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How the PRO Act Could Affect Owner/Operators

In early February, Democrats in both the House and Senate reintroduced the Protecting the Right to Organize (PRO) Act, an ambitious pro-employee and pro-union bill that could dramatically impact the trucking industry.

In what has been called the most “significant [piece of] labor reform” in the United States since the end of World War II, the PRO Act would, among other provisions, increase the number and size of fines against organizations that violate workers’ rights, give employees more power to strike, weaken right-to-work laws, and offer independent contractors increased protections.

The PRO Act passed the House in 2020 but did not receive a vote in the Senate. While this year’s version is expected to again find success in the House, it is unlikely to get the 60 votes needed to acquire a vote in the Senate. Even though it may not immediately become law in its current form, the PRO Act illustrates the Democratic Party’s renewed emphasis on labor issues.

What Impact Would the PRO Act Have on Truckers?

The Owner-Operator Independent Drivers Association has come out strongly against the PRO Act, arguing that it would force trucking companies to abandon the traditional owner/operator model. The bill, if passed, would implement what is known as the ABC test, which was expanded and codified in California under state law AB5.

The test requires all workers be considered employees of a company unless three factors are established:

  1. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact.
  2. That the worker performs work that is outside the usual course of the hiring entity’s business.
  3. That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

At odds for owner/operators is section B as they perform the same service as the companies hiring them. OOIDA argues that this broad classification has been created to determine if independent contractors should be classified as employees for the sake of unionization. This law could make it so trucking companies could not hire owner/operators at all.

Looking for a Safe Middle Ground

The trucking industry has fought back against California’s bill, similar state bills in places like New Jersey, New York, Washington State, as well as federal action. Advocacy groups argue that the ABC test unfairly classifies owner/operators who exist in a more nebulous middle ground. While these laws primarily focus on gig economy workers, looking to provide additional workplace rights for independent contractors at companies like Uber and Lyft, they would also impact truckers who operate under a completely different business model.

The California Trucking Association has brought temporary relief, winning an injunction in U.S. District Court in January of 2020—just days after AB5 was enacted—to momentarily stop enforcement of the new California law. The CTA argues that the Federal Aviation Administration Authorization Act prohibits states from passing laws “related to price, route, or service of any motor carrier” and would preempt all state laws.

The organization also argues that the California test would impose a significant burden on interstate commerce as an owner/operator theoretically would not be able to drive through California under this ruling, or any other states that pass similar legislation. This would be in addition to other challenges recently put on truckers and the trucking industry.

What is the Current State of Things?

The injunction has put a momentary hold on the law’s enforcement and is awaiting an appeal in the federal 9th Circuit Court of Appeals. While federal passage of the PRO Act still appears a long shot, these state laws, and in particular the CTA’s appeal, will provide insight into how the legal system views the owner/operator system and how it fits into larger labor disputes.

Numerous groups, including the U.S. Chamber of Commerce, the International Foodservice Distributors Association, and Teamsters General have voiced opposition as well. While not mentioning truckers specifically, these organizations argue the PRO Act could hurt job growth, limit self-employment, and serves and overly empowers unions that do not work in the best interest of workers.

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