August 2, 2021
The Senate Committee on Health, Education, Labor, and Pensions (HELP) held a hearing last week on the Protecting the Right to Organize (PRO) Act. The event provided an opportunity for lawmakers to discuss and debate several of the concerns freelance workers and independent contractors have about the proposed legislation. Chief among them is a provision in the bill called the “ABC Test,” which would radically upend over 80 years of worker classification precedent.
The nationwide implementation of this strict three-part classification test would make it immensely more difficult for many workers to maintain their status as independent contractors.
This recalibration in the labor code was intentionally designed to compel businesses to classify their workers as employees rather than independent contractors. While some believe the updated standard will provide workers with greater leverage to collectively bargain, in the end, it will cause more harm than good for these hardworking folks.
In addition, the stiff legal penalties that the proposal prescribes for noncompliance, whether intentional or not, would disincentivize companies from retaining workers whose roles straddle the border between the two classifications. Given that independent contractors make up a large percentage of the country’s workforce, the law’s impact would be far-reaching.
A recent study showed that over 22 million Americans work as independent contractors, and in 2019, 48 million were self-employed at some point during a given week. These mutually beneficial relationships were formed because they provide both workers and companies with a high degree of flexibility. However, if the PRO Act were to pass, it may not make sense for one or even both parties to transition into a traditional employee-employer relationship.
California began experimenting with the ABC Test in 2020 after its legislature passed AB 5,a sweeping labor bill on which Congressional Democrats have based the PRO Act. The law has been disastrous for California workers, which is why it is confusing that some in Congress have a desire to replicate it.
The policy eliminated countless independent contractor and freelance opportunities for Californians and left businesses that could not afford to hire these workers as employees scrambling to pick up the pieces. In fact, the bill caused so much economic destruction that the state legislature amended itto provide nearly 50 special carveouts for industries that were hit especially hard.
Massachusetts is the only other state to use this strict three-part test for worker classification purposes. During the hearing, Obama-era National Labor Relations Board Chairman Mark Pearce incorrectly stated that half the states in the country use the ABC test. The reality is only two states use the version of the ABC test that’s in the PRO Act, and a majority of states do not use any form of the ABC test. It goes to show the lengths that advocates for the proposal are willing to go to normalize such a radical policy.
At last week’s Senate hearing, Senators Jerry Moran and Roger Marshall—both of Kansas—and Senator Mike Braun of Indiana did a fantastic job exposing California’s failed experiment with the PRO Act. Some have attempted to dismiss as “anecdotal evidence” the ABC Test’s impact on the Golden State. However, to do so would be a monumental mistake.
Members of Congress who have previously supported the PRO Act must seriously reconsider their allegiance to the flawed proposal. The Senate HELP Committee hearing allowed the American people to hear just how damaging this bill would be for our nation’s workforce.
