PRO Act will Hurt Gig Economy Workers and Independent Contractors | Citizens Against Government Waste

PRO Act will Hurt Gig Economy Workers and Independent Contractors

The WasteWatcher

Currently in the United States, millions of people have control of their own livelihood as independent contractors beholden to no one except themselves.  These jobs have traditionally included freelance writers, tutors, music teachers, real estate agents, physical therapists, truckers, doctors, lawyers, and hairdressers.  Over the past decade, these jobs have expanded to app-based gig economy workers like Lyft and Uber drivers, Instacart and DoorDash delivery drivers, and other activities. 

On September 18, 2019, these jobs were dramatically altered when California Governor Gavin Newsom signed  Assembly Bill 5 (AB 5) into law.  AB 5 was supposedly aimed at workers for DoorDash, Lyft, and Uber, but instead has led to the loss of work for independent contractors in every imaginable industry.  It was intended to protect workers by guaranteeing a minimum wage, sick leave, workers’ compensation, and unemployment benefits.  Since then, the California legislature has worked to exempt several industries from AB 5, and voters approved a 2020 ballot measure that exempts app-based delivery and transportation services.

Despite the ongoing controversy over AB 5, on February 6, 2020, the House of Representatives voted 224-194 in favor of Protecting the Right to Organize (PRO) Act, which not only included a provision that followed AB 5, but also made significant changes in labor law, including eliminating all state Right-To-Work laws and secret union ballots, among other pro-union provisions.  The legislation has been endorsed by President Biden, who also stated that he wants to “aggressively pursue employers” who violate labor laws including misclassifying employers as independent contractors.  He also wants to go “go beyond the PRO Act” by enacting legislation that would impose strict penalties on corporations and “hold company executives personally liable when they interfere with organizing efforts, including criminally liable when their interference is intentional.”

The PRO Act will do considerable damage to the economy of the United States.  While workers in the energy industry, among others, have already lost or will lost their jobs due to Executive Orders issued during the president’s first two weeks in office, even more people can expect to have their livelihoods affected should the PRO Act be enacted.  According to an August 2020 report the Bureau of Labor Statistics, 10.6 million independent contractors were identified in May 2017, or 6.9 percent of total employment. 

President Biden also issued a memo that would “halt or delay” regulations issued during the Trump administration that have not yet taken effect.  One of the regulations that will be challenged due to this memo is a final rule from the Department of Labor that clarifies the status of independent contractors and employee under the Fair Labor Standards Act.

The rule includes an “economic reality” test to decide if someone works for themselves or an employer, including the amount of control over the work and the change for a profit or loss based on their own initiative and/or investment, among several other factors.

The PRO Act cannot be allowed to become law.  The more regulations that are imposed on these independent contractors and the gig economy as a whole, the more damage will be done to the nation’s economy.  Individuals, families, and businesses have been struggling to make ends meet during the coronavirus pandemic.  Passing the PRO Act will only harm them further.