Californians Rejected a Harsh Law That Destroyed Freelance Jobs. Congress Is Trying To Make It Federal Law.
The PRO Act would demolish the gig economy for the benefit of labor unions and would undermine right-to-work laws.
In November, California voters approved a ballot initiative that vetoed parts of a bad labor law forcing many companies and industries in the state to hire independent contractors as employees. So why, now, are Democrats in Congress trying to force these rules down the entire country's throat?
The California bill, A.B. 5 became a source of vicious labor conflict in the state. It was designed to attack ride-sharing services like Lyft and Uber and delivery services like DoorDash and Grubhub. These companies operate via independent contractors rather than employees, which undermined the strong union controls over the labor market in the state.
A.B. 5 ended up hitting thousands upon thousands of freelance jobs in the market, from writers to musicians to real estate agents to interpreters. Eventually, lawmakers had to go back and carve out a bunch of exceptions to the law. They kept the ride-sharing and delivery services, the target for the legislation, in the law. But the companies didn't take it lying down and instead forced the measure to a vote via Proposition 22. California voters, despite their strong Democratic leanings, agreed that drivers should be permitted to remain independent contractors. Prop. 22 was passed.
Rather than learning a lesson here, Democrats and labor unions are instead trying to make the entire concept federal law with the Protecting the Right to Organize Act (PRO Act) of 2021.
A.B. 5 formalized a procedure known as the "ABC test," established through a California court precedent, to determine whether a person was a freelance worker or an employee. Whether the person wanted to be a freelance worker or an employee was utterly irrelevant to the test. Under the ABC test, the following three conditions must all apply in order to classify somebody providing services for your company as a freelance contractor:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work.
- The worker performs work that is outside the usual course of the hiring entity's business.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
If those conditions are not met, workers must be treated as employees. These rules hit a remarkably broad swath of freelance contractors and are precisely what caused A.B. 5 to threaten so many independent jobs. And yet, the ABC test has been imported directly into the federal PRO Act. California voters rejected it in November. Nevertheless, six California representatives are among the PRO Act's sponsors, and when the House voted on the bill on Tuesday, every Democratic representative from the Golden State voted yes, in defiance of what the voters decided just months ago. It passed the House by a vote of 225-206. Only one Democrat, Rep. Henry Cuellar of Texas, voted no. He has an excellent Twitter thread explaining why:
Why did I vote against the PRO Act? I read the bill; and here is why I voted to protect workers:
This bill would destroy small businesses and thousands of Texas jobs in our communities who are struggling to stay alive during this pandemic.— Rep. Henry Cuellar (@RepCuellar) March 10, 2021
If the PRO Act only implemented this terrible ABC rule, that would be bad enough. But as Cuellar notes, it also undermines state-level right-to-work laws, which stop unions from requiring workers to join unions and pay union dues if they don't want to be represented by them.
Some of the framing of the PRO Act is absurdly lopsided. Take this USA Today story, which almost exclusively quotes supporters of the legislation (save for one Republican lawmaker). Here's one justification for supporting the law:
Lane Windham, the associate director at the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, said that the PRO Act would rectify employers' ability to skirt longstanding labor laws. A former organizer with a clothing and textiles union working across the South, Windham said the bill's provision to stop employers from holding "captive audience meetings" — where they coerce or require workers to sit through meetings to discourage organizing — is particularly important.
So, to summarize, employers forcing workers to sit through meetings to discourage union organizing is bad and must be blocked by federal law. But forcing workers to pay dues to labor unions against their will is good and should be encouraged by federal law, even if state laws must be subverted to do so.
