Employment security: administration; determination of whether services performed by an individual are employment; modify. Amends sec. 42 of of 1936 (Ex Sess) PA 1 (MCL 421.42).

HB 5007 amends Michigan's Employment Security Act to update how "employment" is defined for unemployment benefits eligibility. It changes the standard for classifying workers as employees (requiring benefits coverage) versus independent contractors, effective January 1, 2026. Under the new rule, most workers must be classified as employees unless they meet all three strict criteria: no employer control, services outside the employer's usual business, and the worker operating as an independent business. This directly affects employers and workers in Michigan who currently classify individuals as independent contractors, particularly in gig economy and service roles. The bill maintains current rules (using the IRS 20-factor test) until 2026, with specific exceptions for certain visa holders and federally certified employers.