New Hampshire’s Portable Benefits Bill: Legalizing Access to Benefits for Self-Employed Workers

New Hampshire House Labor, Industrial, and Rehabilitative Services Committee

Dear Members of the New Hampshire House Labor, Industrial, and Rehabilitative Services Committee:

My name is Liya Palagashvili. I am an economist and senior research fellow at the Mercatus Center at George Mason University.

For almost a decade now, my research has centered on self-employment and the independent workforce, with a focus on the advantages of portable benefits systems for this workforce.

Today, state governments are grappling with the rise in self-employment. In New Hampshire, there are more than 115,000 self-employed workers, who generated about $8.4 billion in revenues in 2023 alone.^[1] The number of self-employed workers is expected to grow significantly over the next decade.

This workforce spans a range of industries, skill levels, and educational attainment. Examples include musicians, realtors, delivery drivers, yoga instructors, software developers, graphic designers, landscapers, and online merchants.

Today, I address the following four points:

1. Current laws in New Hampshire and across the United States restrict hiring parties from providing self-employed workers with benefits, thereby leaving a growing fraction of the workforce without access to traditional benefits.
2. Experience from other states shows that portable benefits programs can expand access to benefits for self-employed workers through voluntary, legally permitted arrangements.
3. Self-employed workers would gain from increased access to benefits while maintaining the flexibility and autonomy of their work arrangements.
4. Portable benefits reforms do not change the composition of the labor market; instead, they allow self-employed workers access to some benefits without altering worker classification.

Laws Restrict Benefits for Self-Employed Workers

Employment and tax laws govern two primary modes of work. The first is traditional (W-2) employment, which comes with traditional, generally tax-advantaged, benefits. This kind of employment comes without the true independence and work autonomy that many workers desire or may require for personal reasons. The second is self-employment, which provides work autonomy and independence but generally requires workers to forgo traditional workplace benefits. As self-employment grows, an increasing share of the workforce does not have access to traditional benefits.

Laws in New Hampshire and across the United States currently restrict the flow of benefits to self-employed workers.^[2] These laws do not allow hiring parties to voluntarily provide self-employed workers with benefits, precisely because these benefits—healthcare, retirement, vacation days, and paid or sick leave—have conventionally been tied to employer–employee relationships.

Therefore, under most current state systems, if a hiring party were to provide benefits to self-employed workers, those workers would likely have to be reclassified as employees and consequently lose their independence and flexibility. Removing this legal barrier could enable organizations to voluntarily provide benefits to self-employed workers. Some businesses might offer a “menu of benefits,” while others may focus on one or two individual benefits. Larger companies might even provide a more complete set of benefits.

Many organizations have already indicated that they want to—and are ready to—provide independent contractors with benefits where permitted by state law. Indeed, several companies are already doing so in states that allow it, such as Utah, Pennsylvania, and Georgia.

Evidence from Portable Benefits Programs in Other States

In Pennsylvania and Georgia, for example, DoorDash has operated voluntary portable benefits pilot programs for independent contractors. Evaluations of these pilots show that roughly two-thirds to three-quarters of participating workers gained access to benefits they previously lacked, more than 70 percent reported feeling more financially secure as a result of the programs, and more than 90 percent indicated they would feel more secure if the programs were made permanent.^[3] In both states, a majority of participants opened interest-bearing savings accounts they did not previously have, and workers used benefit funds for purposes such as emergency savings, paid time off, retirement, and health-related expenses.

Or take the case of Utah. Three years ago, I testified before the Utah Legislature on a portable benefits bill that eliminates the presence of benefits as a factor in worker classification tests.^[4] This bill was passed and went into effect in May 2023. As a result, Target’s Shipt launched a pilot benefits program in Utah, partnering with the benefits company Stride. Other companies followed, including Lyft, which launched a portable benefits program that adds 7 percent on top of earnings to each participating driver’s benefits account.

Building on these developments, in 2025 two additional states—Tennessee and Alabama—passed portable benefits legislation and are now positioned to support similar voluntary benefits programs for self-employed workers.

To reiterate, those state programs for self-employed workers were only possible due to legal changes. In New Hampshire, it is not currently possible for self-employed workers to receive benefits. The first step to providing portable benefits in New Hampshire is to allow for the establishment of portable benefits accounts and to remove the presence of benefits as a factor in the worker classification tests.

Self-Employed Workers Value Autonomy and Flexibility

A 2023 Bureau of Labor Statistics survey found that 80.3 percent of self-employed workers prefer their current work arrangements over W-2 employment.^[5] Over a dozen additional surveys indicate that workers value the work autonomy and flexibility of self-employment.^[6]

Self-employment can be particularly transformative for women who are the primary caregivers in their households.^[7] One study found that self-employment rates are higher for women who have young children.^[8]

In a nationwide survey, researchers also found that about 75 percent of self-identified homemakers indicated they would likely return to work if they had flexible options.^[9] In another survey of 2,000 self-employed women, 96 percent cited flexible hours as the primary benefit of this type of work.^[10]

About 81 percent of self-employed workers indicated they would like access to flexible or portable benefits.^[11]

Portable Benefit Reforms Legalize Access to Benefits for Self-Employed Workers

Legalizing access to portable benefits does not increase worker misclassification. Businesses must still follow state and federal worker classification tests.

Evidence from Utah shows no impact on the growth of W-2 employees or self-employed workers following enactment of portable benefits legislation.

Conclusion

New Hampshire has an opportunity to modernize its labor laws to support self-employed workers.

By enacting targeted reforms that enable businesses to voluntarily offer portable benefits—without triggering reclassification risks—New Hampshire would support economic well-being while encouraging innovation and fairness.

Notes