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Senate backs voluntary portable‑benefits law for independent contractors
Summary
Senate Bill 13-77, the Voluntary Portable Benefit Act, passed after debate; it allows employers and third‑party administrators to provide benefits to independent contractors without changing their classification.
The Tennessee Senate passed Senate Bill 13‑77, which enables independent contractors to receive voluntary portable benefits administered through third‑party accounts while retaining independent‑contractor status.
Sponsor Senator Bo Watson described the bill as a modernization step for Tennessee’s evolving gig economy, saying it allows companies to contribute to accounts that belong to independent workers and that workers may use the funds for retirement, health coverage or paid time off. Watson said the law is voluntary and intended to preserve the independent contractor relationship while giving contractors access to benefit-like payments.
Senator Sara Yarbrough questioned whether the bill creates a new classification that might complicate federal or state employer‑classification tests. She warned of potential confusion with IRS and common-law factors that determine employment status, and said the statute should be written carefully to avoid unintentionally triggering employer obligations.
Senator Oliver asked whether such contributions could be treated as a reduction in contracted pay; sponsor Watson said the arrangement would be voluntary and transparent: a worker choosing an account would know whether the contractor contribution came from the employer or was deducted from pay. Supporters, including Sen. Yeager and Leader Johnson, called the bill an important step for gig workers such as drivers and freelancers, saying it brings access to benefits without mandating employer obligations.
The Senate adopted a Commerce & Labor amendment clarifying that employers may provide benefits to independent contractors while protecting their status. After floor debate, the bill passed on final consideration with a tally of 27 ayes and 3 nays. Supporters said it removes legal barriers to providing benefits while opponents urged caution and clarity on classification implications.
Senate Bill 13‑77 lets an independent contractor create an account maintained by a third‑party administrator; funds deposited there belong to the worker and can be used for health, retirement, or paid‑time‑off benefits. The law is voluntary and does not require employers to offer the accounts.
