Contract workers for the Alabama-based delivery service Shipt will soon be able to participate in a portable benefits program where they and the company can contribute quarterly to health insurance, retirement or other funds decided by the workers.
Shipt advocated earlier this year for the legislation that outlined the benefits option for gig workers and was approved with bipartisan support.
The new law doesn’t require participation by workers or companies, but is an option for app-based companies that hire contract workers. Unlike traditional retirement or health care benefits, portable benefits are not tied to a specific job. Instead, they are attached to workers who may work for multiple businesses as contract employees.
“As a people-centric company, we take pride in finding innovative solutions to offer workers on our platform greater access, choice, and security in how they work,” Mindy Reher, vice president of experiential operations for Shipt, said in a written statement.
“Alabama shoppers can now further build toward their financial goals without compromising on the flexibility they get from earning on the Shipt platform.”
Contract employees for Shipt can enroll starting Oct. 1, Shipt will begin contributing 4% of their pre-tax earnings, up to $300 per quarter, in January.
Contract workers in Alabama could have contributions in their funds from multiple businesses if the companies they work for choose to participate. Participating companies can deduct 100% of their portable benefits contributions from their state income taxes.
Sen. Arthur Orr, R-Decatur, and Rep. Neil Rafferty, D-Birmingham, sponsored this year’s bill. During task force discussions, lawmakers were told about 79,000 Alabamians were employed as contract employees by app-based delivery and ride-sharing services.
“Thousands of Alabama independent contractors now have voluntary access to benefit contributions and a wide array of benefits to further secure their financial independence and support their families,” Orr said in a written statement. “This is about empowering people to build their own financial safety nets in a flexible, modern economy.”
Rafferty said the Alabama law is an effort to recognize work is changing, and laws must as well.
“Alabama is now a leading voice in the nation, allowing portable benefits contributions that are fully tax-deductible for both businesses and workers,” Rafferty said. “That incentive not only brings real economic value, but sends the message: independent workers matter in this state.”
Alabama’s law was modeled after Utah’s, where Shipt was already providing benefits. Shipt’s workers will have accounts with the portable benefits platform Stride.
Delivery app DoorDash has recently piloted portable benefit programs in Georgia and Pennsylvania.
In their legislation, Alabama and other states have tried to stay in compliance with federal rules that say contract employees don’t have to be awarded the same benefits as traditional employees.
While more states are exploring portable benefits options, not all are convinced they’re right for workers. Wisconsin’s Democratic governor earlier this month vetoed portable benefits legislation, saying the gig workers program was hastily contrived and took away protections from gig drivers “in the absence of any guaranteed benefit for workers,” according to Wisconsin Public Radio.