Perhaps you’ll remember California’s AB5, the bill that re-classified a lot of independent contractors as employees, including Uber drivers (until the passage of Prop 22 during the election).
Well, this kind of discussion is no longer limited to California, because a similar bill called the Protecting the Right to Organize Act (PRO Act) passed a House vote on Tuesday—and this kind of legislation could pose a threat to independent, freelancing, and otherwise non-W2-employed people across the country, including many marketers.
Put me in the right ballpark here. What’s AB5 all about? Broadly speaking, it’s a worker protection law. Independent contractors don’t have some of the rights and legal protections afforded to full-blown W2 employees (worker’s comp, for example), and companies have sometimes taken advantage of this.
AB5 happened because California witnessed a huge shift from W2 employment to independent contractorship, thanks largely to tech companies like Uber, and they worried that millions more people suddenly didn’t have these protections (maybe without realizing the threat and risk).
What does it mean to “re-classify” a worker? It basically means re-drawing the legal line between “work you can hire contractors to do” and “work you need a bona-fide employee to do.”
It’s long been understood that you have to (formally) hire people who play irreplaceable, lifeblood roles in a business; executives and “inner-circle” decision-makers obviously can’t be contractors. Middle managers probably can’t be contractors, but… entry-level workers? Well, now we’re entering the gray area where we need more specific standards for who can be what.
Who’s responsible for following these kinds of worker-classification rules? The hiring business; as a rule, they would get in trouble and not you. But workers, especially contractors, need to know about this stuff before they’re suddenly wondering why nobody will hire them. (That happened to a ton of contractors in California once businesses realized they could maybe get in trouble for hiring them post-AB5.)
What standards does the PRO Act propose (for classifying employee vs. contractor work)? It proposes something called an ABC classification test, the bones of which were created in the 1930s to protect factory workers. The test has three parts, and a given employer must be able to affirm all three parts to hire someone to work as an independent contractor:
[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. Basically: if your boss can boss you around with the specifics of your job, they can’t hire you as a contractor.
[B] The service is performed outside the usual course of the business of the employer. In other words: contractors can’t do the same kinds of work as the business hiring them. You might be fine if you’re a marketing consultant for people who, I dunno, sell shovels or something—but you couldn’t be a freelance writer working for other writers (i.e. a publication) or a freelance marketer working for other marketers (i.e. an agency).
[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. This basically says that, whatever your main line of work, any independent contracting work has to fall into that same line of work. Put yet another way: no side gigs unless it’s more of your main gig (e.g. no part-timing for stay-at-home moms).
So… does this mean the PRO Act is bad? Well, it might not have the wrong intentions overall, but it certainly has the wrong idea about what a lot of independent contractors need (especially in the marketing space).
As Deborah Abrams Kaplan points out in this post, a lot of contractors (she’s a content marketer) actually prefer the independence. She has more freedom and flexibility than a typical employee, she can earn more, and those earnings are diversified (several distinct clients instead of a single make-or-break employer). But the work she does wouldn’t be possible under the PRO Act, and a lot of marketing professionals would become stuck in a similar position.
As this source concisely summarizes, the ABC test “can’t tell the difference between an exploited worker and a thriving independent contractor.” There’s a good chance the PRO Act won’t make it through the Senate this time around, but the threat is knocking… and we’ll need to keep our ears open in case it decides to come back.