Legislature proposes portable benefits accounts for independent contractors without tax status changes

The Insurance Committee of the Tennessee State Legislature convened on March 5, 2025, to discuss a significant piece of legislation aimed at supporting independent contractors. The proposed bill seeks to establish a portable employment benefits account that would allow gig workers, freelancers, and other independent contractors to access essential employment benefits without altering their tax status.

The bill's primary focus is on individuals engaged in temporary or multiple job roles, such as DoorDash drivers, Uber and Lyft workers. Under this legislation, contributions to the portable benefits account could come from various sources, including the contractors themselves, their customers, or even family members. This flexibility aims to create a sustainable funding mechanism for benefits that are often inaccessible to independent workers.

Key benefits that could be funded through these accounts include health insurance, income replacement insurance, life insurance, and retirement benefits. The management of these accounts would be entrusted to a third-party provider, ensuring that independent contractors can choose the benefits that best suit their needs. The bill emphasizes that participation in the program would be voluntary, allowing contractors to tailor their benefits according to their personal circumstances.

A critical aspect of the proposed legislation is the portability of the benefits, meaning that the accounts would remain with the independent contractor regardless of job changes or multiple employers. This feature is designed to address the current challenges faced by independent contractors, who often find themselves without access to essential benefits or risk losing their tax status when attempting to secure them.

The committee's discussions highlighted the urgent need for such legislation, as many independent contractors currently face a lack of support in obtaining necessary benefits. The bill aims to provide a viable solution, ensuring that these workers can maintain their employment status while gaining access to crucial benefits that enhance their financial security.

As the committee continues to review the bill, stakeholders are encouraged to consider the implications of this legislation for the growing independent workforce in Tennessee.