The U.S. House of Representatives recently passed the PRO Act, also known as HR 842. Officially called the Protecting the Right to Organize Act, the legislation seeks to take California’s AB5 and apply it nationwide. The California bill was designed to rein in companies like Uber and Lyft. But it has harmed millions of others in its wake.
PRO Act supporters need to convince ten GOP senators to go along with the bill. Right now, the chances of that happening look slim. But stranger things have happened. The Democrats could offer the GOP a compromise on Section 230 waivers to get them on board. It is also possible that the Senate will do away with the filibuster altogether.
So what does it all mean? What would happen if the PRO Act became law? It could decimate several industries with very little effort. Real estate, travel, and nearly every kind of freelance occupation would be up for grabs.
Real Estate Agents Become Employees
The fear among realtors is losing their independent contractor status and being forced into traditional employment. The problem they face is the second of the three litmus tests applied by the legislation. Those litmus tests for being considered an independent contractor are encapsulated in HR 842 as follows:
- 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.
- The service is performed outside the usual course of the business of the employer.
- 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.
A real estate agent is not performing work “outside the usual course of business of the employer.” Selling houses is what real estate brokers do.
Salt Lake City’s CityHome Collective is a real estate brokerage and design firm. How its designers would be impacted by the PRO Act is unclear. But all of its independent agents would become employees because they do not pass the second litmus test.
The Same for Travel Agents
Travel agents are in a similar situation. Most work as independent contractors on behalf of agency owners through which they are licensed to work. They control their own schedules as well as how and where they do their jobs. They are involved in an independently established trade for which they perform services. But they do not perform work that falls outside of their agencies’ normal course of business.
Like real estate brokerages, travel agencies would have to take their agents on as employees. Agencies would be responsible for paying overtime, benefits, and payroll taxes.
Freelancers the Hardest Hit
Unfortunately, freelancers would be hit the hardest if the PRO Act becomes law. Most freelance writers, web developers, etc. do not work for a single employer. Most work piecemeal, taking jobs where they can get them. There is no single employer they could go to for full-time work. So they either find a new line of work, go on welfare, or move to a country that is still friendly to freelancers.
A great Forbes piece discussing the PRO Act also explains that the rest of the world remains friendly to freelancers. Freelancing is big business across most of Europe, and it would become an attractive place to move if our own government decided to pull the rug out from underneath freelance workers.
Let us hope the PRO Act doesn’t become law. If it does, millions of people are going to have their lives turned upside down.