Among the many provisions of the reconciliation bills that are intended to promote the agenda of the labor unions is changing the definition of employees and independent contractors.  H.R. 842, the Protecting the Right to Organize Act (PRO Act), is one of the main priorities of union bosses around the country.  The bill is based on California’s Assembly Bill 5 (AB5) which made radical changes to California’s economy before voters passed Proposition 22 to override the provisions of AB 5 as they applied to  app-based workers.    The PRO Act passed the House of Representatives on March 9, 2021, and is currently stalled in the Senate. While it is unlikely the PRO Act would gain the 10 Republican votes needed to pass in the Senate, Democrats plan on including the PRO Act in their reconciliation legislation, which they can pass without any Republican support.  The PRO Act would radically transform parts of the economy and severely harm workers and small business owners while greatly benefiting unions.

The PRO Act would impose an “ABC test” to determine whether a worker should be considered a regular employee or an independent contractor.  This test would force app-based companies like Uber, Lyft, and Instacart to either stop using freelance drivers or hire them as traditional employees.  Workers for these companies d enjoy the ability to set their own schedule and work when and where they want.  They can also work in more than one job.  Not only does the ABC test affect businesses in the gig economy, it also affects other independent contractors and workers, who appreciate the flexibility this type of work provides.  If companies are forced to hire independent contractors as traditional employees, they can then set a weekly schedule for these workers and dictate to them when and where they are allowed to work. 

In addition to changing the gig economy the PRO Act would overturn the franchising business model.  The PRO Act would make franchisors legally liable for workers they are not directly involved in hiring, firing, or scheduling.  It is likely that in response to this increased legal liability, franchisors would reduce the number of franchises and leave thousands of workers out of jobs.  According to Rachel Grezsler of the Heritage Foundation, there are currently about 75,000 franchise establishments spread across 300 different types of businesses including fast-food restaurants, hotels, and small stores.  Most of these franchises are owned by members of the local community who are small business owners.  The additional liability these small business owners would face would lead to increased costs and likely a loss of jobs across the country.  Union leaders would find an easier path to grow their membership and the amount of union dues paid to them.  They would no longer have to put in the legwork of organizing workers at each franchise location and instead could conduct one large organizing campaign to unionize all workers of the franchiser across the country. 

The PRO Act would upend large sections of the economy and deprive workers of the independence to make money on their own time.  The economy is starting to slowly recover from the COVID-19 pandemic and the most recent jobs report fell far short of expectations.  Congress should focus on passing pro-growth and pro-worker policies instead of legislation like the PRO Act that would benefit union bosses at the expense of small businesses and independent workers.