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How to tell if your work will be reclassified under the PRO Act

Feb 1, 2021 by AFP

Each year since 2018, some member of Congress has introduced a bill called the PRO Act, which would, among other things, eliminate most forms of independent contracting and reclassify those workers as employees under the National Labor Relations Act. The House passed this bill along largely partisan lines in 2019.

Much like its state-level counterpart, California’s AB 5, the PRO Act would be a job killer. It is no wonder, then, why it has been widely labeled one of the worst bills recently proposed by Congress.

Unfortunately, it is likely to see a renewed push this year with a new Congress and new president that indicated the bill as a priority. As has happened since 2018, lawmakers should again reject it.

Eliminating most forms of independent contracting, gig work, and freelancing would be contrary to the wishes of over three-quarters of those workers, who say they enjoy the freedom, flexibility, and opportunity that come with their work.

Who would be reclassified by the PRO Act, and what would that mean for those workers?

Who would be affected by the PRO Act?

The United States had over 15.5 million people earning their primary income as independent contractors, about 10 percent of the country’s workforce. Even more earned some income as independent contractors, including the 59 million people who did freelance work in the last year. Unlike traditional employees, these workers have more flexibility and choice in the contracts they accept and the hours during which they operate.

“Independent contractors contract their services outside the direct control of [clients],” said Erica Jedynak, director of economic opportunity at Stand Together. “[They] include gig economy workers, freelancers, many self-employed entrepreneurs, and workers in diverse professions — from yoga instructors to hair stylists to optometrists.”

Independent contractors can be:

  • college student performing gig work with a delivery company in order to pick up extra money.
  • A photographer who sells his copyrighted content to several clients under a contract.
  • An associate optometrist who has a contract with a local practice.
  • A copywriter with several different contracts with a variety of clients.

If any of these seems similar to your work arrangement, you could potentially face reclassification as an employee under the PRO Act, which employs an “ABC” test to determine who is subject to the bill’s provisions.

Can you pass the PRO Act’s ABC test?

The PRO Act’s ABC test — similar to the independent contractor tests enforced by states such as California, Connecticut, and Massachusetts — requires workers to fulfill three criteria if they wish to maintain their flexible work arrangements:

A: Absence of control. This means the worker is not under direct control of the client. A videographer who runs a business creating captivating content, and sells his product to several different clients, fits this description.

B: Business of the worker. This is by far the most difficult part of the ABC test to pass. It requires that the worker perform work that is outside the course of the client’s usual business. An IT worker or an accountant who contracts with a newspaper would pass, but would probably fail the absence of control requirement. The videographer who sells his own copyrighted work to the newspaper would most certainly fail the business of the worker requirement.

C: Customarily engaged. The contractor is usually engaged in an independently established occupation or trade that is of the same nature as the work being performed. This part of the test limits independent contracting to professionals, particularly those with licenses. An optometrist or barber would pass this part of the test — although they would probably fail the previous one. Those workers who tend to provide a variety of unlicensed services, even to a variety of clients, would not pass the customarily engaged requirement.

What’s more, doing all or a majority of work for a single client at a given time can lead to a failure of this part of the test, regardless of whether this is a voluntary choice by an independent contractor.

What happens if you fail the ABC test?

While it is not possible to know exactly how the National Labor Relations Board (NLRB) or other federal entities would subjectively enforce a new ABC test, all independent contractors should be wary of the potential to lose their independent status under this classification test. It is designed to reclassify most workers with flexible work arrangements and place them in traditional employment. Under the NLRB, that would mean that former independent workers could be organized by unions.

“These stifling ABC test provisions in the PRO Act would hurt both employers and employees by putting up numerous government roadblocks to the flexible work arrangements both are seeking,” said Americans for Prosperity Senior Policy Analyst Austen Bannan. “Instead of being able to work your own way as an independent contractor, the PRO Act could lead to both government and unions dictating the terms of your employment.”

For someone like Beth Anne Mumford, who helped support her new family as a copywriter, this would have been disastrous. She would not have been able to work as an employee while raising her children. She needed the flexibility her contract work provided, something prized by many independent contractors.

What’s more, it’s likely many businesses could not afford to put their independent contractors on payroll. Studies have found that employers would lose as much as $12.1 billion per year if the ABC test were implemented nationwide. Consequently, many workers would simply lose their jobs entirely.

Any potential good that might be done by the PRO Act would be easily be undone by the massive cost to the livelihoods of independent contractors and the businesses who need them.

Lawmakers must hear from you to reject this bad bill. Join the campaign to flex your independence by supporting independent contractors and oppose unfair and harmful efforts to restrict their freedoms and opportunity.