislature introduced Senate Bill 1377, a significant piece of legislation aimed at enhancing the benefits available to independent contractors in the state. This bill seeks to establish a framework for portable benefit plans, allowing contractors to receive contributions toward their benefits directly from hiring parties or through a percentage of their compensation.

The primary purpose of Senate Bill 1377 is to address the growing concern over the lack of benefits for independent contractors, a group that has expanded significantly in recent years. The bill outlines specific provisions that require any withholding of compensation for benefit contributions to be clearly stated in a written agreement. This agreement must be unambiguous and prominently displayed, ensuring that contractors are fully informed about their options. Importantly, participation in these benefit plans is voluntary, allowing contractors to opt-in or opt-out at any time.

Key amendments to existing Tennessee Code are also included in the bill. For instance, it modifies the language regarding compensation from third-party platforms to explicitly include contributions to portable benefit accounts. This change is expected to clarify the responsibilities of marketplace platforms in providing benefits to contractors.

The introduction of Senate Bill 1377 has sparked notable discussions among lawmakers and stakeholders. Proponents argue that the bill is a crucial step toward providing essential benefits to a workforce that often lacks access to health insurance and retirement plans. Critics, however, express concerns about the potential administrative burden on small businesses and the implications of requiring written agreements for compensation withholdings.

The economic implications of this bill could be significant, as it may encourage more individuals to pursue independent contracting by providing a safety net of benefits. This could lead to a more robust gig economy in Tennessee, potentially attracting a diverse range of workers and businesses.

As the bill moves through the legislative process, its future remains uncertain. Experts suggest that if passed, it could set a precedent for other states to follow, potentially reshaping the landscape of independent contracting nationwide. The outcome of Senate Bill 1377 will be closely watched, as it holds the promise of improving the livelihoods of many Tennessee residents while also raising important questions about the balance between worker protections and business flexibility.