Back in March, the US House of Representatives passed what’s known as the PRO Act.
While the legislation is gaining notoriety over its content on unions and employees’ right to organize, it also aims to completely change the job marketplace for freelancers and independent contractors.
However, the PRO Act faces a major hurdle, or two, in the US Senate. You can expect to hear more about the PRO Act in the coming days or weeks now.
Last week, Amazon workers voted against unionizing. Now, it appears pro-union lobbyists will be upping the pressure on Democrats in the Senate to get the PRO Act to President Joe Biden for his signature.
The only way that may happen is if the Senate votes to end the filibuster. And right now, that doesn’t seem likely.
Regardless, if you’re an independent contractor, freelancer, or small business owner with employees, you’ll want to closely follow this bill as it’s debated in the coming weeks. It could have major implications for all.
The PRO Act’s Effect on Small Business, Independent Contractors and Freelancers
Let’s look at what’s in the bill and what’s been said about it so far, mostly in debate among the US House of Representatives.
The House of Representatives passed the PRO (or Protecting the Right to Organize) Act March 9 by a 225-206 vote.
On March 11 the PRO Act (HR842) was received in the Senate and referred to the committee on Health, Education, Labor and Pensions (HELP). HR842 will be debated in committee before being presented to the Senate for vote.
The PRO Act and Independent Contractors
HR842, as it’s written now, adopts California’s ABC test for independent contractors. Here’s the text for the ABC test:
“An individual performing any service shall be considered an employee (except as provided in the previous sentence) and not an independent contractor, unless—
- (A) The individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
- (B) The service is performed outside the usual course of the business of the employer; and
- (C) The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
In other words, the PRO Act would change the 1099 classification of independent contractors. Many people currently working as freelancers or subcontractors are presently doing work or service “outside the usual course of business of the employer.”
US Rep. Elise Stefanik, R-NY, said that the ABC standard would eliminate contract-based work.
“It would be disastrous for independent contractors,” Stefanik said. “The majority of independent contractors prefer that status, and (the PRO Act) would take that choice away from millions of workers.”
Stefanik has introduced legislation called the Modern Workers Empowerment Act, which she called a bill to “protect their right and choice to be independent contractors.”
The PRO Act and Union Dues
Existing laws in 27 states prevent companies from requiring its employees to pay union dues or fees as a condition of employment. These laws are called “right-to-work” laws.
Those who back labor unions say “right-to-work laws crush unions. The PRO Act language states that employees can be required to pay union dues “notwithstanding any State or Territorial law.” Employees who decline to pay can be fired. Right-to-work laws would be made null.
The PRO Act and Union Organizing
Under the PRO Act, employers could not hold mandatory meetings to speak against creating a union or share facts about what union organization could mean.
The PRO Act also tightens the timeline for negotiating a collective bargaining agreement. It requires the employer and union to begin bargaining within 10 days of a written request, and if no agreement is reached within 90 days, either party can request a federal mediator.
Employers would be required to provide all names and contact information of employees to the union. Employers would not be permitted to replace workers who participate in a strike.
National Labor Relations Board (NRLB) fines
The PRO Act creates a fine structure for the NLRB to impose civil penalties. Penalties would up up to $50,000 for labor violations or up to $100,000 for repeated violations.
The National Federation of Independent Business’s Response to the PRO Act
According to the NFIB, 70% of its members oppose repealing state “Right to Work” laws. Nearly 100% of NFIB members believe small businesses should be able to hire independent contractors to perform tasks essential to their business.
The NFIB also opposes the PRO Act language which requires employers to provide the personal contact information for all their employees to union organizers without the consent of the employee.
“This is a bill with labor policy proposals that have not only been dismissed in the courts, but have been rejected by Congress for decades,” said Kevin Kuhlman, NFIB’s Senior Director of Federal Government Relations. “If passed, the PRO Act of 2019 will put employees’ private information at risk, expose small businesses to unrelated secondary boycotts, impose labor union dues on employees regardless of whether they are a member of the union, and dramatically change decades of employment law.”
“Small business optimism is at historic levels, and owners are increasing hiring, wages, and investment,” he added. “This damaging bill that would stifle such tremendous gains.”
President Biden Strongly Supports the PRO Act
The President clearly supports the PRO Act as part of his pro-union agenda. In a recent statement, he said, “The PRO Act defends workers’ right to strike—a fundamental economic right—and to engage in boycotts and other acts of solidarity with workers at other companies without penalty.
“It clarifies that employers may not force employees to waive their rights to join together in collective or class action litigation. The bill also closes loopholes in Federal labor law by barring employers from misclassifying workers as independent contractors and preventing workers from being denied remedies due to their immigration status.
“It establishes an expansive joint employer standard, allowing workers to collectively bargain with all the companies that control the terms and conditions of their employment. The bill allows unions to collect fair-share fees to cover the cost of collective bargaining and administering a union contract for all workers who are protected by the contract’s terms. H.R. 842 restores workers’ access to fair union elections, and ensures the results are respected.”
Though it now seems unlikely that the Senate will vote to end the filibuster, an impediment to getting the PRO Act through the chamber, it certainly doesn’t sound the death knell for the bill.
Parts of the PRO Act could get through to Biden for his signature and if that happens, it could lead to big changes with your business.