Page 25 - NCISS Your Advocate September-Summer 2021

Legislative Update from NCISS Legislative Committee and Lobbyit

Legislative Updates from NCISS

Independent Contractor Overview
(Jason Ortega, Lobbyit – shared by Wes Bearden, NCISS President)
At the federal level, there are two areas of concern regarding the treatment of independent contractors. First is the
Protecting the Right to Organize (PRO) Act in Congress, strengthening workers’ ability to organize and implements the
“ABC” test to determine whether a worker is an independent contractor. Second is the Biden administration’s decision to
issue a new rule after scrapping the rule implemented by the Trump administration.

Congressional Action
Background: Granting workers more power is a top priority for Democrats in Congress. Last year, after gaining control in
the House, Democrats passed a version of the PRO Act with five Republicans voting for it. It subsequently went nowhere
in the Republican-controlled Senate. This past February, the bill was reintroduced in the House and Senate.

Latest Action: In March, the House passed the 2021 PRO Act, and now it awaits a vote in the Senate. Notably, the bill
passed with zero exceptions to the “ABC” test determination for independent contractors.

Next Steps: Currently, the PRO Act is stalled in the Senate. The vital thing to note is that this bill has no viable path forward
in the Senate. The bill only has 47 cosponsors, which means that not even every Democrat favors the bill. Even if every
Democrat votes for the bill, it needs ten additional Republican votes for passage. Votes that do not exist.

Additionally, there is widespread disagreement on the impact of the “ABC” test on independent contractors. Supporters
of the bill argue that it will only put the test in place to determine if independent contractors have the right to organize
and join unions. Opponents say that it will eliminate self-employment. This disagreement further complicates the passage
of the bill.

Regulatory Action
Background: The Trump administration rule set out an “economic realities” test to determine whether a worker is an
independent contractor or an employee under FLSA. The test analyzed how much control workers have over their job
duties and their opportunities for profit or loss. The rule was implemented with the expectation that more businesses
would use independent contractors.

Latest Action: The Biden administration has not stated that it will issue a new rule. The result is that the Department of
Labor (DOL) will continue to enforce the Fair Labor Standards Act (FLSA) but based on the interpretation of the current
DOL leadership. This means enforcement will ratchet up. Secretary of Labor Marty Walsh has stated that he believes “in
a lot of cases, gig workers should be classified as employees.” Biden’s pick to lead the Wage and Hour Division of the DOL,
the division tasked with this enforcement, has stated that he believes “most” workers should be considered employees
under the minimum wage law.

Next Steps: Enforcement is expected to ramp up. DOL may issue a new rule that lays out the administration’s position on
independent contractors more explicitly. That will take time, and there will be opportunities to engage and provide
feedback.

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