The PRO Act of 2021 May Shift Owner-Operators
You might recall last year a bill called the Protecting Right to Organize (PRO) Act made it through the House of Representatives, but died either in the senate or on the president’s desk. It is making a comeback, and with Democrats in control of the house, senate, and presidency, it may just become law.
History of PRO-Esque Legislation
The PRO Act is based on the California AB-5 bill, which became official law in the state at the start of 2020. The law involved using an established list of criteria to determine whether or not a worker was an employee or an independent contractor, to prevent the exploitation of workers by misclassifying them.
It did not work out as well as originally planned. A judge in southern California put an injunction to make it not applicable to motor carriers operating under another’s Authority until a case went through the courts, CTA v. Becerra, which is still going as of the time of this writing. Even for the main industries in which it was trying to curtail worker exploitation, such as ridesharing and food delivery, companies got enough signatures to put Proposition 22 on the ballot, where it won 59-41 and granted exemptions for the main reason it was created.
As of today, AB-2257, a newer version of AB-5, has at least 100 different exemptions.
The ABC Test
AB-5 and AB-2257 expand upon the definition of an independent contractor by asking three questions, known as the ABC test:
- Is the person hired given extensive freedom in how about they go accomplishing the task assigned?
- Is the work done outside of the hiring company’s normal business operations?
- Is the person hired a member of an established business for the line of work they are doing?
If the answer to any of these questions is “no”, the worker must be labeled an employee and be given the benefits and services due to an employee such as social security withholding and worker’s compensation. A DoorDash delivery driver would answer no to questions 2 and 3, while an owner-operator leasing under a larger carrier would answer no to number 2 alone.
The PRO Act is based heavily upon California AB-5 and its ABC test, but is more resilient. While those who oppose AB-5 can cite the Federal Aviation Administration Authorization Act (FAAA) of 1994 to say it violates Congress’ ability to manage interstate commerce, the PRO Act would be Congress doing just that. This would impact the ability of owner-operators to drive their own trucks under the Authority of another carrier such as Landstar, a move in the industry that can be considered a stepping stone from company driver to owning a company.
Bottom Line
AB-5 proved to be an unpopular piece of legislation, despite being enacted in one of the most left-leaning states in the nation. Even with technically controlling the senate at a 50-50 split with a tiebreaker vote, it would only take one more Democrat than Republican crossing party lines to stop the bill in its tracks. While the bill has a significantly higher chance of passing than it did in 2020 under the Trump administration, it may not be enough.
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