If you’re a commercial contractor, new federal bills moving through Congress could shake up how you handle worker classification and joint employment. Both issues hit close to home for contractors juggling crews, subs, and multiple employers on a jobsite.

Here’s what’s in play and what it might mean for your day-to-day.

The Modern Worker Empowerment Act: Who’s an Employee?

This bill narrows the definition of “employee” under The Fair Labor Standards Act Of 1938 and the National Labor Relations Act. It says a worker only counts as an employee if someone else has “significant control” over how the work gets done, and the worker doesn’t carry typical business risks like making managerial decisions or running the show.

Why does this matter? If you hire subcontractors or independent tradespeople, this bill could make it easier to classify them as true independent contractors, not employees.

If you bring on a subcontractor who controls their own schedule, uses their own tools, and manages how the work gets done, this bill would likely classify them as an independent contractor rather than your employee. That means you wouldn’t be responsible for overtime, benefits, or payroll taxes for that worker.

But there’s a flip side. If you or your office tightly control their day-to-day tasks or dictate exact work methods, they might legally count as employees. This means more paperwork, taxes, and liability for you.

The Save Local Business Act: Who’s a Joint Employer?

This bill tightens the rules on joint employers (aka companies who share responsibility for the same workers).

Right now, it’s common for contractors to share workers with subs or staffing agencies. Under this bill, for you to be a joint employer, you’d need to directly control things like hiring, firing, pay rates, schedules, and discipline.

In practice, this means if you simply subcontract work but don’t manage these core employment details, you probably won’t be legally responsible for those workers. That lowers your risk but also shifts more accountability onto the subcontractor or staffing company.

Think about a job where you hire a sub to bring in their electricians. If the subcontractor hires, fires, pays, and schedules their crew without your hands-on control, this bill says you’re likely not a joint employer.

What Contractors Need to Do

If these bills become law, here’s how your approach might need to change:

• Review Your Contracts and Work Practices: Make sure your agreements with subs and independent contractors clearly reflect who controls what. The more your subs run their business independently, the better your legal footing.
• Avoid Over-Managing Subcontractors: Hands-off management reduces your risk of being reclassified as an employer or joint employer.
• Keep Documentation Tight: Track who controls hiring, firing, pay, and discipline. Clear records can protect you if questions arise.
• Train Office and Site Managers: Make sure supervisors know the limits of their authority with subs to avoid accidentally taking on employer responsibilities.
• Plan for Payroll and Compliance Changes: If you currently treat certain workers as contractors but control their work closely, you may need to reconsider classification or prepare for added payroll and benefit costs.

Bottom Line

This legislation is about drawing clearer lines on who counts as an employee and who shares employer responsibility. For contractors, it means rethinking how you work with subs and independent tradespeople to avoid unexpected liability.

Keep a close eye on how these bills evolve. Early prep now can save you money and prevent future headaches.