California's job-killing AB 5 about to go Federal

Dave Wickenhauser on Wed, March 10, 2021

Last Updated: Wed, March 10, 2021

They say that as California goes, so goes the rest of the nation.

Unfortunately for gig workers, and especially for independent contractor truck drivers, the anti-independent-worker disease that has infected California is spreading nationwide.

Since it went into effect, AB 5 has caused thousands of California's independent workers to have lost their incomes, and now Congress is hoping to pass that misery on to all gig workers and independent contractors throughout the United States.

Introduced by U.S. Rep Robert Cortez Scott (D-Virginia), H.R. 842 builds on California's AB 5 in order to institute the ABC test for all companies across the United States that hire gig workers and independent contractors. Some 212 representatives have signed on as co-sponsors.

Given the makeup of Congress and the extreme leftward tilt in government the bill is likely to pass this year.

The full name of the bill, "Protecting the Right to Organize Act of 2021," makes it very clear what the purpose of the bill is and who will benefit the most.

In a March 8 statement of administration policy from the Office of Management and Budget supporting the bill, the OMB unabashedly admits the purpose of the bill is to "encourage union organizing."

"The Administration strongly supports House passage of H.R. 842, the Protecting the Right to Organize (PRO) Act of 2021, which would strengthen the Federal laws that protect workers’ right to organize a union and collectively bargain for better wages, benefits, and working conditions."

The OMB statement notes that, "The policy of the United States Government, stated clearly in the National Labor Relations Act, is to encourage union organizing and collective bargaining."

The statement lays the blame for the fact that less than 7 percent of U.S. workers are union members on the "anti-union efforts by many employers for decades …"

In a strongly rhetorical passage that reads a lot like, "Workers of the World Unite," the OMB pulls out all stops in support of the unionization of every worker in the United States.

"America was not built by Wall Street. It was built by the middle class, and unions built the middle class. Unions put power in the hands of workers. They give workers a stronger voice to increase wages, improve the quality of jobs and protect job security, protect against racial and all other forms of discrimination and sexual harassment, and protect workers’ health, safety, and benefits in the workplace. Unions lift up workers, both union and non-union."

All state right-to-work laws would be eliminated

Standing in the way of the current administration's desire to socialize the workforce are the millions of gig workers and independent contractors who enjoy the freedom to work without the constraints of government interference.

According to a Forbes article, the PRO Act would wipe out right-to-work laws as they currently exist in 27 states. In other words, legislators in 27 states recognize a citizen's right to work without being forced to join a union and pay dues. But those legislators would no longer be allowed to pass laws reflecting the will of their constituents.

States with right-to-work laws have a higher level of economic activity than states without that protection of citizens' rights. Workers in those states enjoy higher wages and benefit from a higher level of economic growth.

Further studies, according to Forbes, show that workers in right-to-work states also enjoy a higher level of self-reported life satisfaction, both at the present time and for what they expect of the future.

To help unions undo the benefits to workers of the right to work H.R. 842 would virtually eliminate independents' threat to the unions by forcing companies that hire independent contractors to put them through the ABC test. And those who don't pass would have the choice of being hired as employees or quitting the workforce.

What that means for the trucking industry has already been played out in California with the enactment of AB 5.

The three-part test for determining whether a worker should be classified as an employee or independent worker would virtually eliminate the independent contractor model that is followed by thousands of commercial carriers, and it will affect hundreds of thousands of operators.

According to the bill text, the ABC test consists of "An individual performing any service shall be considered an employee and not an independent contractor, unless:

• (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;
• (B) the service is performed outside the usual course of the business of the employer;
• (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.

It's the middle part that precludes a commercial carrier from hiring an independent contractor driver. Hundreds of thousands of independent operators would fail the ABC test.

Besides the economy-killing aspect of the proposed bill, there are further implications to the trucking industry if it should pass.

David Heller, vice president of government affairs at the Truckload Carriers Association, says that the originators of many trucking companies got their start as independent operators working for other carriers.

Heller's and other trucking groups are appealing to Congress to consider the impact of this legislation of the trucking industry. “I get that there are bad apples,” he told Overdrive of motor carriers that abuse the independent contractor model. “But the number of success stories far outweighs the negative ones.”

And Joe Rajkovacz, head of government affairs for the Western States Trucking Association, is quoted in Overdrive as saying that the "pathway to getting your own authority is by becoming an owner-operator leased to a motor carrier."

He points out that Congress is out of step with the wishes of the people regarding killing off the gig worker economy.

He cites the passage of the Proposition 22 ballot measure in the recent California election by 60 percent of voters calling for California's ABC test to be scaled back to allow more gig workers to operate independently.

Such a consensus from the population of a state that traditionally leans to the far left means that there could be repercussions against Democrats in the 2022 mid-term election.

Sudden turn-around in support for gig workers

H.R. 842 couldn't be a more stark example of the difference between administrations.

According to a publication from the U.S. Senate's Health, Education, Labor, and Pensions Committee, chaired by Patty Murray (D-WA), H.R. 842 cures the problem of President Trump's "unprecedented attacks on workers’ rights and growing economic inequality and instability."

"While the economy is working very well for the wealthy, the well-connected, and massive corporations—it’s stagnating for everyone else," Murray wrote. "This inequality, stagnation, and instability for so many is not a natural product of a functioning economy, it is the result of policy choices that have stripped workers of the power to stand together and bargain for fairer wages, benefits, and working conditions."

"Unions are critical ... but special interest-funded attacks on labor laws have eroded union membership," the committee concluded.

The current administration's sentiment is in stark contrast to the good news for gig workers and independent contractors that was announced by the trucker-friendly President Trump administration's U.S. Department of Labor as recently as September 22.

The DOL was preparing federal guidelines that would add a new test to whether gig workers and independent contractors should be classified as employees or non-employees. Basically, the proposed guidelines would make that decision based on an "economic reality" test and not the egregious ABC test.

Among other considerations, the determination would be based on two “core factors,” specifically the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors help determine if a worker is economically dependent on someone else’s business or is in business for himself or herself.

“The Department’s proposal aims to bring clarity and consistency to the determination of who’s an independent contractor under the Fair Labor Standards Act,” said Secretary of Labor Eugene Scalia, in its September 22 announcement.

“Once finalized, it will make it easier to identify employees covered by the Act, while respecting the decision other workers make to pursue the freedom and entrepreneurialism associated with being an independent contractor.”

Obviously, those considerations for worker freedoms are rescinded now in favor of throwing everyone into a pool that is accessible to union organization.

Dave Wickenhauser went on the road driving big rigs after retiring from 33 years in newspaper journalism. His trucking novel, "Crimson Highway" the first in the Hugh Mann series, is available as an Amazon paperback, and as an Amazon Kindle ebook.

Sources: Overdrive, Forbes, HR 842 PDF, OMB statement PDF

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