Freelancers and independent contractors are on edge since a revived version of the Protecting the Right to Organize Act, or PRO Act, passed the House of Representatives earlier this year. Over 10 million people in the U.S. make their living as independent contractors. The growing “gig economy” includes freelance writers, graphic designers, social media managers, Uber and Lyft drivers, and more.
How the PRO Act affects freelancers and independent workers centers primarily around the inclusion of a restrictive version of the ABC test, similar to what is in California.
What is the ABC test in the PRO Act?
The ABC test is used to differentiate an employee from an independent contractor. To be classified as an independent contractor, an individual must answer “yes” to the following three questions:
- Are they free from control and direction in connection with the performance of a service?
- Is the service performed outside the usual course of business outside all places of business for the company the service is being provided for?
- Are they customarily engaged in an independently established trade, occupation, profession or business of the same nature as the service performed?
“The problem with this ABC Test is that it misclassifies true independent contractors as employees, upending our small businesses and chosen careers,” wrote representatives with the grassroots group Fight for Freelancers USA in thank you letter to five Senators.
The letter thanked Senators Mark Kelly, Angus King, Joe Manchin, Kyrsten Sinema, and Mark Warner for not co-sponsoring the PRO Act.
Hi Senator @ewarren & @SenMarkey. US #freelancers ask that you #fightforfreelancers, not against us.— World of Freelancers ⭐ Winning the #noPROAct fight (@WoFreelancers) March 31, 2021
Delete the B prong of the #PROAct #ABCtest, change it to another test like #IRStest, or simply vote NO to PRO Act.
Let's keep freelancers #freelancing! 😃 #IRSnotABC #noPROAct
The history of the PRO Act goes back to the Trump administration.
The House first passed the PRO Act in Feb. 2020, but it was shot down when it reached the Republican-controlled Senate. Former President Donald Trump also opposed the bill and threatened to veto it if he had a chance.
Earlier in March, a resurrected version of the bill passed the Democrat-led House on a 225-206 vote. Five Republicans voted in favor. Now the bill goes onto the Senate, where the Democrats also have a narrow control. But, if Senate Republicans stage a filibuster, the bill could be dead again.
PRO Act supporters say the bill is essential to addressing income inequality.
Supporters of the PRO Act believe the comprehensive labor legislation will bolster worker’s collective bargaining rights.
Union leaders support the bill, saying it would level the playing field between workers and big business. In an interview with National Public Radio (NPR), AFL-CIO President Richard Trumka called the bill a “game-changer.”
“If you really want to correct inequality in this country — wages and wealth inequality, opportunity and inequality of power — passing the PRO Act is absolutely essential to doing that," Trumka told NPR.
Current President Joe Biden supports the bill and promises to sign it if it reaches his desk.
"Nearly 60 million Americans would join a union if they get a chance, but too many employers and states prevent them from doing so through anti-union attacks," Biden wrote in a March 9 statement in support of the PRO Act.
The bill is now in the Senate in front of the Committee on Health, Education, Labor and Pensions.
Lobbyists in the construction industry are among the PRO Act opposition.
The PRO Act is also causing concern in the construction industry, which relies on seasonal contracted workers.
The PRO Act will harm thousands of construction firms that chose to hire union workers because it undermines the collective bargaining process, said Associated General Contractors of America’s chief executive officer Stephen Sandherr in a statement against the bill.
“We view this measure as a significant threat to the viability of the commercial construction industry, its long history of offering advancement and opportunity to all workers and its ability to rebuild our economy and revive our nation,” Sandherr said.