PRO Act, Bill That Threatens Independent Contractor Status, Passes House

The Protecting the Right to Organize (PRO) Act (H.R. 842) passed in the House with a 225-206 vote on March 9. The bill, intended to support workers in the gig economy by making it easier for them to unionize, would effectively eliminate independent contractor status on a nationwide level.

The bill now heads to the Senate, where it is unlikely to advance due to low support from Senate Republicans. According to NPR, the bill originally passed in the House in February 2020, but was never taken up by the Republican-controlled Senate.

This time, Democrats control the Senate, but not with enough of a majority to beat a Republican filibuster. Five Republicans voted in favor of the bill in the House.

The PRO Act is similar to legislation passed in California last year, even using the same "ABC test" to determine employment status. Employers would be required to classify any person who does not meet each of the following criteria as an employee, not an independent contractor:

(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.”

This would drastically change the employment status of a significant number of American workers. The American Action Forum, a center-right-leaning policy institute, estimated that this would result in "$3.6 billion to $12.1 billion of annual upward cost pressure on employers" and millions of job losses.

Critics of the PRO Act say the ABC test is outdated and that the bill's scope is too broad, inadvertently sweeping up multiple other industries outside of the gig economy that employ large numbers of independent contractors. That includes the promotional product industry, where independent contractors make up around 35% of the sales force.

The bill also makes no exceptions for workers happy with their independent contractor status. And it would upend the franchise model by classifying franchise owners as employees, among other changes.

PPAI has vocally opposed the bill, joining a coalition of organizations and trade groups urging legislators not to sign it into law. While the bill may be unlikely to advance further in its current form, it's worth watching to see if it resurfaces in amended form down the line.