You might remember from last week that we wrote about California Assembly Bill No. 5 and its potential effects on the trucking industry as a whole. The article ended by mentioning other states following suit. Now, the House of Representatives has passed their parallel to AB5, called the Protecting the Right to Organize (PRO) Act. It uses much of the same language as AB5 does.
A Refresher on AB5
It is against the law to misclassify employees as independent contractors in an attempt to save money on social security, worker’s compensation, and other payments. Assembly Bill 5 expands upon the definition of an independent contractor versus employee by asking three questions, otherwise known as the ABC test:
- Is the person hired given extensive freedom in how about they go accomplishing the task assigned?
- Is the work done outside of the hiring company’s normal business operations?
- Is the person hired a member of an established business for the line of work they are doing?
If all three of these questions are answered as yes, then the person is an independent contractor. If the answer to even one question is no, then they are to be classified as an employee.
Let’s take a look at DoorDash, one of the companies for who this bill is targeting in particular:
- The person in question is given freedom on the route they take to get the food to the customer.
- The delivery of food is the company’s normal business operations.
- The driver is an individual rather than a part of another business.
DoorDash’s delivery service fails check 2 and 3, and as such DoorDash must consider the driver an employee.
On January 16th, U.S. District Judge Roger Benitez issued a preliminary injunction against AB5, forbidding California from enforcing the law on carriers and owner-operators until a pending lawsuit brought by the California Trucking Association is decided.
Our summary here is not a substitute for understanding the bill directly. For more information, you can read the bill here.
The PRO Act
You can read the PRO Act in its entirety here. The bill is much longer than the California bill and covers a multitude of topics such as a worker’s right to strike, but see Section 4(2) starting on page 10; its language closely follows the ABC test of AB5.
One of the key differences between PRO and AB5 is that while AB5 may interfere with federal law, the PRO Act is federal law, and as such detractors would not be able to cite the Federal Aviation Administration Authorization Act (FAAA) of 1994. By enacting this law in every state at once, Congress would be using its constitutional power to manage interstate commerce.
What Happens Now?
Unlike AB5 which was approved by the California government and signed into law before being blocked by a judge, PRO has only passed in the House of Representatives.
Next, the bill has to go through the Senate and obtain a simple majority of present Senate members attending the vote. Assuming it passes, it then passes over to President Trump’s desk where he could:
- Sign it into law, which would presumably get him the votes of the working class in rural America and amongst truckers (more so than he has now).
- Veto the bill to avoid adding red tape in various industries across the nation.
If Trump does the first route, it becomes a law, presumably on January 1st, 2021. If Trump vetos it, the PRO Act is on its last legs: both sections of Congress can override the presidential veto by obtaining a supermajority (67% of attendees approve) in both houses.
This intense legislative process ensures that only the most important and bipartisan bills become law.
PRO Act Affecting Truckers
When AB5 was soon to become law, many logistics companies such as Landstar told its California contractors that they would have to move out of California to continue working with Landstar; Landstar could not afford to keep them on as employees. If the PRO Act becomes law, these logistics companies and the owner-operators beneath them will have nowhere to run. They will either become employees and be granted an employee’s various benefits, or the drivers will be out of agreements with larger logistics companies altogether.
The odds that the PRO Act becomes law is unlikely considering the hurdles it will have to go through, but if it becomes law, it will be much harder for special interests such as the California Trucking Association or American Trucking Associations to block it.
The way the Bill is written now, it has zero mentions of the words “transportation” and “truck”, so there is very little chance that it will have an exception clause for the trucking industry once it becomes law.
It is unlikely it will pass into law, but the PRO Act is something to consider if you work as an Owner-Operator for a logistics company, no matter what state in which you live.
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