The Facts About the PRO Act

As part of the Biden Administration's promise to strengthen the middle class, the House of Representatives recently passed the PRO Act, the largest pro-union bill in the U.S. in more than 80 years. There has been a lot of confusion about what the bill does and doesn't do, as well as misinformation being stoked by real concerns due to worker classification laws in California and other states.

As an organization that has fought for the inclusion and rights of freelancers for more than 25 years, it is our duty to provide freelancers with information about the issues that affect them. In conversation with a number of freelancer organizations, employment lawyers, and workers' rights groups, we have assembled answers to the most common questions we have encountered about this bill.

This reflects our most current understanding of the facts (as of April 1, 2021); should new developments arise, we will continue to update Freelancers Union members in the interest of full transparency.

What is the PRO Act?

The Protecting the Right to Organize Act provides a number of protections designed to make it easier for workers to join unions, and to increase the power of unions to effect change for their members by undoing current restrictions on strikes, boycotts, and secondary actions (someti known as sympathy strikes) to show solidarity with other unionized workers.

The PRO Act was first proposed and passed by the House of Representatives in February 2020, but was not taken up by the Senate. It was again passed by the House on March 9, 2021, and now awaits discussion by the Senate.

What does it do for freelancers?

The PRO Act expands the definition of an employee for the purposes of allowing more people who work with a particular company to join a union in order to advocate for higher wages, better working conditions, and worker protections. By using the language of an ABC test for this purpose, the PRO Act includes some independent contractors and freelancers within that umbrella. In short, it would allow freelancers in some workplaces to unionize alongside their staff colleagues.

What is the ABC test?

Simply put, the ABC test uses three questions to determine whether a worker is truly independent from their employer. To be considered an independent contractor, a person must:

  1. Be free from the employer’s control in how they complete their work (eg., they can choose their work hours, place of work, tools, etc.)
  2. Work in an industry that is outside the usual course of business of the employer
  3. Be able to show that they are “customarily engaged” in an independent business (eg., they have other clients for whom they do this work; are independently licensed or accredited; or have an office, web presence, LLC, business banking account, or other accoutrements of an independent business)

If an individual does not meet all three of the above, they are not considered independent for the purposes of the law in which the test is included.

The ABC test is currently used by 33 states for different purposes, such as to determine qualification for worker’s compensation or eligibility for unemployment insurance.

Isn’t the ABC test harmful for freelancers? What about AB5?

In September 2019, California law AB5 changed the way it determines who is an employee in its Labor Code and Unemployment Insurance Code from a 20-factor common-law test (also known as the IRS test) to the more simplified ABC test.

Against the recommendations of many freelance groups, AB5 was passed with especially broad language that impacted many freelancers who work in the same industry as their clients, such as journalists, writers, and photographers. And some companies stopped hiring freelancers in California altogether rather than work to understand the new law and ensure compliance. Since then, California legislators have gone back and written in a number of exemptions to the ABC test for those who provide “professional services” - aka freelancers.

Will the PRO Act have similar implications as AB5 or change any laws to make it harder for me to run my freelance business?

No.

The PRO Act clearly states, in Title I, Section 101 (b), that the ABC test is to be used only in the National Labor Relations Act, which only governs unionization. And just to be extra clear, an amendment was passed in the House of Representatives during negotiations to spell out that the status of freelancers is ONLY being changed for those purposes. The amendment states:

“The amendments made under this Act shall not be construed to affect the definitions of ‘‘employer’’ or ‘‘employee’’ under the laws of any State that govern the wages, work hours, workers’ compensation, or unemployment insurance of employees.”

Why do freelancers support the PRO Act?

Union membership is directly correlated to higher wages, better racial equity, and stronger protections for all workers. If passed, the PRO Act would allow freelancers to share information about their pay with each other, to come together to suggest minimum payments for their work, and to speak out collectively against harassment, abuse, and other types of mistreatment. They would be able to call for the boycott of companies that mistreat their freelancers - an act that is currently illegal under federal antitrust law.

Misclassification is a serious issue that affects not only app-based workers like rideshare drivers and delivery workers. Many freelancers have also experienced gigs that were staff jobs in disguise, being held to the same standards and requirements as staff members without the benefits of sick days, paid leave, and HR protection - and paying twice the taxes on that income. Unfortunately, many companies have found it financially beneficial to move staff positions to freelance roles, passing the financial burden and uncertainty onto the worker.

Why do freelancers oppose the PRO Act?

There are many ways in which freelancers are different from other workers, and they take pride in their independence. Many of them made the decision to leave full-time employment to pursue a freelance career, and the use of the word “employee” in any terminology, even in laws that cannot change their employment status, brings up fears that they will be forced into a 9-5 office job.

Opponents of the PRO Act believe that if it passes, the Biden administration will use the same ABC test language in changes to federal employment or tax law. But the fact is that any such law would also have to undergo debate, review, and a vote in both the House and Senate, during which time there would be opportunity for freelancer advocates to push for the necessary changes to ensure freelancers are not impacted. 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 that employment or tax law changes would not use an un-amended ABC test.

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