How The PRO Act Helps Freelancers: A Legal Analysis

In March, the National Writers Union and the Freelance Solidarity Project released a statement of support for the PRO Act, which has also been endorsed by the Author’s Guild, the Freelancers Union, the Dramatist Guild, and a host of other freelance writer and creator organizations. These organizations reject the false claim that the PRO Act’s “ABC Test” will require the wholesale reclassification of freelancers as employees, or otherwise harm freelancers’ careers. The NWU and FSP made this determination after consulting experts in labor and employment law about the bill. To maximize the amount of accurate information available, we are publishing excerpts of their legal analysis.

Stacey Leyton, an esteemed labor attorney at Altshuler Berzon LLP, debunks the inaccurate claim that the PRO Act’s impact on freelancers would resemble the outcome of California’s Assembly Bill 5, which used an “ABC Test” to classify certain freelancers as employees under state law rather than independent contractors, leading some employers to terminate freelancers’ contracts. Here is Leyton’s analysis of the PRO Act’s classification test, found in H.R. 2474, SEC. 2(a)(2) (emphasis ours):

While the ABC test set forth in the PRO Act is similar to the test for employment status that California adopted in AB 5, the scope of the test’s application is very different.

AB 5 modified the employment test for all purposes under California’s labor and employment laws. By contrast, the PRO Act modifies the employment test only for purposes of the NLRA, which covers the right to form or join unions; engage in protected, concerted activities to address or improve working conditions; or refrain from engaging in these activities. The PRO Act does not modify the test used for employment status for purposes of other federal laws, such as the Fair Labor Standards Act, Title VII, ERISA, the Internal Revenue Code, or the Copyright Act; it also does not change the test for employment status under any state or local laws. This means that freelancers could remain independent contractors for purposes of taxes (being paid as 1099 workers rather than W-2 workers) and other laws; the publication would not be forced to reclassify the freelancers for tax or other purposes. And freelancers who perform work for various publications could continue to do so.

Leyton also emphasizes that the PRO Act would provide freelancers who sought to organize for better labor conditions with significant new legal protections: 

Under the PRO Act, freelancers who are deemed NLRA employees will gain the right to unionize under the NLRA. (They will not, of course, be forced to unionize, because a union would need to make a majority showing in order to be recognized as the exclusive representative.)   

Finally, Leyton adds that, in addition to allowing freelancers to unionize, the PRO Act would protect independent contractors who took certain actions to improve their working conditions from employer retaliation:

Moreover, even if freelancers for a particular publication did not elect to unionize, being deemed NLRA employees would protect them against certain employer actions. For example, 29 U.S.C. §157 protects, and §158 prohibits interference with, employees’ “concerted activity” to improve their terms and conditions of employment. Such protected, concerted activity is not limited to seeking to organize a union, but can include acts such as talking with co-workers, circulating a petition, or jointly advocating to management about workplace issues.

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The National Writers Union also consulted with Diana M. Bardes, a partner at Mooney, Green, Saindon, Murphy & Welch, P.C. and former editor at the Federal Circuit Bar Journal. Bardes’ presentation on the PRO Act, which can be found below in its entirety, covers the aspects of the bill specific to independent contractors on pages 10-15.

https://docs.google.com/presentation/d/1sFbB94W1KK9BJlWHbpfQUcZBjUGWCmEY/present?slide=id.p10 

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For convenience, we have also excerpted the most relevant slide on the issue (emphasis ours):

COMMON QUESTIONS

• If I am a freelancer but I meet the ABC Test definition of employee, does this mean the company must hire me as a W-2 employee?

• No.  The PRO Act does not affect any of the laws that typically determine whether someone is hired as a W-2 employee; the IRS test would still apply.

• If I am a freelancer but I meet the ABC Test definition of employee, does this change my employment status under state law?

• No. Your state law still applies for the purposes of minimum wage, unemployment insurance, workers’ compensation, etc.  And, the test for determining whether you are an “employee” for the purposes of those state statutes is still based on your state law.

• Why not just drop the ABC Test from the PRO Act?

• Because employers often try to stop their workers from organizing a union by claiming that the workers are independent contractors. The ABC Test is the best way to protect the rights of workers to engage in collective bargaining. And if you don’t want to organize, then the ABC Test has no impact on you.