How the PRO Act Impacts Independent Contractors

The PRO Act sets a much higher bar for someone to be classified as an independent contractor (IC) – the same ABC standard codified in California following the California Supreme Court's Dynamex ruling. Following initial passage of the law, the legislature had to make exceptions for numerous industries and professionals whose work had usually and traditionally be done on a freelance or independent contractor basis and I would expect to see the same happen following passage of the Act.

Creating the same standard on the federal level will have similar results nationally as occurred in California, with many ICs losing work and becoming unemployed as employers sought to avoid bringing them onto the payroll as employees for whom payroll taxes would have to be collected and paid and who would be entitled to guaranteed wages and benefits.

"By classifying most ICs as employees, the unions will have a much larger pool of potential union members. However, there is little or no guarantee many of these new “employees” would join a union," says Robert S. Teachout, SHRM - SCP, XpertHR Legal Editor

The Act would void state right-to-work laws. These laws prohibit a union and an employer from reaching an agreement that requires employees to become union members or pay union dues or fees as a condition of employment. Under the Act, ICs (as “employees) would be required to pay core union dues or fair share fees or to become union members if a closed shop agreement exists.

Because the Act requires employers to provide employee information to unions, each IC’s home address, work locations, shifts, job classification, home and cell phone numbers and personal email addresses would be available to unions even if an IC does not approve or agree.

Because the Act facilitates the ability of unions to organize “micro units” within a company, ICs could potentially be places in separate proposed bargaining units for organizing efforts, allowing them to be grouped with employees in classifications more likely to vote to unionize. Then the above mentioned fair share fees provisions would kick in to collect dues. Another possibility is that the unions work to create a “hiring hall” for ICs, which employers would have use to gain the services of the ICs and ICs would be required to join participate in as a practical matter to gain employment (e.g., SAG and AFTRA, carpenters and other trade unions.)