Portable Benefits Laws by State: Which States Let Gig Companies Fund Contractor Benefits

Workers who find gigs through an app feel the gap most: 42% wish they got benefits, compared with 28% across all gig work. People selling or renting items care least, at 26%.

Most gig workers do have some health coverage. Among platform workers it is 86%, against 92% for adults who did no gig work, so the gap is real but smaller than many people assume.

The bigger difference is where coverage comes from. Only 45% of platform workers have employer-provided insurance, compared with 56% of adults with no gig work, which leaves more of them finding coverage some other way.

Gig work skews young: 26% of adults aged 18-29 did some in the prior month, against 12% of those 60 and older.

Gig platform workers rate companies better on job assignment (72%) and pay (64%) than on benefits. In the same survey, 46% said companies had been unfair about benefits.

State and city laws on benefits for gig workers and independent contractors (verified against official text)

Source: Alabama Department of Revenue, Portable Benefit Accounts (Act 2025-119); California Secretary of State, Official Voter Information Guide, Proposition 22, Text of Proposed Laws (adds Bus. & Prof. Code sections 7448 and following); Washington State Legislature, Engrossed Substitute House Bill 2076, Chapter 281, Laws of 2022 (Transportation Network Companies); Seattle Office of Labor Standards, App-Based Worker Paid Sick and Safe Time Ordinance (SMC 8.39). Download as image

California Prop 22 quarterly health care subsidy tiers

Source: California Secretary of State, Official Voter Information Guide, Proposition 22, Text of Proposed Laws (adds Bus. & Prof. Code sections 7448 and following). Download as image

State law on benefits for gig workers and contractors by state

• 1Law lets companies fund portable benefit accounts
• 2Law requires app companies to provide set benefits
• 0No statewide law confirmed

What are portable benefits for gig workers?

A portable benefit is one that follows you, not the job. Instead of a health plan tied to one employer, money goes into an account in your name. Several companies can pay into it over a year, and nothing is lost when you stop working with one of them.

For a delivery driver who works three apps, or a designer with six clients, that matters. Today each client pays you a rate and you fund everything yourself. A portable benefits law gives clients a clear, safe way to add to that pot without turning you into their employee on paper.

The demand is there. In the Federal Reserve's 2024 survey, 28% of people doing any gig work said they wish they got benefits like health insurance from it. Among those working through app platforms, it was 42%.

The gap is less about having coverage and more about who pays for it. In the same survey, 86% of platform workers had some health insurance, but only 45% had it through an employer, compared with 56% of adults who did no gig work. So more of them have to find coverage somewhere other than a job.

That is the problem portable benefits aim at. They do not create new insurance. They give clients a way to share the cost without the legal risk that has kept most of them from trying.

Which states have portable benefits laws?

Alabama is the clearest example we could verify against official text. Act 2025-119 lets any hiring party contribute to a contractor-owned account for health, disability, life insurance or retirement benefits. The contractor can also contribute. The program is voluntary on both sides.

California and Washington took a different route. California's Proposition 22, approved by voters on Nov. 3, 2020, makes app-based rideshare and delivery companies pay a quarterly health care subsidy and carry occupational accident insurance. Washington's ESHB 2076 gives rideshare drivers paid sick time and workers' compensation coverage from Jan. 1, 2023. Seattle adds its own paid sick and safe time rule for app-based workers.

Tennessee and Utah are often reported to have passed voluntary portable benefits laws, but we could not reach their legislature sites to confirm the text, so we list them as not yet confirmed. For every other state, treat the absence of a law as unknown rather than a firm no, and check your state's official site.

The split matters for you. An account law like Alabama's covers any contractor, from a bookkeeper to a welder, but nobody has to pay in. A mandate like Prop 22 forces payment, but only for a narrow group of app drivers. Most freelancers fall outside the mandates, which means any benefit you get will come from what you negotiate.

How does the Alabama portable benefits deduction work?

For tax years beginning after Dec. 31, 2025, a contractor can deduct 100% of contributions to the account on an Alabama return. That covers both your own deposits and money a hiring party puts in as part of your pay. The hiring party can also deduct 100% of its own contributions as a business expense.

Two details protect you. First, Alabama courts cannot use these contributions to decide if you are an employee, which removes the main reason companies have avoided paying in. Second, a company can only take money out of your pay for the account under a written, opt-in agreement, and you can leave at any time.

Say a client offers to add a set amount per invoice to your account. In Alabama, you both get a state deduction, the money is yours, and the offer by itself does not change your status. In a state without a law like this, the same offer comes with none of those guarantees, so the details in the contract carry more weight.

What benefits do California and Washington require for app drivers?

Under Prop 22, the health subsidy depends on hours. Drivers averaging 25 or more engaged hours a week in a quarter get at least 100% of the average ACA contribution. Those averaging at least 15 but under 25 hours get at least 50%. The average ACA contribution itself is set at 82% of the average Covered California premium.

Prop 22 also requires occupational accident insurance with at least $1,000,000 in medical coverage. If you are hurt on the job, it must pay disability of 66% of your average weekly earnings for up to the first 104 weeks. Keep in mind that engaged time is narrower than time logged in, so waiting between rides may not count toward those hour tiers.

In Washington, rideshare drivers earn 1 hour of paid sick time for every 40 hours of passenger platform time. In Seattle, app-based workers at network companies with more than 250 workers earn one day of paid sick and safe time for every 30 days with at least one work-related stop in the city. Both rules cover only certain app work, not freelancers in general.

What should freelancers and businesses do now?

• Check which rule applies to the work, not just where you live. Prop 22 and the Washington and Seattle rules turn on the type of app work, and Alabama's deduction depends on Alabama income tax.
• If a client offers benefit contributions, get the amount, timing and account owner in writing. You want the account in your name, not the company's.
• Ask what happens to contributions when the contract ends. Money already paid in should stay with you, with no clawback.
• Read any clause that lets the client deduct benefit costs from your pay. Outside Alabama's opt-in rule, that can quietly cut your rate.
• For businesses hiring contractors: in states without a law like Alabama's, talk to an advisor before funding benefits, because it can feed into a misclassification claim.
• Track your hours if you drive in California or Washington. Your benefits depend on them, and your own records help if the company's numbers look wrong.

Sources and method

Every number on this page comes from the sources below, each opened and read on or before October 18, 2026. A second, independent review checked every figure against its source and corrected anything that did not match. 3 of 51 state entries were confirmed; any that could not be are marked "Not yet confirmed" and left out of every count and chart.

1. Alabama Department of Revenue, Portable Benefit Accounts (Act 2025-119) (Accessed October 2026 (page undated))
2. California Secretary of State, Official Voter Information Guide, Proposition 22, Text of Proposed Laws (adds Bus. & Prof. Code sections 7448 and following) (November 3, 2020 General Election)
3. Washington State Legislature, Engrossed Substitute House Bill 2076, Chapter 281, Laws of 2022 (Transportation Network Companies) (Approved March 31, 2022)
4. Seattle Office of Labor Standards, App-Based Worker Paid Sick and Safe Time Ordinance (SMC 8.39) (Accessed October 2026 (page undated))
5. Board of Governors of the Federal Reserve System, Economic Well-Being of U.S. Households in 2024: Employment and Gig Work (May 2025 (latest edition with a gig work section; the May 2026 edition has none))
6. Pew Research Center, The State of Gig Work in 2021 (December 8, 2021)
7. USA.gov, State governments directory (no state portable benefits source checked) (Accessed October 2026)