What the PRO Act Means for Freelancers Around The World

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The US House of Representatives have passed legislation that could change the world of freelancing. The Protecting the Right to Organize (PRO) Act is a bill that focuses on protecting the rights of workers seeking to unionize, and penalizes companies that violate workers’ rights. But the bill also comes with clauses that threaten a freelancer’s ability to freelance. The bill now has to be voted on by the Senate to be passed.

How the bill affects freelancers

The major part of the bill relevant to freelancers would reclassify many of them as employees. If a company was interested in hiring an independent contractor, the PRO Act would force them to hire a freelancer as an employee. Freelancers would receive the benefits that come with being an employee like insurance or vacation time, but lose the flexibility of controlling their own hours, and being their own boss.

The major clause in the bill leading these changes is The ABC test. Created in 1930, certain states used the ABC test to determine the difference between an employee or contractor. If the bill passes through the Senate, the ABC Test would leave many freelancers reclassified as employees. Here is how it appears on the PRO Act:

“An individual performing any service shall be considered an employee (except as provided in the previous sentence) 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; and

(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. [H.R. 842 via Congress.gov]”

For some freelancers, part B will be the sticking point. If a freelancer is in the same line of work as a client, they’ll have to be classified as an employee. This affects freelancers like independent journalists who pitch to news publications. 

A majority of freelancers are concerned

According to a survey conducted by Make a Living Writing and Mindset Analytics, a large majority of freelancers (80%) expressed concerns about the PRO Act potentially limiting their ability to continue freelancing. More than half of concerned respondents stated they were “very concerned.” The survey collected responses from 690 current full-time freelancers in the US.

The data also revealed that more than half of respondents (58%) believe the PRO Act would negatively impact their livelihood. A majority (52%) said they don’t support the bill at all. 

Freelancers value their independence

Another key finding in the survey was that a large majority of respondents (75%) said their status of being independant was very important to them. Moreover, 73% said they would rather be a contractor than an employee. 

One of US President Joe Biden’s pledges to contract workers was ensuring they’d receive legal benefits and protections. To achieve this, Democrats pushed for the inclusion of the ABC Test in the PRO Act. Although this might secure freelancers more benefits, they would be reclassified as employees, and lose freelance jobs. 

Recent cases have shown that judges in the US have sided with freelancers, but the PRO Act is sure to change how things proceed moving forward. Many other countries like India, and the Philippines have adopted new protections for freelancers, and might be a matter of time until other countries take suit. 

Read Next: Freelancer Taxes in 2021: Advice From A Tax Accountant

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