Contents
Legislation
- House passes PRO Act with strict ABC test
- COVID RELIEF ALERT – New Legislation Could Provide Additional Relief for Small Carriers and Brokers
Advocacy and Comment
Legislation
House passes PRO Act with strict ABC test
The U.S. House of Representatives on March 8 passed on a party line 225 to 206 vote legislation that would mandate a federal ABC test for worker classification similar to that in California’s AB 5. The Protecting the Right to Organize (PRO) Act (H.R. 842) now moves to the Senate. The same legislation passed the House in the 116th Congress but died in the Republican-controlled Senate.
Although Democrats technically control the Senate by virtue of Vice President Harris’ tie-breaking vote, H.R. 842 faces an uphill battle owing to the filibuster. Some observers believe that killing the filibuster altogether would be the only path to final passage of the entire PRO Act, although it is more feasible that individual pieces could pass as riders to other legislative vehicles. Regardless, House passage coupled with Democratic control of the Senate means that this is the closest Congress has ever come to essentially outlawing the leased owner-operator model.
The PRO Act contains a host of pro-labor provisions, but for the trucking industry, the most problematic measure is section 101(b), which includes a definition of an employee stating that 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; 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.
In addition to imposing a federal ABC test, the PRO Act would explicitly declare misclassification of workers a violation of the National Labor Relations Act (NLRA). As such, the legislation would overturn the National Labor Relations Board’s August 29, 2019 decision in Velox Express, which held that misclassification is not a violation of the NLRA. For more on the PRO Act, visit https://www.congress.gov/bill/117th-congress/house-bill/842.
COVID RELIEF ALERT – New Legislation Could Provide Additional Relief for Small Carriers and Brokers
President Biden is set to sign the American Rescue Plan (“ARP”) this evening that will provide an additional $1.9 trillion in COVID-19 relief. The relief is in addition to the trillions that the Trump administration funded over the course of the past year. $50 billion will be used to fund new and existing relief programs for small businesses that are administered by the Small Business Administration (“SBA”). Some these programs include:
Paycheck Protection Program (PPP)
- ARP will give $7.25 billion funds for the existing PPP.
- Recent changes to PPP rules have been made by the Trump and Biden administrations making access to PPP loans more equitable, specifically for sole proprietors, independent contractors, and smaller businesses with up to 10 employees. If fall into one of those categories and haven’t taken advantage of this program, contact your bank before the latest deadline for the program of March 31, 2021.
- 2nd draws are available for eligible businesses if you have previously received a PPP loan.
Economic Injury Disaster Loan
- Provides grants for businesses up to $10,000.
Information on the above programs and other relief programs administered by the SBA is available on the following SBA website: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. Note, the new law will also provide $1.32 billion in administrative funding to the SBA for resources necessary to further implement these relief programs.
Advocacy and Comment
This mid-month update reflects how quickly important legislation is moving through the new Congress.
Although the above analysis of the effect of House passage of the PRO Act is hopefully correct, the prospect of it becoming law is deeply concerning, particularly for owner operators and their carrier partners. The importance of the model to the trucking industry and to small businesses has still not gained traction and is a “hot topic” of general industry concern. (See March Regulatory and Legislative Update)
As predicted, the new Department of Labor has formally repudiated the “Economic Realities” rule promulgated by the former DOL. In doing so, it suggests that based upon existing precedent it might have denied employee benefits to existing workers that could have been reclassified as independent contractors. In turn, any change contemplated by the new Administration which would require reclassification of owner operators would deprive blue collar entrepreneurs of their long held right to be treated on equal footing with other independent businessmen.
Secondly, included is a description of the possible effect of the $1.9 trillion COVID-19 legislation on additional stimulus funding. The dysfunctionality of the earlier PPP grants is hopefully over, and funds will be available to needy small businesses and independent contractors. If you missed out on earlier funding and have questions, please email us at info@transportationlaw.net.
