Last updated: The #PROact: Millions of careers in peril as vote on labor law looms

The #PROact: Millions of careers in peril as vote on labor law looms


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Exactly a year ago, the world of work was transformed nearly overnight. Millions shifted to working from home when pandemic-related shutdowns began, and millions more lost their jobs or were furloughed. Essential workers struggled to stay safe.

Sounds like a time for more workforce support, options, and flexibility, not less, right?

Women, for example, were both disproportionately impacted by job losses in 2020 and have carried the most household burdens during the pandemic. Older workers, people of color and those with disabilities and health issues also found themselves needing flexible, remote career options.

And yet, here we are, with legislation that could quite literally take millions more from the workforce.

The #ProAct: Despite havoc and economic damage in CA, bill is now up for vote in the House

As a result of the pandemic and thanks to new mindsets around work, it’s no surprise that the self-employed workforce is booming. In fact, a recent Upwork study found that two million Americans started freelancing over the past 12 months alone, while the gig economy had already been going gangbusters for the past decade.

Certainly, some are doing so out of necessity, rather than by choice. But for many – particularly those in skilled professions and those requiring flexibility – second jobs or side hustles, the freelance life has been a lifesaver during these difficult days, and may remain a long-term choice.

During the pandemic, hiring freelancers also became an important option for employers who could not make employee hires, but also realized that skilled freelance talent, working remotely, could meet their needs. A report found that freelance job openings increased over 25% during the 2nd quarter of 2020—compared to the first three months of the year.

This is arguably a win-win moment—where Americans need freedom and flexibility in their employment more than ever, while companies benefit greatly from the services freelancers provide. However, the House of Representatives will vote – likely today, March 8 – on a bill that could result in millions of independent contractors and small business owners losing their incomes.

The PRO (Protecting the Right to Organize) Act is touted as “landmark legislation to protect workers’ rights to organize.” In practice, the PRO Act, as currently written, would redefine who is classified as an employee by using a three-part “ABC” test to determine whether a worker is an employee or independent contractor.

A similar bill using the same ABC test—an antiquated quiz created in 1937 for Great Depression-era workers and far more strict than the more modern IRS version— went into effect in California in January 2020, devastating millions of independent contractors and their clients.

By May 2020, the economic damage was so severe to creatives and highly-specialized professionals that the state passed another bill exempting many professions. In November 2020, California voters passed Prop 22 by a 59-41% margin, which exempted app-based workers from the original bill.

What is the ABC test?

According to the ABC test, an individual must be classified as an employee unless:

  1. 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
  2. B: the service is performed outside the usual course of the business of the employer
  3. 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

Unfortunately, the bill in its current form threatens the livelihoods of countless self-employed professionals, from writers, graphic designers, software developers, and videographers to actors, accountants, hairdressers, and even truckers and construction workers.

That’s because of the “B” part of the ABC test:

A freelance writer would be prohibited from working for a newspaper, since they’d help create the product that the publication publishes in the usual course of their business.
A freelance accountant wouldn’t be able to work for an accounting firm.
A musician wouldn’t be able to work for a band or music venue.
A photographer would not be able to do a one-off job for a photo agency.

In addition, gig workers working part-time driving for Uber or Lyft fail the “B” prong of the ABC test. A worker must pass all three to remain independent.

The future of employment has changed, and flexibility is key

According to a Contently study, 75% of freelancers are self-employed because they prefer it over a traditional full-time position.

As a full-time freelance writer for over a decade, I certainly count myself among that group. I’ve been particularly grateful for my flourishing solo business since the pandemic began. I was already working at home with a flexible schedule, so I carried on as always, except suddenly everyone else was home, too—including my husband. I was lucky enough to work for multiple clients who had the budget to keep hiring me, and enjoyed the freedom to choose to scale up or pull back.

I was able to be my own boss, while so many of my friends were laid off or wilting under the pressures of zillion Zoom meetings.

Certainly, there should be greater legal protections for those who are being treated as independent contractors but really should be considered employees. But the vast majority of freelancers do not want to be employees and are willing to take on the risk of running their own small businesses.

They have multiple clients. They make enough money to pay for their own benefits; that’s why the gig economy is booming. They have many reasons for choosing a self-employed life, from family issues and caregiving responsibilities to highly-specialized skills and an entrepreneurial spirit.

For companies currently examining the future of work, there’s no doubt that the continuing and growing trends towards remote work, hybrid workplaces, agile business models based on project work, collaborative technology and digital nomads will all make augmenting teams with professional freelancers highly attractive.

These modern workplace trends will not go away. Instead, they should be embraced and addressed and balanced so that all people have the freedom and opportunity to work in the ways they want (or need) to work.

Purpose powers the future of business.
Learn more HERE.

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