California’s AB5 law, which aimed to prevent misclassification of workers, faced popular backlash when it disrupted the livelihoods of freelancers and workers in the odd-job economy across the state. Yet Congress Democrats are now seeking to pass a national version of the legislation, the Right to Organize Protection Act. The House has already passed it and the Senate Committee on Health, Education and Labor held a hearing on the matter on Thursday.
The PRO law would ban, among other things, many freelance jobs and most jobs in the so-called gig economy, like carpooling. The legislation would do this by redefining the term “entrepreneur” under the National Labor Relations Act, the main federal law covering collective bargaining, to use the same standards used in AB5.
Never mind that California lawmakers were forced to provide many exceptions to AB5 when they belatedly discovered that it extended to many traditional independent professions like photographers, journalists and musicians. Then Golden State voters approved Proposition 22, which removed the main provision of the law, covering ride-sharing drivers, leaving AB5 a shell unto itself. One would think that such a fiasco would serve as a warning.
At the very least, you would think PRO Act supporters would try to avoid repeating the mistakes of California law. But no. âAB5 ended up being amended to allow exemptions for certain categories of workers. The PRO Act contains no exemptions for workers, âKansas Senator Jerry Moran noted in Thursday’s hearing. âDoes this seem like an appropriate standard for the federal government? “
The PRO law would limit contractual work to jobs “performed outside the ordinary course of the employer’s business” and to cases in which the worker “habitually exercises a trade, an occupation. [or] In other words, companies could only hire subcontractors for jobs outside of their core operations, while workers could only do contract work for their primary means of earning a living.
For example, a ridesharing company like Uber couldn’t continue to use drivers for individual trips because facilitating transportation is Uber’s core business. Every driver should be a regular employee. Uber could hire a contractor to do something like renovate an office because it is not directly related to their business. A self-employed person could only get this contract if renovating the office was something the worker usually does. In short, this amounts to a severe restriction on the type of work people can do.
In short, the PRO Law would take most of the hassle out of the workers’ side. Companies could not afford to keep employees who only want to work sporadically. Even if a worker has been established as a freelance writer, a company may not be able to use it if the work relates to the “usual course of business” of the company. For example, could a news website contract with a freelance photographer under the PRO Act? If the site regularly posts photos, maybe not.
Currently, entrepreneurs and self-employed people are legally considered to be independent businesses. Therefore, contractors are generally not subject to federal laws covering workplace issues such as overtime, minimum wage, or health insurance. Instead, entrepreneurs negotiate their own terms with the company they are offering their services to. This provides great freedom for both the company and the entrepreneur to come to an agreement on conditions such as hours and pay.
Contract work can be done quickly and with minimal paperwork. The contractor and the company can approve a quick short-term arrangement and get the job done. In a situation involving traditional employees, federal regulations require the employer to set and control the worker’s schedule and other working conditions.
Most so-called gig economy companies, such as Uber and Lyft, exclusively use contract workers, arguing that being able to organize short-term work quickly is key to their business model. Carpool drivers work as much or as little as they want. Many drive part-time, some as little as a few hours per week. Including part-times ensures a large pool of potential drivers, which allows passengers to be served quickly.
Critics of contracts, especially unions and their allies in Congress, argue that it has been abused by companies and that most contract workers are in fact poorly classified employees. Contractors are also much more difficult to organize because federal collective bargaining laws were written with employees in mind. “For workers to be successful unions must be successful,” said Washington Senator Patty Murray, chair of the HELP committee. âThat’s why we need to embrace #PROAct. “
The problem with AB5 was that it’s difficult to write a law that covers so-called odd-job businesses that don’t also cover most of the other people who work in professions traditionally held by the self-employed. This is because the two groups of workers are essentially doing the same thing. Freelancers work when they want, for as long as they want and for who they want. They can work for several companies, even competitors, at the same time. Anyone who has taken a ride via Uber has likely seen a sticker for Lyft on the car that picked them up, or vice versa. If drivers are really employees, why do their employers allow them to drive for their direct competitors?
If ridesharing companies were to classify all of their drivers as employees, they would only be able to retain those who drive full time. This would hamper the ability to provide the fast and affordable service that sets them apart from traditional taxi companies. Drivers should choose a company and be subject to its work schedule.
It’s a loss of freedom that many concert workers say they appreciate. In a survey of its drivers in California, Uber found that only a minority chose to drive 40 hours or more per week, and many only drive a few hours per week.
The stated intention of the Biden administration in supporting the PRO Act is to push workers into these full-time jobs. Labor Secretary Marty Walsh told Reuters in April: âWe are looking at it, but in many cases concert workers should be classified as employees. â¦ I think it needs to be consistent across the board “to ensure that concert workers get” all the things an average employee in America can access. “
While it is believed that this will benefit workers in the odd-job economy, the PRO law, as AB5 did, will bring with it all kinds of other workers who have always been considered self-employed. If the law passes Congress, it will be a wake-up call for many people.