Independent contractor legislation — with a wage transparency twist — may soon be on the move

Advocacy News – April 24, 2025 

Legislation to make sweeping changes to how employers classify employees and require so-called “wage transparency” may be on the move in the Michigan Senate as soon as the week of April 28.

Why it matters: Senate Bills 6 and 7 would create an “ABC test,” limiting the ability of virtually ALL employers to use independent contractors. In addition, the proposals would require employers to provide employees with three years of wage information for “similarly situated employees.”

• The bill specifies that for a worker to be properly classified as an independent contractor, companies would need to establish the individual meets all three components of the ABC test:

1. “The individual is free from control and direction of the payer in connection with the performance of the work, both under contract and in fact.”
2. “The individual performs work that is outside the usual course of the payer’s business.”
3. “The individual is customarily engaged in an independently established trade, occupation or business of the same work performed by the individual for the payer.”

One thing to note: California, which adopted an ABC test in 2019, now exempts over 109 types of workers as well as business-to-business relationships. Additional exemptions are under consideration and are dragging out what has already been a prolonged, unnecessary and messy process. Additionally, these exemptions have not solved the issue and instead created a system of winners and losers. Some of CA’s exemptions include most outside salespeople; insurance underwriters, auditors, and risk managers; medical professionals; other licensed professions (e.g., lawyers, engineers, accountants); investment advisers; grant writers; graphic designers; freelance writers; real estate professionals; most bona-fide business-to-business relationships; and more.

The bottom line: The bills would drastically increase the penalties for misclassifying a worker and could even result in years-long prison sentences for business owners.

What we’re doing: The MI Chamber has organized a statewide coalition to fight back against this dangerous proposal. Read the coalition leave behind.

Go deeper: Read a full analysis of the bill or contact Wendy Block for more information.