March 26, 2021

The Pro Act: Bad for Workers, Bad for Businesses


KEY TAKEAWAYS

  • The Democrats’ “Protecting the Right to Organize” Act would sabotage the economic recovery just as businesses are trying to make it past the pandemic and Americans are trying to return to work.
  • The bill’s policies would curb workers’ choices, threaten jobs, and increase costs on employers. These include overriding state right-to-work laws, limiting Americans’ freedom to work as independent contractors, and allowing boycotts at businesses not involved in a labor dispute.
  • The Democrats’ bill would boost unions’ power at the expense of workers and job creators. 

Congressional Democrats are pushing a bill that would impose many harmful policies on the economy. They say the so-called “Protecting the Right to Organize” Act, which the House recently passed, is pro-worker. In reality, it would threaten jobs and heavily tilt the scales in favor of labor unions, at the expense of workers and job creators.

Dangerous Policies in the PRO Act

PRO Act

Millions of Americans are trying to go back to work or find a new job. This bill would restrict their freedom to choose independent contract work. It could increase costs on job creators or upset their business model. Vaccinations are increasing and states are easing pandemic restrictions, making it a terrible time to cripple businesses’ efforts to rebound. One business group called it “the worst bill in Congress” and “completely unworkable.”

soundly rejected by businesses

The PRO Act is yet another partisan bill that congressional Democrats are pushing − the House passed it almost entirely on party lines. Soon after, the AFL-CIO effectively said it would support ending the Senate’s legislative filibuster to allow the Senate to pass this and other partisan elements of President Biden’s agenda. Republican leader Mitch McConnell has said such a move would “break the Senate” and produce a “radically less stable and less consensus-driven system of government.”

Organizations representing small and large businesses around the country have rejected the PRO Act. The Chamber of Commerce called it “a litany of almost every failed idea from the past 30 years of labor policy.” Associated Builders and Contractors said the bill would “strip workers of entrepreneurial opportunities to freelance as independent contractors, denying them the freedom to earn a living on their own terms and pursue the American dream.” The National Restaurant Association said it would jeopardize the economic recovery and COVID relief spending, “essentially setting fire to billions in taxpayer dollars.”

PRO Act Would Override 27 States’ Right-to-Work Laws

 PRO Act

threatens jobs and worker freedoms

The House-passed PRO Act and its Senate companion bill would impose sweeping changes to labor law that would affect non-union and unionized workers and their employers.

Twenty-seven states have laws that protect workers from being compelled to join or pay fees to a union – in some cases those laws have been in place since the 1940s. The PRO Act would override these states’ right-to-work laws. It would allow collective bargaining agreements to require all employees to pay union fees as a requirement for employment. Workers would be forced to pay money to a union whether or not they want to be represented by it.

One area that would not be directly affected by the PRO Act is the Supreme Court’s decision in Janus v. AFSCME. In that case, the Supreme Court held that mandatory union fees applied by a state violated the First Amendment. Congress cannot overrule the Supreme Court’s decision in Janus without a constitutional amendment. Given that Janus only applies to public-sector unions, however, its holding would not affect the constitutionality of the PRO Act.

Another misguided policy in the PRO Act would threaten the jobs of millions of Americans who have chosen the freedom and flexibility of working as independent contractors. These include photographers, insurance agents, and food delivery drivers. The Democrats’ bill would assume these workers are employees of a business they work with, unless they can meet a strict new definition of an independent contractor. Businesses would have to absorb the higher costs for things such as payroll and benefits for these new employees or stop working with them. California passed a law, known as AB-5, that imposed the same policy starting in January 2020, and it has been disastrous for workers. Some freelancers lost contract work even before the law went into effect. The law had a slew of exemptions and carve-outs for workers such as dentists, accountants, and travel agents. To try to reduce the damage, the legislature had to scramble to adopt even more exemptions for workers such as songwriters, landscape architects, and home inspectors. Voters approved a 2020 ballot measure to revise the law again for ride-share and delivery drivers. The PRO Act does not contain exemptions.

Democrats’ pro-union bill would expand the standard for determining when two businesses are jointly liable for the same workers under the National Labor Relations Act. This means a homebuilding company could be liable for unfair labor practices its subcontractors commit, even if it does not control those decisions. The new broader standard could also ensnare entrepreneurs who buy a franchise, such as a restaurant or hotel franchise.

The standard for determining businesses’ joint-employer status has fluctuated since the Obama National Labor Relations Board reversed longstanding precedent and expanded the standard in a 2015 decision. In 2020, the NLRB finalized a rule that returned to a narrower standard to be considered a joint employer – a business has to “exercise substantial direct and immediate control” over employment conditions for another business’ workers, such as for wages or hiring. The PRO Act’s return to a more expansive standard, combined with the reclassification of independent contractors as employees, could discourage businesses from subcontracting with other businesses and threaten franchise establishments and their workers across the country.

Other policies in the bill would change the terms for union elections. One way to form a union is for at least 30% of workers to sign a petition. If certain conditions are met, the NLRB then conducts an election. Currently, if workers vote to not be represented by the union, but the NRLB decides that the employer interfered in the election, there is a re-vote. The PRO Act would cancel these re-run elections unless the employer can prove that the interference would not have changed the outcome. The board would just certify the union to be the workers’ representative as long as the union can show that a majority of workers signed “authorization” cards favoring the union as their representative. This version of the card check” would undermine workers’ right to vote by secret ballot, and it could impose a union even if a majority of workers did not to vote for one. The bill also would let unions decide whether an election is done by mail, electronically, at work, or at place not owned by the employer. This would remove employers from the process.

Another policy would trample workers’ privacy. Before an election, employers would be required to give the union organizers a voter list. It would have the workers’ names, addresses, work locations, shifts, and their personal phone numbers and email addresses.

The bill also would increase costs on job creators. One provision would prohibit employers from using mandatory arbitration agreements to settle disputes without going to court, by making such agreements an unfair labor practice. This could pave the way for more costly class-action claims. Another provision would permit unions to picket, boycott, or strike at “secondary” businesses, or those other than the actual business with which it has a labor dispute. This means a union could target a neutral business in the supply chain with strikes or picketing in order to put pressure on the real target. Federal law generally bans this practice. Allowing it would be disruptive and costly. One industry group pointed out that the country can hardly recover from the pandemic-related economic shutdowns “when work is idled, workers are unpaid and projects go uncompleted.”

Issue Tags: Economy, Labor, COVID-19