Could Alabama’s New Bill Change How Gig Workers Get Benefits?

For years, gig workers have faced the challenge of earning income without access to traditional benefits. Unlike full-time employees, independent contractors don’t automatically receive health coverage, retirement savings, or income protection, making financial security more difficult to maintain. Now, Alabama is considering a policy that could change how benefits work for gig workers—without requiring them to give up their independence.

On February 4, 2025, Alabama Senator Arthur Orr introduced Senate Bill (SB) 86, which would allow independent contractors to open portable benefit accounts. These accounts wouldn’t be tied to a specific employer but would instead belong to the worker, allowing them to save for health benefits, income replacement insurance, life insurance, or retirement on their own terms.

The bill proposes that hiring parties—companies that contract independent workers—could contribute to these accounts. They wouldn’t be required to, but the state would offer tax deductions as an incentive. Companies could either contribute their own funds or withhold a percentage of a worker’s earnings, if the worker agrees in writing. To ensure that this doesn’t affect worker classification, the bill states that contributions cannot be used to determine whether a worker is an independent contractor or an employee. If passed, the law would take effect on October 1, 2025.

This type of system could give gig workers a way to build financial security without losing the flexibility that drew them to independent work in the first place. One of the biggest concerns in the gig economy is finding a balance between flexibility and stability, and Alabama’s proposal suggests that portable benefits could be part of the solution.

Right now, nothing requires hiring parties to contribute, which means gig workers may still have to rely mostly on their own contributions. However, the tax incentives could encourage more companies to participate. If this system proves successful, it could set an example for other states looking to provide benefits for gig workers without forcing them into employee status.

Gig economy policies are evolving, and Alabama’s approach could be a preview of what’s to come. Whether this bill passes or not, discussions around portable benefits, worker classification, and financial security for independent contractors will continue shaping the future of gig work.