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The PRO Act's 'ABC test' fails American workers

The PRO Act's 'ABC test' fails American workers
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The Protecting the Right to Organize Act threatens the freedom of millions of independent contractors — at a moment when Americans most need freedom and flexibility in their employment. The PRO Act, after failing to pass in the last Congress, was recently reintroduced. With Democrats controlling the House of Representatives and Senate, and with the support of President BidenJoe BidenDefense lawyers for alleged Capitol rioters to get tours of U.S. Capitol Sasse to introduce legislation giving new hires signing bonuses after negative jobs report Three questions about Biden's conservation goals MORE, it is only a matter of time until the PRO Act becomes a priority.

Before that happens, however, legislators would be wise to consider the lessons learned from California’s enactment of Assembly Bill 5 in 2019.

Among other things, the PRO Act would amend the National Labor Relations Act to redefine who is classified as an employee for the purposes of that law. The new definition would adopt the “ABC test” — a relic from the 1930s, and recently adopted by California, that imposes a strict three-part test to determine whether a worker is an employee or independent contractor. An individual must be classified as an employee unless: 

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“(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.” 

Critically, all three elements must be met for a worker to remain independent. Fail one prong, and you must be considered an employee. While the “A” and “C” parts of the test seek to prevent employers from deliberately misclassifying employees as contractors, the “B” part of the test is a poor fit for the modern era. 

Consider journalists. Rather than tie themselves to a single publication with assigned beats, editors and deadlines, and endure the stress of a perpetual cycle of layoffs and cutbacks, many former staff writers have forged successful careers as independent contractors. As freelancers, they are free to write for multiple publications on topics and angles of their choosing, and to pursue as much or as little work as they desire. Thus, the “A” and “C” parts of the ABC test are easily met by most freelancers.

But the “B” part of the test is impossible to satisfy for writers who create the product that publications publish in the usual course of their business. The same goes for musicians, comedians, actors, grant writers, graphic designers and countless other professionals who have built themselves into successful microbusinesses. Similarly, gig workers filling free time or padding their schedules with a few hours driving for Uber or Lyft lose that freedom under the “B” prong of the ABC test.   

In 2020, California’s AB 5 law took effect, imposing the ABC test in all aspects of California labor law. However, even California lawmakers recognized that the ABC test would hamstring many workers and included numerous exceptions to the law selected through a frenzied lobbying process.

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One such exception applied to writers and journalists, but only up to 35 submissions per client per year. Upon reaching the 35-submission cap, however, a freelancer would have to be hired by the publication as an employee or, more likely, stop producing content for that outlet. But rather than spark a return to newsrooms overflowing with journalists, the law quickly resulted in a devastating loss of work and income for freelancers.

Weekly columnists became bi-weekly columnists; photographers and writers who provided coverage for a few small, local publications found themselves approaching the 35-submission cap quickly, and rather than convert to employees (even assuming that option was available — in most instances it wasn’t — the vast majority of freelancers choose not to be employees) they stopped working with those publications for the rest of the year. Some publications, either unwilling or unable to keep track of the law’s requirements, simply stopped hiring California freelancers.  

For those unfortunate many who have not received even a limited exception, the pain was widespread. From small theater companies to music festivals, legal transcriptionists, interpreters, real estate appraisers, software consultants and beyond, the examples of lost work are too numerous to track. Fleeing the harms of the ABC test, many contractors left California. Those who stayed endured the loss of flexible work just as COVID-19 struck.

Because of unrelenting outrage, California lawmakers were forced to amend AB 5 in 2020, creating dozens of additional exceptions. Some of those still working under the ABC test can at least leave California if the burden proves too much. But if the ABC test becomes the law of the land there is nowhere to run.

Instead, lawmakers should run from the outdated and unworkable ABC test. A one-size-fits-all model of work proved to be a disaster in California, and Congress shouldn’t double-down on that disaster nationwide.

Caleb Trotter and Jim Manley are attorneys with Pacific Legal Foundation, which litigates nationwide to achieve court victories enforcing the Constitution’s guarantee of individual liberty. Follow them on Twitter @nolatarian and @ManleyLiberty.