Independent contractors are a significant driver behind the promotional products industry. The reintroduction of the PRO Act to the U.S. House of Representatives at the end of February could put their status into question.
A slightly different version of the bill under a similar name passed the House in 2021 before failing to make it through the Senate.
If the bill, as it is currently written, were to pass into law it would, the language suggests, reclassify many independent contractors into employees under the National Labor Relations Act.
What Is The PRO Act?
The Richard L. Trumka Protecting the Right to Organize (PRO) Act of 2023 is a bill with a fairly large scope, which aims to protect workers’ rights, strengthen unions and allow for bargaining for wages, benefits and safer workplaces.
- In one sense, it tries to protect independent contractors from exploitation by largely reclassifying them as employees unless they meet specific criteria.
- PPAI’s opposition is not toward the legislators’ larger goal of protecting the right of workers to negotiate.
Where it becomes dicey is the classification of the independent contractor and the requirements for those who do not meet certain criteria. PPAI urges members to read through the bill or relevant fact sheets to get a fuller understanding.
- The first version of the PRO Act came up in 2019, meaning it has been introduced in each of the last three congressional sessions.
Dig Deeper
For reference, here are a few breakdowns of the full effects of the PRO Act of 2023.
- Here is the bill’s text in its entirety for review.
- Here is a fact sheet concerning the full intentions of the bill.
How Exactly Does This Affect Promo?
As far as the promotional products industry is concerned, the first thing to look out for is the inclusion of the “ABC” test. This was included in the 2021 version of the bill, and upon reviewing the new bill, it is indeed included again on the 2023 version.
In the “ABC” test, an individual performing any service will 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.’’
Under that specific wording, it seems inevitable that such a test would significantly change how thousands of promotional products companies interact with each other, and it would eliminate jobs in the industry.
PPAI’s Stance
PPAI has been providing ongoing coverage and advocacy since the first version of the PRO Act came up in 2019.
- That has included engaging members on how they can let their voices be heard in regards to how this framing will affect small business owners in our industry from earning an income. PPAI is continuing that task with the PRO Act of 2023 (more on how to make your voice heard below).
In short, PPAI is in opposition to the Pro Act of 2023, specifically its classification of independent contractors in our industry.
“PPAI has been engaging on this important legislation since it first presented itself in 2019, both through media coverage and direct advocacy at the state and federal levels,” says PPAI’s public affairs manager Maurice Norris. “It is critical for industry members to educate Congress about the unintended consequences of these harmful legislative policies, including jeopardizing the livelihoods of over 30,000 small businesses in our industry. PPAI makes that self-advocacy easy by providing a prewritten, editable letter that also helps members determine who their legislators are to ensure the messages are directed to the relevant congressional offices.”
- A key distinction PPAI and members of the industry have been adamant about since the initial bill in 2021 is the difference between workers in the “gig economy” and independent contractors in the promotional products industry, who choose to be independent often in order to be their own bosses and make their own schedules.
- Unlike workers in the gig economy, the relationship between independent contractors in the promotional products industry and their distributors is reciprocally beneficial.
- PPAI has expressed concerns that this enforcement would negatively affect thousands of independent contractors in the industry.
“Independent contractors are used all through our industry,” Steven Meyer, MAS, national sales manager at Gemini Industries, told PPAI Media in 2022. “The proposed changes would seriously damage both the opportunities to work with or to contract with individuals to represent companies.”
PPAI Makes Contacting Your Legislator Easy
As Norris stated above, PPAI helps members advocate for themselves and the industry by providing a prewritten, editable letter to their legislator.
- Click here to contact your legislator.
- The above link has a message about how the PRO Act would devastate the promotional products industry written by PPAI on your behalf, which can be personalized or changed if you prefer.
The PRO Act of 2023 will have to pass through both the House and the Senate before it goes to the president’s desk to be signed into law. It has currently been referred to the House Committee on Education and the Workforce for further consideration.
PPAI urges members to make their voices heard on how this act will be detrimental to our industry.