Proposed Legislation to Protect Unionizing Rights Would Effectively Eliminate Independent Contractor Status Nationwide
Rep. Bobby Scott (D-VA), chairman of the House Committee on Education and Labor, has introduced a bill designed to protect American workers’ ability to unionize, and would penalize companies that violate their economic wellbeing under the terms laid out in the legislation.
The Protecting the Right to Organize (PRO) Act (H.R. 842) would, among other things, prevent American employers from “misclassifying” their employees, preventing them from receiving union benefits, and give employers the “power to override so-called ‘right-to-work’ laws that prevent unions from collecting dues from the workers they represent.”
To put it simply, it would essentially eliminate independent contractor status. The bill amends the National Labor Relations act to require employers to consider any person performing a service as an employee, not an independent contractor, with the following exceptions:
(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.”
"The new legislation makes a broad presumption that all workers in the U.S. are employees unless each element of a newly established 'ABC' test can be demonstrated," said PPAI in a statement opposing the bill. "PPAI is opposed to the PRO Act because, if signed into law, it would significantly change how thousands of promotional products companies interact with each other, and it will eliminate jobs in our industry."
The promo industry employs a significant number of independent contractors. Previous surveys from PPAI have indicated that as much as 45% of the industry's sales force is independent contractors, with a much higher percentage at smaller firms. Requiring industry employers to change the way they classify workers could have far-reaching implications, from commission structure changes to job losses.
Rep. Scott’s bill would be nationwide, but similar legislation was introduced on a state level last year in California, where lawmakers and activists sought to protect the working rights of “gig economy” workers, such as rideshare drivers. California's economy is so large that even that bill would create ripple effects in the promotional products industry. National legislation, obviously, would go much further.
The spirit of the PRO Act seems to be protecting workers from being potentially wrongfully terminated and without benefits during the pandemic, and is a reaction to anti-union sentiment seen at large corporations like Amazon. More than anything, if the fact sheet released by the Education and Labor Committee is any indication, the focus of the bill is almost entirely union-focused.
But, it certainly has wide-reaching impacts for companies and industries that rely on independent contractors.
The bill was introduced in early February, and the House is reportedly set to consider the bill with a possible vote taking place by the end of the week.