This week, the House of Representatives is considering the PRO Act, which would establish a federal “ABC test” for workers. This provision, modeled after a similar test in California’s Assembly Bill 5, could cause tremendous uncertainty for American workers and wreak havoc on our economy. To protect workers, it is critical that lawmakers reject the ABC test completely.
The ABC test would classify a worker as an independent contractor or an employee through three narrow requirements that workers must satisfy. To understand why this test is so hazardous for workers, one should look at the impacts of AB5 in California – where the bill forced thousands of independent contractors to lose their earning opportunities entirely, and caused a feeding frenzy for lobbyists and special interests seeking exemptions from it.
In the case of AB5, the most significant requirement is the “B” prong. Under that element, a person is an employee unless “the person performs work that is outside the usual course of the hiring entity’s business.” An interpretation this narrow, however, will mean that many independent workers lose their jobs altogether.
That’s because it means if the contractor and the company are in a similar business, the worker must be classified as an employee. It doesn’t matter if the contractor has total control of their schedule, work, and performance (the A prong), or if they’ve owned their own business and maintained their own clientele for 20 years (the C Prong). It doesn’t even matter what the contractor wants.
The PRO Act, modeled after AB5, would make an ABC test federal labor law, meaning workers everywhere could be reclassified as employees. App-based workers, for example, could be forced into a traditional employment role with a rigid schedule and inflexible shifts. They could lose the independence, flexibility, and autonomy that drew them to app-based work in the first place.
According to a study by Berkeley Research Group, as many as 90 percent of app-based workers would lose their work opportunities in an ABC test system. In California, AB5 is forcing independent workers in many industries to face reduced income or lose their jobs entirely, which is why nearly 100 occupations had to be carved out of the requirements. The PRO Act, by contrast, contains no exceptions. Doctors, lawyers, referral services, franchise businesses - all of them would have to pass the ABC test to avoid reclassification under labor law.
Not only is the ABC test economically devastating, but it’s also unpopular with workers. According to one survey, 69 percent of app-based workers prefer to be classified as independent contractors. In the 2020 election, an overwhelming, bipartisan majority of California voters supported a measure to eliminate the ABC test for app-based workers and keep their independent contractor status while adding wage protections, workplace injury insurance, and payments for health insurance, all paid for by the gig companies.
Put simply, the ABC test won’t fix our antiquated system because it is itself an antiquated solution. Lawmakers need to promote modern solutions that protect worker independence while providing critical benefits and certainty for every worker who needs it, and work closely with all stakeholders as they debate this important issue.