The 21st Century Worker Act clarifies how workers should be classified as either employees or independent contractors under federal law. The bill creates three classification categories: mandatory independent contractors (including licensed professionals, business entities, direct sellers, and certain contractors), mandatory employees (those in substantial economic relationships or with employment agreements), and workers in the middle who can choose their classification by mutual written agreement with the company they work for. For workers choosing their classification, both the worker and company must sign and keep records of the election for three years, with penalties up to $100 for failure to do so and 15 percent of compensation for willful misclassification. The bill applies these definitions to labor laws including the Fair Labor Standards Act, the National Labor Relations Act, and tax law, and requires a Government Accountability Office study within two years to identify inconsistencies with other federal employment laws.
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