U.S. Senator Mike Lee (R-UT) has introduced the 21st Century Worker Act, a bill aimed at simplifying federal regulations for independent contractors and flexible work arrangements. The legislation seeks to clarify worker classifications and reduce regulatory barriers for employers and workers.
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, said, “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, Research Fellow at 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 U.S. labor policies involve different standards under various laws such as the Fair Labor Standards Act (FLSA), U.S tax codes, and National Labor Relations Act which leads to confusion over how workers are classified as employees or independent contractors.
In 2025, independent professionals made up about 4.1% of the national workforce—approximately 6.9 million skilled independent workers generated $319 billion in revenue collectively.
Recent regulatory changes have added further complexity; in October 2022 the Department of Labor proposed an “economic realities” test under FLSA favoring employee status in gig economy jobs but later guidance from May 2025 indicated non-enforcement under current administration policies.
Senator Lee’s proposal aims to establish one clear standard across federal labor law by outlining common factors for classifying both employees and independent contractors while also creating an additional category for those who do not fit either definition neatly.
The act also provides an option where businesses and workers can mutually agree on status; if agreement cannot be reached then default classification would be as an independent contractor.
Additionally, it commissions a Government Accountability Office study on harmonizing other laws with this new standard.
Senator Mike Lee represents Utah in Washington D.C., Salt Lake City, St. George, Vernal—and advocates for limited government involvement along with fiscal responsibility according to his official website. He works on legislative issues related to public safety, health care reform initiatives—including economic matters—and offers constituent services through his offices in Utah as well as Washington D.C.
