Vice President, Labor Policy, U.S. Chamber of Commerce
March 19, 2021
As this blog has noted on numerous occasions, Congress is considering a piece of legislation that would radically re-write American labor law and undermine freelancers and other independent contractors. The bill, known as the Protecting the Right to Organize (PRO) Act, passed the House of Representatives last year and again on March 9 of this year, and were it to become law, it would fundamentally change various aspects of the National Labor Relations Act (NLRA), which has governed the relationship between employers, employees, and labor unions since Congress enacted it in 1935.
One of those changes is the word-for-word adoption of California’s so-called “ABC” test for determining whether an individual is an independent contractor rather than an employee, which is an issue that has become much more prominent in recent years. The ABC test is not exactly new, but it was made infamous when California adopted a restrictive version of it in sweeping legislation known as AB 5, a state law passed in 2019.
The ABC test in California continues to disrupt longstanding business relationships involving independent contractors ranging from freelance journalists to actors portraying Santa Claus. In short, AB 5 prevents employers from classifying individuals as independent contractors under state wage and hour law except under limited circumstances. The results have been disastrous for many.
Similarly, the PRO Act applies the California ABC test for purposes of the NLRA, which, as it currently stands, specifically excludes independent contractors from being able to form a union. Under the PRO Act, independent contractors could be deemed employees for purposes of federal labor law, which would allow unions to organize them.
Defenders of the PRO Act seem to sense this is a sore spot, and they have tried to downplay the impact of the bill on independent contractors and freelancers. They argue that because the PRO Act would only alter the NLRA, it would only impact those workers if they choose to join a union.
The reality is that the PRO Act would apply California’s ABC test to the NLRA in all 50 states (and without the numerous exemptions that the California legislature later had to enact to mitigate AB 5’s ill effects). That alone is a dramatic change and it would be the first time the federal government has adopted this restrictive ABC test. It also is quite likely that once this ABC test is established under one law, it will be the pretext for it to spread into other areas, and we have already seen the Department of Labor engage in rulemaking on independent contracting.
Other parts of the PRO Act mean that the impact on independent contractors and freelancers will not be limited just to those who “choose to organize.” For example, the PRO Act eliminates right-to-work laws, so that any freelancer pulled into a union would be forced to pay union fees or likely lose their job. And even freelancers and independent contractors who voted “no” on a union would still be bound by all the wages and working conditions negotiated in a union contract because of the laws around exclusive representation. Moreover, because these elections are decided by a majority of those who actually vote (and given the decentralized nature of independent contracting, many workers would be unlikely to even realize there’s an election) independent workers could easily be dragged into a union that only enjoyed minority support.
Once they realize what has happened, those workers might wish to decertify the union, but the PRO Act takes care of that by preventing workers from even having the option of rejecting an unwanted union during the life of the contract. So, to assert that “if workers don’t want to organize they don’t have to” is far from accurate.
Ultimately, should the PRO Act pass, businesses may be reluctant to take on independent contractors who could end up in a union or for whom the business must accept an employer-employee relationship where one does not currently exist. So, whether it’s extracting dues from unwilling workers, trapping independent contractors into a union they can’t exit, or reducing earning opportunities, “only” changing the definition of independent contractors under the NLRA has a significant impact. And just as in California, those most likely to be hurt by the PRO Act are the independent contractors and freelancers that the proposal ostensibly means to protect.