Stalled: The House of Representatives’ ABC Test Law Remains a Non-Starter for Now

U.S. House Passes “Protecting the Right to Organize” Act (the “PRO Act”)
On February 6, 2020, as impeachment proceedings concluded, the United States House of Representatives passed the PRO Act. The law passed in a 224-194 vote, mostly along party lines. Among other changes, the law would impose the “ABC Test” that was controversially implemented through California’s AB-5 legislation at the national level, revising the statutory definition of “employee” contained in the National Labor Relations Act and related labor laws.

Stalled for Now
Six months after it was passed, PRO Act opponents can rest easy, at least for now. Shortly after its passage, the Trump administration signaled that it would veto the law if passed in its current form. Senate Majority Leader Mitch McConnell has taken no action to move the bill forward in the Senate. But the Act is supported by a number of prominent Democratic senators, and former Vice President and presumptive Democratic presidential candidate Joe Biden has endorsed the California version of the PRO Act (AB-5). The outcome of the 2020 presidential and congressional elections will almost certainly dictate the law’s fate. Stakeholders must plan for this uncertainty accordingly.

The Stakes
Proponents: Proponents of the ABC Test generally argue that worker misclassification has the effect of denying workers access to benefits and protections like minimum wage, overtime, paid leave, unemployment and health insurance, and safe workplaces and workers’ compensation. Taxpayers, they argue, are left to foot the bill for these programs, while state and federal governments eat substantial tax revenue losses. Amidst the COVID-19 pandemic, proponents argue that misclassification leaves workers particularly vulnerable because they lack the workplace protections, and attendant economic security, that allow them to weather serious illness or job loss.

However, while worker misclassification is a hot button topic, and critiques of current approaches are easily located, a specific justification for use of the ABC Test (as opposed to some other method of classifying workers) is harder to find. In his testimony in support of the House’s PRO Act, AFL-CIO President Richard Trumka’s focus was on other aspects of that legislation. He did not mention the ABC Test. In fact, the issue of worker classification was mentioned just once and in passing, with Mr. Trumka stating his view that, by preventing employee misclassification, the PRO Act ensures that employees are not deprived of the right to unionize by employer-applied labels. House Speaker Nancy Pelosi did not comment on the ABC Test in a floor speech supporting the law. Press releases from the office of Virginia Representative and Education and Labor Committee Chairman Robert C. “Bobby” Scott, the law’s lead sponsor, likewise do not comment on the reasons for choosing the ABC Test as the defining standard for national worker classification. The Act’s Fact Sheet, from the offices of Mr. Scott and Senator Patty Murray, merely notes that the Act “prevents employees from misclassifying their employees as supervisors or independent contractors,” but does not explain why the ABC Test is, in their view, the best way to do so.

The Opposition: On the other hand, as we have explored in a series of articles, the ABC Test faced staunch opposition even before it was passed as part of AB-5 in California. That criticism continued after it was made state law, particularly as the COVID-19 pandemic raged on, with some gig and freelance workers warning that AB-5’s conversion of independent contractors into employees could harm or completely eliminate certain areas of work and deprive workers of needed flexibility in a time when gig work might help make ends meet for families facing unemployment or the unique challenges of bringing in income with children at home and out of school. AB-5’s one-size-fits all approach, critics have argued, does not best serve workers.

Criticism of the ABC Test codified in AB-5 and the House’s PRO Act has been wide-ranging. In New Jersey, where state legislators reintroduced a previously-withdrawn bill that would implement the ABC Test, it comes from a diverse group of trade professionals: doctors and sign language interpreters who want to control their own hours; designers who relish their creative autonomy and fear age bias if forced to reenter the full-time job force; writers and social media consultants who cannot hold a full-time job while simultaneously caring for a special-needs child or a sick or elderly parent; and online teachers who work odd hours teaching children in other time zones while homeschooling their own children. Opposition comes from musicians, too. One New Jersey musician argues that, as part of the nature of their business, musicians bounce from group to group and band to band, sometimes working with as many as two dozen groups or bands in a single year. But few local music groups have enough work to pay every person who plays with them over the course of a year minimum wage, plus benefits. Making the ABC Test law, he argues, would make the industry’s gig-by-gig hiring unlawful, pushing performers out of work and leading to a downturn in live music at places like weddings, restaurants, festivals, and worship services.

We’ll continue to monitor the events and proceedings in courtrooms, legislatures, and on the ground across the country in the fight over the ABC Test. With a team at Ansa Assuncao LLP that possesses decades of collective experience representing transportation industry clients throughout the nation, including in matters involving independent owner-operator drivers (a significant part of the gig economy), we stand ready to offer you assistance amidst this evolving legal landscape.

Roman T. Galas is Partner in our Pennsylvania office.
Heather L. Williams is an Associate in our Maryland office.