Freedom for Entrepreneurs and Contractors

Author: Rachel Greszler, Senior Research Fellow

Affordability 101 · Chapter 3: Freedom to Work and Enterprise

Plymouth Institute for Free Enterprise

Topline

Lawmakers should protect entrepreneurship and independent work by codifying bright-line tests, consistent across all federal law, based on the level of control an individual exercises over their work.

Background

: The platform-based gig economy has expanded opportunities for flexible, independent work. Whether full-time, part-time, or as side hustles, an estimated 72.9 million Americans—more than 40% of the workforce—performed independent work in 2025. Independent work is especially valuable to parents of young children, caregivers, and individuals with disabilities who typically need more flexibility than a traditional 9-to-5 job affords. Yet, differing legal definitions of “employee” versus “independent contractor” across federal law, as well as flip-flopping federal regulations and restrictive state laws can limit or eliminate independent work opportunities.

Action Items (Congress)

• Clarify across all federal law that an individual who exercises significant control over their work is an independent contractor and not subject to the same labor law restrictions and requirements as traditional employees.

How It Would Make Life More Affordable

• It would increase incomes by enabling opportunities for people to work more and earn more. California’s law that restricts independent work—AB 5—was estimated to reduce self-employment by 10.5% and lead to a 4.4% decline in total employment.
• It would reduce prices by expanding employment, which is currently roughly 5.8 million workers below where it would be at the January 2020 employment-to-population ratio. More workers would put downward pressure on the prices of goods and services they provide.
• Many people place a high value on flexible work. Without flexible options, some people cannot work at all. The average Uber driver, for example, would not drive at all if he could not control his schedule.

Related Legislation: 21st Century Worker Act (S. 2159 [118th Congr.]); Modern Worker Empowerment Act (S. 2228, H.R. 1319).

Bottomline

Congress should provide certainty and consistency across all federal law by establishing a single, bright-line test of employee or independent contractor status based on how much control an individual has over their work.

This memo is part of Affordability 101, Advancing American Freedom’s playbook of 101 policy solutions to make life more affordable.

More Affordability 101 memos »