April 11, 2021

Three reasons why the PRO Act won’t destroy freelancing or the gig economy

3 min read
Lately, we have seen criticism of the Protecting the Right to Organize (PRO) Act centered...

Lately, we have seen criticism of the Protecting the Right to Organize (PRO) Act centered on what the bill will mean for independent contractors and freelancers.

Despite the fearmongering by business interests and some freelancer groups, the PRO Act will not destroy the gig economy.

Here are three reasons why:

The PRO Act is about giving workers a voice, not taking away freedom.

The PRO Act would expand collective bargaining rights for workers. It would not force any worker to give up their gig or freelance work.

The Act would expand protections under the National Labor Relations Act (NLRA) to more workers. The NLRA is an 85-year-old law that protects workers’ right to join together to form unions or to engage in concerted efforts to ensure better working conditions. When Congress passed the NLRA it was to “encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses, and the U.S. economy.” The NLRA only covers “employees,” so workers who are deemed independent contractors are not covered, which leads us to the next point.

The PRO Act is about making it harder for employers to misclassify workers as independent contractors, not ending the contractor designation.

The PRO Act would stop employers from misclassifying employees as independent contractors or freelancers in order to prevent workers from banding together or forming unions to negotiate for better pay and working conditions.

The Act would use a legal test, known as an “ABC” test, of three key criteria employers have to meet in order to prove a worker is truly an independent contractor. The criteria include:

“(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 PRO Act does not change a worker’s employment status that impacts state benefits like workers’ compensation or unemployment.

The PRO Act would provide workers with the right to join unions and band together no matter where they live if they are deemed employees because the legislation would be federally regulated and enforced.

The Act would not impact rules or laws in states that determine whether workers are employees or independent contractors for the purposes of determining a workers’ state income tax status or whether they’re entitled to workers’ compensation benefits or unemployment benefits.

The PRO Act’s name says exactly what it does, nothing more, nothing less. It’s about protecting the right to organize.

For additional resources on the PRO Act, check out:

  • Strengthening workers’ right to organize is 50 years overdue;
  • EPI applauds House passage of the PRO Act; and
  • Six ways the Protecting the Right to Organize (PRO) Act restores workers’ bargaining power.

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