The PRO Act bill, HR 842, has a worker classification provision that is similar to California’s AB5 labor law. AB5 was meant to keep gig economy companies such as Uber and Lyft from treating workers with little autonomy as independent contractors.
Under AB5, workers can only be classified as independent contractors if a business demonstrates that the workers are 1) free from control and direction by the hiring company; 2) performing work outside the usual course of business of the business; and 3) independently established in that trade, occupation, or business. Workers who do not meet all three conditions must be classified as employees, AB5 mandates, for purposes of state wage and hour protections.
Despite its efforts to define how independent contractors work, freelancers in other sectors have complained that AB5 interferes with their capacity to work freelance, forcing them to take unnecessary staff jobs.
NAIFA has similarly contended that the PRO Act’s reclassification of insurance producers and financial advisors could force them to work as employees, and it could cause problems. Such problems include complicating the tax filing of many insurance producers, and disrupting prevailing insurance and financial services distribution models, NAIFA explained in an email to its members.
ThinkAdvisor reported that the US Chamber of Commerce is leading opposition against the PRO Act, calling the proposed legislation “a litany of almost every failed idea from the past 30 years of labor policy.”
In an analysis of HR 842 by the employee policy division of the Chamber, it found that the independent contractor classification provision could make it easier for workers to join unions. The Chamber also noted that under current labor laws, independent contractors are not eligible to unionize. The Chamber also noted that part of the PRO Act’s independent contractor classification provision may be identical to AB5’s language, but lacks the many exemptions of AB5.