PRO Act Passes House, Elevates Threat To Independent Contractors

Last week, the Protecting the Right to Organize (PRO) Act passed the House of Representatives and is being sent to the Senate. H.R. 842 amends current labor law to establish a new definition of employees which expressly eliminates independent contractors in the U.S. Among its provisions, the legislation makes a broad presumption that all workers in the U.S. are employees unless each element of a newly established “ABC” test can be demonstrated.

The three biggest problems with the PRO Act are that it would eliminate independent contractor agreements, enforce expanded government control over private employment contracts and significantly broaden risk exposure to joint employer liability.

The legislation also sets new criteria for determining occupational status as an independent contractor instead of an employee. The proposed new criteria entail a three-pronged test for which each of the requirements must be proven if an independent contractor wants to retain his or her status under federal labor law.

In the “ABC” test, an individual performing any service will be considered an employee and not an independent contractor, unless— ‘‘(A) the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact; (B) the service is performed outside the usual course of the business of the employer; and (C) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.’’

If signed into law, the PRO Act would significantly change how thousands of promotional products companies interact with each other and it will eliminate jobs in this industry. In the latest episode of PPAI’s PromoTalks podcast, PPAI’s D.C.-based lobbyist Cliff Andrews and PPAI’s Public Affairs Manager Maurice Norris discuss the implications of this proposed legislation on industry companies, answer some of the most commonly asked questions and explain how industry members can take action now to oppose it. PPB Presents: “Why The PRO Act Is Detrimental To the Promotional Products Industry,” is available free on Spotify and Apple Podcasts and at PromoTalks.

PPAI urges industry members to click here to quickly email and call their senators to educate them about why independent contractors in the promotional products industry do not want to be forced to reclassify as employees. The Association also encourages those who have already reached out to their legislators to do so again, as they and their staffers respond to getting repeated mentions on the same topic.

filed under March 2021
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Comments (1)
Kevin Terpenny
March 16, 2021
It is hard to believe that the Senate will vote for this legislation. But the suppliers have long used the ICs to expose customers to their products/ services in the promotional products industry. If it does become law, the suppliers will have to step up and increase their service personnel in order to more actively assist in each sale.
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