The Democrats are quietly advancing legislation that would torpedo a lot of independent contractors and small business owners. From Eric Groves at alignable.com:
For the first time in months, you’re feeling more optimistic about your post-COVID future, according to recent poll results. And while that is something to celebrate, there’s also a new bill popping up in Washington that might put a damper on that hope.
It’s called the PRO Act and it comes with some serious implications for small business owners, ones that may be as or more dangerous than the COVID virus.
So what is the PRO Act and how could it affect your business? Let’s take a look at the details of this proposed law including recent data that shows just how big the impact could be and how you can raise your voice.
What is the PRO Act?
The PRO Act 2021, or Protecting the Right to Organize Act, focuses on reducing the barriers for employees to unionize. Based on a version of a similar state law that passed in California (AB5), it makes it easier for workers to form a union with the aim of protecting them from unfair working conditions.
But unions aren’t the issue—what comes along with the bill is where things get ugly.
If this legislation passes, there’s a provision within it that could act as a virus that would target the dreams of freelancers and independent contractors who depend on contract work for survival.
California is trying to kill the gig economy of which it is arguably the birthplace. From Gerard Scimeca at realclearmarkets.com:
If our current economy were a swimmer paddling furiously against a surging tide, then California is determined to hand it an anchor. Millions of Americans who work to make ends meet through freelance work in the ‘gig’ economy were recently handed virtual pink slips through AB5, legislation signed into law last year by Governor Gavin Newsome forcing independent contractors to be treated as employees.
With other states now looking to follow suit, it’s time Congress address this atrocious assault on worker freedoms and economic innovation by enacting federal standards on independent contract work. It would be a shallow victory for our economy to rebound from Covid only to have workers tossed out of their freelance jobs by clueless politicians seeking to “protect” their rights.
It should surprise no one that AB5 set in motion a massive economic wrecking ball that already has rideshare giants Uber and Lyft packing their bags to leave the state. Requiring contract workers to be treated as full-fledged employees in California or any state will of course make dozens of similar gig platforms unprofitable, in effect deleting apps right off our phones. A court’s temporary pause of AB5 last week is now holding worker jobs by a thread, causing Uber and Lyft to temporarily suspend plans to leave the state. If the ruling doesn’t hold, over 200,000 freelance workers will be driven out of work and millions of consumers will be left on the side of the road.
It is startling that in today’s modern economy California would even attempt such a clampdown. The one-size-fits-all model of employee-employer relationship is a relic of the distant past. More than a third of the U.S. workforce is currently employed as either full or part-time freelancers. This is no longer an employment niche but a pillar of our current economy. Freelancers earn good money, often sizably more than their employee counterparts. And despite the complaints of some interventionist lawmakers, workers themselves are quite content with the freedom their work offers. In one recent survey, 71 percent claimed increased work opportunities over the previous year.
California makes it still harder to business in a state that already has a horrible business climate. From Kelli Ballard at libertynation.com:
California used to be the dream place to live and work. With its range of landscapes, beaches, mountains, pleasant weather, and fertile soil, people flocked to the Golden State to make a better, more enjoyable life for themselves and their families. In days past, “California or bust!” could be seen on the sides of wagons as people rushed West to seek their fortune in gold. Now, however, it seems more accurate to say “Leave California or bust!” as many independent contractors find out that new Assembly Bill 5 (AB 5) could put thousands of owner-operated truckers and other drivers, such as those for Uber and Lyft, out of business.
Another one of Gov. Gavin Newsom’s schemes to come under fire, AB 5 makes it hard for companies to justify hiring independent contractors. In an op-ed for the Sacramento Bee, he wrote:
“Contributing to this imbalance is the misclassification of workers, where companies eager to save on labor costs identify workers as ‘independent contractors’ rather than employees. Workers lose basic protections like the minimum wage, paid sick days and health insurance benefits. Employers shirk responsibility to safety net programs like workers’ compensation and unemployment insurance. Taxpayers are left to foot the bill.”
If employer duties towards their “gig” workers, who are now considered independent contractors, must include the full panoply of obligations that they must assume if those workers are considered employees, then the “gig economy” is pretty much out the window. From Tyler Durden at zerohedge.com:
When Raef Lawson filed his $586.56 lawsuit in San Francisco he probably didn’t realize he could potentially end up disrupting the entire ‘gig economy’ that subsidizes a plethora of Silicon Valley tech giants from Uber to DoorDash, but that could very well end up being the outcome.
As Yahoo points out today, Lawson used to be a delivery driver for GrubHub but now he finds himself at the epicenter of an ongoing legal battle over whether 1099 contractors working for firms GrubHub and Uber should really be counted at employees rather than independent contractors.
In a windowless, 15th-floor courtroom in downtown San Francisco last week, GrubHub was defending its 1099 independent contractor employment model for its delivery drivers.
There’s no verdict yet, and there probably won’t be for at least another week. This trial, Lawson vs. GrubHub, is looking to determine whether or not plaintiff Raef Lawson, an ex-GrubHub driver, was misclassified as an independent contractor while delivering food for GrubHub.
Lawson’s lawyer, Shannon Liss-Riordan (pictured below), has spent a good chunk of time in this trial focusing on the amount of control she perceived GrubHub to have over Lawson during the time he delivered food for them. She’s trying to prove that Lawson’s employment met the conditions of the Borello test, which looks at circumstances like whether the work performed is part of the company’s regular business, the skill required, payment method and whether the work is done under supervision of a manager. The purpose of the test is to determine whether a worker is a 1099 contractor or a W-2 employee.
To continue reading: This $586.56 San Francisco Lawsuit Could Destroy The Entire ‘Gig Economy’