Independent Contractor Misclassification and Compliance News June 2025

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It’s important for companies to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we bring you the latest news stories from around the web.

1. Oregon Makes Owners and General Contractors Liable for Misclassification by Subcontractors

The construction industry is notorious across the country for misclassifying employees as independent contractors. Oregon has taken a creative approach that makes both project owners and general contractors liable for misclassification of nonunion workers by subcontractors.

The new Oregon statute, SB 426, provides:

An owner that enters into a construction contract with a direct contractor shall be jointly and severally liable with the direct contractor for any unpaid wages, including fringe benefit contributions and penalties, owed to any unrepresented employee of the direct con­tractor and any unrepresented employee of a subcontractor at any tier for labor performed on a project within the scope of the construction contract.

The statute provides that an unrepresented employee is an employee who is not a member of a labor union or subject to a collective bargaining unit. The statute goes on to create a rebuttable presumption that a person performing labor on a project within the scope of a construction contract is an employee.

The Oregon law seeks to address the problem of misclassification by imposing obligations on the owner and general contractor for construction projects. It will be interesting to see if this approach is successful and whether other states adopt a similar approach.

2. Alabama Creates a Portable Benefits Framework for Independent Contractors

Alabama has enacted legislation that lets businesses and independent contractors contribute to portable benefit plans for independent contractors without affecting the worker’s classification as an independent contractor.

Senate Bill 86 creates a framework which allows a bank, investment firm, or trust company to administer an account for an independent contractor whose funds are used for “the purpose of funding the purchase of one or more benefit plans, including, but not limited to, plans that provide health benefits, income replacement insurance, life insurance, or retirement benefits.”

The law preserves the classification of a worker as an independent contractor, stating that “the contribution may not be construed by an Alabama court as any element of an employment relationship.”

Alabama’s approach offers a way for hiring entities and independent contractors to contribute towards benefits for the independent contractor in a tax-advantaged way that maintains the classification of the worker as an independent contractor.

For more information, check out our resources page on misclassification and compliance. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.