Expansive federal legislation that would rewrite labor law, and codify the “ABC” test for worker classification – already in California’s controversial AB 5 – is under consideration on Capitol Hill.
“The PRO Act is largely designed to increase the unionization of workers, and may well achieve that goal if passed,” Adam Summers, a research fellow at the Independent Institute, told the Northern California Record by email. “Unfortunately, it would also drastically increase costs to employers through provisions that would force them to treat independent contractors as full employees (including offering the typically more generous benefits to which full employees are entitled) and encourage more costly litigation through new liabilities and richer potential pay-outs.”
The PRO Act would impose more restrictions on businesses already reeling from the mandated closures and job losses amid the COVID-19 economic downturn.
“For example, provisions of the bill could make contractors liable for the actions of their subcontractors, and make franchisors liable for the actions of their franchisees, potentially threatening the entire franchise model which has allowed so many independent operators to become entrepreneurs and grow successful businesses,” Summers said.
The PRO Act also would ban the Right-to-Work (RTW) laws presently in effect in more than half the states in the country. Those workers aren’t required to pay union dues as a condition of their employment; several studies say RTW states have higher rates of employment, income, and economic growth compared to non-RTW states, particularly in manufacturing.
“[It] would effectively nullify right-to-work laws in 27 states, require employers to turn over employees' personal information (including home addresses, email addresses, and cell phone numbers), and force employers to allow their email and other technology systems to be used for union organizing activities,” Summers said, adding that the impact would violate workers' privacy rights and freedom of association while encouraging union harassment and forcing those who don’t want to be part of the union to pay “fair share” dues.
Summers noted the U.S. unionization rate has declined from nearly 30 percent in the 1950s to less than 11 percent today (and only about 6 percent in the private sector), as it’s come to be viewed as counterproductive – incapable of meeting the needs of a changing workforce.
“The PRO Act is an attempt to change the rules and tilt the playing field to further advantage unionization efforts and do through political diktat what the unions have been unable to do at the ballot boxes,” Summers said. “California's AB 5, on which the PRO Act is partially based, has resulted in significant job and income losses for independent contractors--and nearly resulted in the total shutdown of Uber and Lyft ridesharing services before voters saw fit to exempt them from the law via Proposition 22 in November.”
Another crucial labor decision is on the agenda in Washington as hearings on Julie Su’s nomination for second in command at the U.S. Labor Department are scheduled to take place soon. Su is currently Secretary of the California Labor and Workforce Development Agency – the parent agency of the Employment Development Department (EDD) – which is under federal investigation for paying out billions in fraudulent claims.
“Again, it is unclear how this will ultimately play out,” Summers said. “In a sane world, the official in charge of overseeing an agency such as the EDD – which has amassed an atrocious record of failing to process or even respond to unemployment claims in a timely manner, update its IT systems accordingly, prevent fraud on a massive scale, or refrain from including beneficiaries' full Social Security numbers on communications sent through the mail – would be held accountable, not rewarded with a promotion to a higher office.
“But this is the world of politics, and if the politicians have no shame, Democrats have the numbers to confirm her nomination. In light of the EDD's record under her stewardship, however, and the numerous warnings independent auditors issued about those deficiencies over many years, one would think there must be someone better qualified for the job without the EDD's baggage.”
The ultimate outcome for the PRO Act is also murky.
“Democrats have the numbers to ram it through, but they cannot afford any defections since Senate Republicans will likely stand in unison against it,” Summers said. “Senate Democrats in right-to-work states and politically moderate states will face particular pressure to oppose the bill for fear of being blamed for the many job losses that would result from its passage.”