U.S. Senator Mike Lee (R-UT) has introduced the 21st Century Worker Act, a bill designed to simplify employment classifications and provide more flexibility for independent contractors and employees. The proposed legislation aims to reduce regulatory barriers around hiring independent contractors and support flexible work arrangements.
Senator Lee stated, “Gig workers and independent contractors face too much red tape when starting a job. Employers are so scared of misclassifying their employees that they often give up altogether, leaving workers out of a job and our economy worse off. The 21st Century Worker Act cuts through the red tape to give workers and employers flexibility instead of a bureaucratic headache.”
The bill has received endorsements from Heritage Action, the Small Business & Entrepreneurship Council (SBE Council), and the Competitive Enterprise Institute. Karen Kerrigan, President & CEO of SBE Council, commented: “SBE Council applauds Senator Mike Lee for introducing S. 2159, the 21st Century Worker Act, a critical piece of legislation that promises to restore clarity and balance to federal worker classification policy. Independent contracting is a vital source of income mobility, flexibility and entrepreneurial opportunity. For many individuals, it serves as a bridge to full business ownership, allowing them to test ideas and build client networks. Small businesses likewise depend on independent contractors for projects or niche work and to scale responsibly. For years, SBE Council has raised concerns about inconsistent and expansive federal interpretations that create confusion and expose small businesses and independent contractors to legal risk. These heavy-handed classification standards discourage legitimate contracting relationships and threaten the flexibility and autonomy that millions of Americans actively choose. S.2159 replaces ambiguity with certainty by establishing a clear and consistent bright-line framework across federal labor and tax law. It creates a structure that allows workers and businesses to mutually elect classification when traditional categories do not squarely apply. The modernization of the independent contractor framework will reduce misclassification risk, protect choice, strengthen the entrepreneurial ecosystem, and sustain economic growth. SBE Council urges Congress to take swift action on S. 2159 to ensure federal policy supports, rather than undermines, flexible work and small business growth in the 21st century.”
Sean Higgins from the Competitive Enterprise Institute added: “The 21st Century Worker Act addresses a real problem faced by workers and employers alike: the current patchwork of workplace laws and regulations (The Fair Labor Standards Act, National Labor Relations Act, Internal Revenue Code, etc.) creates uncertainty over whether a worker is a traditional employee or a freelancer in business for themselves. “Worker classification” standards should be clear, easy to apply and not inherently hostile to innovative workplace arrangements. The 21st Century Worker Act would create a common-sense, bright-line test across federal labor and tax statutes to settle this issue while preserving the rights of workers to seek out these new types of arrangements if they so choose. The Labor Department is currently on its fourth revising of this worker classification rule in as many presidential administrations. There is no reason to believe that the rule won’t continue to be rewritten with each partisan swing of the executive branch. This volatile situation benefits neither workers nor management. Congress should take up legislation like the 21st Century Worker Act that resolves the matter once and for all.”
Current federal labor policies use different tests under various laws such as the Fair Labor Standards Act (FLSA), U.S tax codes, and National Labor Relations Act when determining whether someone is an employee or an independent contractor; this leads some businesses to avoid hiring independent contractors due to fears over misclassification risks.
In 2025, skilled independent professionals made up about 4.1% of the U.S workforce—an estimated 6.9 million people generating $319 billion in revenue—reflecting growing interest in flexible work options.
In October 2022, the Department of Labor proposed an “economic realities” test under FLSA which favored employee status in gig economy jobs but did not fully consider worker preferences for alternative arrangements; guidance issued in May 2025 indicated this rule would no longer be enforced by DOL under current leadership.
The proposed act establishes clearer criteria for classifying workers as either employees or independent contractors at the federal level while also creating an additional category for those who do not fit neatly into either group—a process allowing mutual agreement between businesses and workers on status where possible; otherwise defaulting classification as an independent contractor if there’s no agreement.
The bill also calls for a Government Accountability Office study examining how aligning other laws with this approach might affect both workers’ rights/payments.
According to his official website, Senator Mike Lee represents Utah in Washington D.C., maintains offices throughout Utah including Salt Lake City, St George, Vernal as well as Washington D.C., advocates for limited government policies including fiscal responsibility along with legislative efforts focused on public safety health care economic issues—and provides constituent services through these offices.
