Employee or Independent Contractor?

The PRO Act Does not Need a Fix to Protect Freelancers like Me, but the Worker Flexibility Act Might

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From Daily Kos, CanAmLefty argues that the Protecting the Right to Organize Act (the “PRO Act”) only affects rights under the National Labor Relations Act while the Worker Flexibility Act adopts the ABC test for the Fair Labor Standards Act which would have a broad effect. CanAmLefty writes;

III. THE PRO ACT AND ITS ABC TEST

14. The PRO Act, H.R.842 – Protecting the Right to Organize Act of 2021, is a Bill currently being considered by Congress that would amend the National Labor Relations Act, the New Deal statute that recognized workers’ right to form and join unions and bargain collectively over compensation and conditions with ownership through those unions. In general, the PRO Act amends the NLRA to make it easier for workers to exercise those rights. Section 101(b) of the PRO Act states as follows:

(b) Employee.—Section 2(3) of the National Labor Relations Act (29 U.S.C. 152(3)) is amended by adding at the end the following:“An individual performing any service shall be considered an employee (except as provided in the previous sentence) and not an independent contractor, unless—

“(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.”

15. The text at 29 U.S.C. 152(3) states how workers are to be classified for purposes of the NLRA, and nothing else. The NLRA is a federal law that guarantees a worker’s right to join a union. It has no impact on how workers are classified for any other purposes, such as taxes, unemployment insurance, health insurance, workers’ compensation, etc.

16. As a result, the comparisons between the PRO Act and California AB5 are misleading at best and dishonest at worst. This why I emphasized, at para. 10 above, the point that the purpose for which the ABC test is used under a given statute is of the utmost importance. The impact of the ABC rule, when applied broadly as with AB5, is bound to be far greater than when it is applied narrowly to a single issue like collective bargaining rights. That is why it is bogus to argue that California’s experience with AB5’s ABC test is predictive of problems that might arise under the PRO Act. Such arguments are based on a profound, and basic misconstrual, not just of labor law, but of law in general.

17. Whatever problems arose under AB 5 arose because of its broad sweep, but that’s got nothing to do with the PRO Act, whose sweep is much, much narrower. Labor-side labor lawyer Brandon Magner explains:

These predictions [“of forced unionization and ruined careers”] are unfounded. The ABC Test, if passed as part of the PRO Act, would only affect the analysis of employee vs. independent contractors status for the purposes of the NLRA. Put simply, the relevant question is whether certain workers possess rights under Section 7 of the NLRA, which guarantees employees (and employees only) the right to strike, collectively bargain, and engage in various other “concerted activities” for “mutual aid or protection.” [first italics added.]

What would the PRO Act not affect? Literally anything else. It would not change a worker’s employment status for the purposes of state laws, such as those involving minimum wage, overtime, unemployment compensation, or various benefit schemes. Thus, a worker could feasibly be classified as an employee with unionization rights under the NLRA while still qualifying as an independent contractor under said state laws. Just ask SAG-AFTRA or IATSE, who count many “freelancers” in the entertainment industry as members; they have no consistent employer but still collectively bargain for superior wages and benefits compared to non-union counterparts.

18. In light of these facts and legal analysis, the argument that the inclusion of the ABC test in the PRO Act could harm independent contractors simply cannot stand. It rests on a false comparison, itself based on the presence of functionally identical language in two statutes, language that nevertheless has completely different effects because of the completely different purposes and scopes of the two statutes.

 

IV. THE WORKER FLEXIBILITY ACT AND ITS ABC TEST IS THE TRUE PARALLEL TO CALIFORNIA AB 5—AND IT MAY NEED FIXING

19. The Worker Flexibility and Small Business Protection Act (WFSBPA), H.R. 8375 / S. 4738, is a Bill being considered by Congress that would amend the Fair Labor Standards Act (FLSA), the other major New Deal statute on labor relations. The FLSA (29 U.S.C. § 203) is a federal labor law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time employees in the private sector and in Federal, State, and local governments. It does not apply to workers properly classified as independent contractors or casual laborers. The amendment proposed by the WFSBPA is as follows:

(1) STRENGTHENING EMPLOYEE TEST.—Section 3(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(e)) is amended by adding at the end the following:

“(6) (A) For purposes of this Act, and except as provided in paragraphs (2), (3), (4), (5), (7), and (9), an individual performing any labor for remuneration for a person shall be an employee employed by the person and not an independent contractor of the person, unless—

“(i) the individual is free from control and direction in connection with the performance of the labor, both under the contract for the performance of the labor and in fact;

“(ii) the labor is performed outside the usual course of the business of the person; and

“(iii) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the labor performed.

20. The specific statutory section being amended, 29 U.S.C. 203(e), is where the FLSA sets forth its definition of employee v. independent contractor.

21. Although the scope of the FLSA is broader than that of the NLRA, it is still not as broad as that of California AB 5. Nevertheless, in light of the fact that the ABC test set forth in the WFSBPA would impact such major issues as a worker’s eligibility for minimum wage, overtime pay, and other federal protections limited to “employees,” there is, to some extent, a proper comparison to be drawn between it and AB 5. This statute is the proper target for the complaints of these freelancers, not the PRO Act.

22. However, solid, empirical economic research on the economic impact of AB 5 is needed so that we can discuss this issue on the basis of fact. It may be that freelancers who believe their woes arise from AB 5 are incorrect, because AB 5 went into effect just two months before the COVID-19 shutdowns began, which certainly must have contributed.

Read the full story at The PRO Act Does not Need a Fix to Protect Freelancers like Me, but the Worker Flexibility Act Might

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