Freelancers Under Fire: Legislation Still Threatens Gig Economy Workers

• The original PRO Act passed in the House of Representatives in 2020, and then again in 2022. However, on both occasions it failed to pass in the Senate. The proposed federal law includes the ABC test, like the one from a California bill.
• The PRO Act was reintroduced by Sen. Bernie Sanders on Feb. 28.
• The ABC test is a three-prong labor test that is used to determine who is classified as an independent contractor and who is classified as an employee. 

Those working in the gig economy were three votes away from a verdict that could upend their livelihoods when proposed legislation last went up for a vote in Congress. Senate Bill 567, the Richard L. Trumka Protecting the Right to Organize Act of 2023 (PRO Act) has the potential to completely alter labor law in the United States. 

The bill, which was reintroduced by Sen. Bernie Sanders on Feb. 28, had failed to make it to President Biden’s desk to become a law in the previous Congress. It missed the boat by a mere three votes. 

With the current divided Congress, it seems highly unlikely that the PRO Act will become official legislation in the near future. However, the history and design of the bill has a more dramatic entrance to the national stage, and it’s one that still keeps some independent contractors on edge. 

The overarching fear and uncertainty felt by many working within the gig economy regarding federal policy began with a trial-run piece of California legislation known as Assembly Bill 5 (AB5). The state law was passed in September of 2019 and was later enacted in January of 2020. 

For a gig worker in California, AB5 could be described as a career coup, because it was drafted to reclassify as many independent contractors in the state as possible. AB5 required the application of the “ABC test” to determine if workers in California are classified as either employees or independent contractors — for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission (IWC) wage orders. All of a sudden hundreds of the independent contractors in California became something many of them never wished to be: employees.

Being an “independent contractor,” at least in most knowledge worker fields, comes with a certain degree of freedom. You are the master of your own schedule, you’re allowed to take on projects that resonate with you, and you have full reign to decline those that don’t. 

Depending on who you ask, this degree of freedom has been threatened, debated, and perhaps misunderstood by certain law makers in recent years. For members of the New Jersey-based volunteer group known as Fight For Freelancers USA, it was California’s gig economy that suffered the most from the initial whirlwind of debate. After legislation in California passed, gig workers in other states took notice.

“There’s been a chilling effect on various states, in terms of what some companies are willing to do now when working with freelancers,” said Debbie Abrams Kaplan, a freelance journalist and co-founder of Fight For Freelancers USA. “Sometimes we’ll see a call for writers, something like ‘we need a freelance writer to write about this specific topic.’ And if you are in a state like California, New Jersey, or New York, don’t bother applying. They say you cannot apply if you’re from those states, because they don’t want to work with freelancers. They just don’t want to deal with the potential audit issues or legislative issues.”

The original PRO Act, modeled after the California legislation, passed in the House of Representatives in 2020, and then again in 2022. However, on both occasions it failed to pass in the Senate. The proposed federal law includes the ABC test, like the one from California.

According to AB5, “Under the ABC test, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions: 

• The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; 
• The worker performs work that is outside the usual course of the hiring entity’s business; 
• The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

Karen Anderson, founder and leader of California-based group, Freelancers Against AB5, recorded the “negative impact” AB5 has had on California’s gig workers since it took effect. The legislation was so impactful that it caused a ripple effect in the national gig economy. 

The California legislation has reportedly cast a large net over a wide spectrum of fields including freelance writers, accountants, attorneys, architects, musicians, comedians, actors, graphic designers, and even truck drivers — to name a few. Around 600 categories of impacted professions have been identified by Fight For Freelancers, according to a recent interview the group’s co-founder Kim Kavin did with Rep. Kevin Kiley. 

The expansive reach of California’s ABC test primarily impacted gig workers, with particular attention drawn to the prominent ride-sharing giants, Uber and Lyft. These companies mounted a bold and noteworthy move through legal channels within California’s court system.

The two companies pushed Proposition 22 (Prop 22) onto a Californian ballot in 2020. The heavy initiative sought to grant a crucial exemption to app-based transport and delivery drivers — and with 59% of the popular vote, it emerged victorious. Despite fierce legal challenges, the verdict in California still stands, reaffirming the importance of the gig economy in today’s post pandemic workforce.

How are freelancers responding?

California was considered the kick-off state — the “beta-test” — for this new type of policy. However, many gig economy workers took notes on what happened in California, and were prepared for what was to come. 

That’s how the aforementioned Fight For Freelancers USA, “a nonpartisan, ad hoc, all-volunteer and self-funded group” began, said Kaplan. 

The group rallied against a New Jersey bill very similar to California’s AB5 — referred to by Fight For Freelancers as a “copycat bill.” Some Californians who had previously helped document the negative impacts of AB5 reportedly rushed to support fellow freelancers in New Jersey.

The New Jersey bill died in early 2020, and the group also worked to help halt a similar New York initiative. Then the pandemic hit, and it seems that any momentum in New York has since died. 

The group states that “Illinois, too, had some lawmakers suggesting they would put forward a copycat bill around the same time. It never came to pass.”

Kaplan recently accompanied Kavin, and Anderson when they testified before the House of Representatives Subcommittee on Workforce Protections (Committee on Education and the Workforce). The purpose was for the subcommittee to get witness testimony on the record for a hearing entitled “Examining Biden’s War on Independent Contractors” — a political title the Fight For Freelancers had nothing to do with.

“The pandemic really opened up a lot of people’s eyes to the effectiveness of being able to freelance and work for yourself, and to do so remotely and have multiple clients,” said Kaplan. “What I have seen and what my fellow freelancers have seen, is that it can actually be a more stable career — freelancing versus working for one company.” 

“If you get laid off [from a company], yes, you have unemployment benefits, but those are not going to be the full benefits,” she explains as one of the other benefits of freelance work. “It’s not going to pay the full amount, and you have to keep applying for those and searching for work. If I lose a couple of clients, I still have more and I can still find more – or pivot and do something different to bring in other work.”

The full hearing can be seen in its entirety on the Committee On Education & The Workforce youtube channel. 

The 2023 Senate PRO Act is still being debated, but the chances of it actually passing this year may be slim due to the makeup of Congress. Since Sen. Sanders reintroduced the bill, it recently made its way to its first Senate Health Committee Hearing where it was reported favorably, with a narrow 11-10 vote.