What if it became so difficult for businesses to hire freelancers that they stopped entirely and relied on employees? That’s the nightmare scenario that some freelancers worry will become reality should a new piece of legislation pass the Senate.
Just passed by the House, the PRO Act is a new labor bill that could dramatically change US labor law. The bill—meant to support unions and workers who want to organize—has wide Democratic support and mostly Republican opposition, so it’s unlikely to pass the Senate any time soon. But freelancers around the country have banded together to write their representatives in Congress and alert the media that their way of life may be endangered by the PRO Act because of a test it uses to determine whether someone is an employee or an independent contractor (freelancer): the ABC test.
Under the strictest version of the ABC test (which is included in the PRO Act), a worker is presumed to be an employee unless the company proves the worker:
A. is free from the control and direction of the company in performing work, both practically and in the contractual agreement between the parties; and
B. performs work that is outside the usual course of the company’s business; and
C. is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the company.
The B prong of the ABC test is considered the biggest problem for freelancers in the writing and publishing community. And already we have evidence of how this test plays out when strictly applied. In 2020, California implemented an ABC test with AB5—a bill that is widely considered to be a failure. AB5 was supposed to be a landmark gig-economy law to better protect people who work for companies such as Uber and Lyft. But the bill reaches beyond ride-share services with specific provisions for all freelancers. For example, under AB5, a publisher can legally hire independent contractors like plumbers or lawyers or accountants, but it can’t—because of the B prong—hire freelance writers and editors.
In November 2020, California voters passed Proposition 22 to allow app-based rideshare and delivery services workers to remain independent contractors, subverting AB5. Meanwhile, California legislators had to add exempted professions under AB5 so that other types of freelancers weren’t immediately thrown out of work. (They’re now up to 107 exempted professions, including writers and editors.) However, these exemptions have not always solved the problem. Some companies don’t work with California’s independent contractors because the fines and penalties for a single mistake are simply not worth the risk—so they hire no independent contractors at all.
However, the PRO Act uses the ABC test in a different context. The PRO Act is a piece of labor law regarding the ability of workers to unionize; it amends the National Labor Rights Act (NLRA) from 1935 and uses the ABC test as a means to define who is an employee and who is an independent contractor for the purposes of collective bargaining. When we talked to Mary Rasenberger of the Authors Guild, she said, “There are a lot of workers who are independent contractors paid with a 1099 and not a W-2 and [who] have no bargaining power. And they need collective bargaining. It’s doing exactly what we’ve been asking for.”
Without the PRO Act, it is illegal for independent contractors to engage in collective bargaining. The act brings people who meet the ABC test into the definition of employee—but only so they can receive NLRA protections. “That has no value for state laws—none,” Rasenberger said. Or, to put it another way: no state judge should look at the NLRA when it comes to determining someone’s employment status.
But according to a lawyer we consulted, the PRO Act would circumvent so-called right-to-work laws in states that have them and mandate that freelancers pay union dues. Catherine Losey of the Losey PLLC law firm told us that, currently, in states that have right-to-work laws, the worker has the choice to join a union or not, and all workers are protected by the collective bargaining agreement negotiated by the union. “Under the PRO Act, unions could insist that all workers in a collective bargaining unit pay dues as a condition of employment,” she wrote us. However, the employee might still remain an independent contractor under state law. “This all remains to be seen if the Act is passed and there is subsequent litigation,” she said.
Freelancers worry that the PRO Act may be the first step in a long-term strategy to eliminate most independent contractors. One advocacy group, Fight for Freelancers USA, led by co-founders Jen Singer and Kim Kavin, has pointed out that other legislation now being considered would make the ABC test the basis for all federal, employment, and tax law. Their FAQ states, “The sponsors of the PRO Act are pushing additional legislation that will eliminate most independent contractors. They are seeking to change labor laws so that all workers are presumed to be employees. We need to stop this attack on freelancers. … We have a right to exist!”
A Twitter thread on this topic by a pianist and choir conductor argues, “Classification laws have been tightening for years now. State and federal penalties for misclassification are incredibly steep, and it’s not worth it for the organization to expose itself to that risk. … An employer takes on extreme risk by classifying some collaborators as W-2 employees & others as ICs who are doing the same work. State and federal regulators will not look kindly on this arrangement.”
This has far-reaching consequences beyond authors and publishers. Part of the brewing battle concerns the rights of workers in an increasingly gig-oriented economy, which tends to benefit companies at the expense of workers. Companies don’t have to offer benefits, pay state employment taxes, or deal with any number of headaches that come with W-2 workers. And there’s no question that abuse and misclassification occurs today. But it’s going to be tricky to legislate protections for the most vulnerable while giving others the freedom and lifestyle they actively want and choose.
We see a rift developing within the freelance community, in some cases along generational lines: Younger, left-leaning workers (freelancers or not) want to see stronger laws that support unions and collective bargaining. Some may in fact wish to create more pressure on companies to hire employees—which is the expressed goal of some Democratic legislators—although opponents argue that has not been an outcome of legislation like AB5. Longtime established freelancers, often older, don’t want to see new laws that would create a chilling effect around their ability to retain or secure freelance work. Still, restrictions around freelance work affect many types of people of all ages, including parents who need to work at home, people with disabilities, and anyone who needs flexibility in their work. Furthermore, for writers, being an employee means losing one’s copyright to any work produced under employment, unless a special arrangement can be negotiated.
Rasenberger said there is reason to be concerned about the PRO Act: The more the ABC test gets encoded into various laws, the more it’s going to become the norm. And the real problem from the perspective of freelance writers—especially those who work for newspapers, magazines, book publishers, and online media—is that B prong. Thus, the Authors Guild is suggesting that the ABC test be amended to remedy the issue. Read the full Authors Guild statement on the PRO Act. The Freelancers Union is suggesting the same.
Fight for Freelancers USA notes, “Some states that use the ABC test have altered it to make it more modern. Some states expanded the B prong, and some abandoned the B prong altogether because it outlaws so much modern work. There are other, more reasonable classification tests that better align with how the modern workforce functions. The IRS Test was created in the 1980s and has been updated since then; and the US Department of Labor created a new test in 2020. These tests can tell the difference between an exploited factory worker in 1930 and a skilled courthouse interpreter in 2021.”
Bottom line: It’s confusing (an understatement) when federal and state laws conflict. If you ask 10 different experts about this legislation and what it means or who it will affect, you may receive 10 different answers. For now, the effect of the PRO Act is far from certain, but it’s already creating some strange bedfellows politically. The Biden administration is broadly in favor of classifying more workers as employees, using the ABC test, and seeing unions grow and strengthen. In one discussion thread about the bill, we saw a freelancer proclaim he was a lifelong Democrat and union supporter, but that this bill was a sure way to turn him into a Republican.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
