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119-s-4010119th CongressWALLET

21st Century Worker Act

Sponsored By: Senator Lee, Mike [R-UT]

Introduced

Summary

Creates a unified worker classification framework. This bill would set detailed tests for when a service provider payee is an employee, a mandatory independent contractor, or an elective classification, and it would make those definitions govern wage, labor relations, and tax rules across federal law.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 0 benefits, 0 costs, 4 mixed.

Clear tests for worker status

If enacted, this bill would add clear, numerical tests for when a service provider is an employee or an independent contractor. You would be an employee if you are a natural person, more than 75% of pay is for time worked, the payor sets your hours, and you work about 30+ hours per week for at least four consecutive weeks. A limited economic relationship would cover pay based on time, fewer than 30 days worked in a calendar quarter, and non‑exclusive work. A formal bona fide contractor would require a written contract, no prior substantial relationship last year, non‑exclusivity, and unreimbursed expenses over 5% of pay.

Tax rules follow new worker tests

If enacted, the bill would change Internal Revenue Code definitions so 'employee' and 'employer' mean the same as under the Act. Employment taxes, withholding, FICA, and FUTA obligations would follow the Act's classifications. These tax changes would apply for taxable years beginning after enactment. This would likely shift payroll withholding and employer payroll tax liabilities for many workers and businesses.

Labor law definitions change for workers

If enacted, this bill would amend the Fair Labor Standards Act and the National Labor Relations Act so 'employer' and 'employee' match the Act's definitions. That would change who gets minimum wage, overtime, and child-labor protections and who can unionize or bring NLRA claims. These definitional changes would take effect upon enactment. Employers could face broader wage and labor obligations where workers are reclassified as employees.

New election and review rules for workers

If enacted, the bill would generally make the payor responsible for the initial classification when work starts, except workers would make the initial contractor claim if based on licensure, business entity status, bona fide sole proprietor, or formal contractor tests. Elective classifications would require a written election within 14 days, payor countersignature, and three-year recordkeeping. Missing the 14-day election or record rules could bring fines up to $100 and willful or reckless misclassification could bring a penalty equal to 15% of the contractor's pay. Major changes (25% or more in hours or pay) and annual reviews (by January 31) would trigger new determinations, but quarters with 100 hours or under $10,000 pay would be exempt.

Sponsors & CoSponsors

Sponsor

Lee, Mike [R-UT]

UT • R

Cosponsors

  • Sen. Britt, Katie Boyd [R-AL]

    AL • R

    Sponsored 3/9/2026

Roll Call Votes

No roll call votes available for this bill.

View on Congress.gov
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