Freelance work and independent contracting have been the way of life for many workers in the United States for many years. During the pandemic, as many people lost jobs or desired a change, the number of these workers has only increased in popularity. However, a new bill circulating through Congress might wreak havoc on the livelihoods of many freelancers and independent contractors if it becomes law.
What is the PRO Act?
The bill is called the Protecting the Right to Organize (PRO) Act, and on the surface, it simply looks like a bill designed to allow workers the right to unionize. According to the AFL-CIO (who favors the legislation), labor laws are outdated and call this bill “a landmark worker empowerment, civil rights and economic stimulus legislation, and an essential part of any plan to build back better from the COVID-19 pandemic and recession.”
However, a closer examination of the bill reveals provisions that could be harmful to freelancers. For example, it contains what is called the ABC Test, a test used to differentiate between employees and independent contractors. This test was adapted originally with AB5, legislation created and passed in California in 2019, with similar provisions.
That bill was so poorly written that it had to undergo many revisions, to include exemptions for many different types of workers. The federal bill has not learned any lessons from AB5 and does not contain these same exemptions.
The ABC test got its name for the three elements of the test – A, B, and C. It establishes a presumption that an individual performing services for an employer is an employee, not a contractor, unless the employer/organization can pass the three factors of the test, as stated by the Economic Policy Institute.
- (A) The work is done without the direction and control of the employer.
- (B) The work is performed outside the usual course of the employer’s business.
- (C) The work is done by someone who has their own, independent business or trade doing that kind of work.
At stake for freelancers is Part B of this test because it essentially says that a freelancer or independent contractor cannot perform the same work the company or client does. For example, a freelance event planner is in the business of planning events.
Under part B of this test, these event planners would not be allowed to freelance for a company that produces events—they would be required to be an employee—something that most independent contractors have little interest in. Additionally, many employers don’t want them to be employees either, as it is more costly to make these workers employees.
She says, “I became a freelancer so I could earn a living that was both schedule and location independent. Freelancing lets me work around my life — rather than live around my work. If passed, the PRO Act could destroy the business and life that I — and millions of other freelancers — have worked so hard to intentionally build.”
The bill passed the House but is expected to face a tougher battle in the Senate and is not expected to pass in its current form. A date has not been set yet for the Senate vote on the PRO Act. However, President Biden has expressed that he wants to make the ABC test the law, which makes the future of independent contracting and freelancing future unclear.
Gariepy says, “While I don’t believe it will pass the Senate as-is, I’m not letting my guard down. The makeup of the Senate could change, which could increase the chance of the legislation going through.”
The consequences of this legislation for freelancers could also mean a loss of business relationships and would force many U.S.-based companies to hire internationally-based contractors.
Unfortunately, the law’s impact in California happened before the exemptions were put in place, causing many freelancers to lose work as companies stopped hiring California-based freelancers.
While the AFL-CIO’s website states that freelance working arrangements will not be affected by the PRO Act or the inclusion of the ABC test in it, many freelancers have concerns over the potential passage of the bill.
If the AB5 law in California is any example, there should be a concern. The Fight for Freelancers group is a nonpartisan group of independent contractors and others who oppose the use of the ABC Test in federal law.
They report on their website that 88 percent of freelancers—including photographers, musicians, online teachers, consultants, and others—oppose the ABC test and any legislation that prevents their ability to work they want to.
The Freelancers Union presents a balanced view on their website, stating that they believe it won’t impact freelancers that worker classification laws in California and other states have. Additionally, they believe any such law would have to undergo debate and review, allowing time for freelancer advocates to advocate for necessary changes ensuring freelancers are not impacted.
Their website states, “Freelancers Union has already discussed our concerns with any law that impedes freelancers’ ability to work with Senate Majority Leader Chuck Schumer, and would engage with him and other political leaders to ensure employment or tax law changes would not use an un-amended ABC test.”
Freelancers or independent contractors who desire to continue to work in this manner should monitor the progress of the PRO Act and the provisions involving the ABC Test. To make your opinion heard, you can reach out to your Senators about the PRO Act.
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This article was produced and syndicated by Wealth of Geeks.
Featured image: Pexels.
Kelley Dukat is a freelance writer, photographer, and event planner currently based in the United States. She has spent the last year as a nomad travelling and house sitting. She holds a Journalism degree from the University of Colorado at Boulder and previously served as a trade magazine editor. Her favorite include dog friendly travel, road trips, nomad life. She is currently working on a memoir, and a series of personal essays.