Pennsylvania Task Force Wants To Import California's Catastrophic 'ABC Test,' Crush Independent Contractors
IMPORTING CALIFORNIA'S POLICIES: The 'ABC Test' has proven itself to be catastrophic on California's independent contractors' ability to earn a living.
In 2021, the so-called gig economy comprised an estimated 59 million people in the United States who perform “1099 work.” They are commonly referred to as freelance workers, ”gig workers,” or independent contractors.
America’s independent contractors contributed $1.3 trillion in annual earnings to the U.S. economy, $100 million more than in 2020, according to Upwork.
Those who do 1099 work, because they are not employees under the National Labor Relations Act, cannot be unionized.
Politicians—beholden to unions—have adopted a stringent ‘ABC Test’ to force employers that use 1099 workers to hire them as employees.
In California, the first place it was enacted, the ‘ABC Test’ destroyed thousands of jobs in hundreds of professions.
In Pennsylvania, in a report to the Keystone State’s General Assembly, a Department of Labor & Industry task force recommends importing the same ‘ABC Test’ for Pennsylvania’s gig economy.
On Tuesday, despite the catastrophic effects on the livelihoods of thousands of Californians doe to the enactment of the so-called ‘ABC Test’ in California’s AB5, Pennsylvania’s Department of Labor & Industry (L&I) Secretary Jennifer Berrier announced a Joint Task Force on Misclassification of Employees report to the General Assembly with 15 unanimous recommendations.—one of the recommendations being a copycat of California’s ‘ABC Test.’
Among the 15 recommendations made, the Task Force recommends the adoption of the so-called ‘ABC Test’ as a baseline standard for the commonwealth to “clearly delineate the difference between employee and independent contractor.”
"Worker misclassification is an issue that demands reform because it harms every aspect of our economy – from individuals wrongly denied protections like workers' compensation insurance to law-abiding employers competing on an uneven playing field to Pennsylvania taxpayers forced to cover the cost of lost revenue in the commonwealth's General Fund and Unemployment Compensation Trust Fund," Secretary Berrier stated.
The ‘ABC Test,’ as defined by the Pennsylvania Task Force Report (although linked to State of New Jersey’s website) is as follows:
A. The individual has been and will continue to be free from control or direction over the performance of work performed, both under contract of service and in fact; and
B. The work is either outside the usual course of the business for which such service is performed, or the work is performed outside of all the places of business of the enterprise for which such service is performed; and
C. The individual is customarily engaged in an independently established trade, occupation, profession or business.
According to Larry Buhl, the difficult part of the ‘ABC Test’ is Part B.
Writing for Insider last year, Buhl wrote:
“Part B is where many independent contractors went through the buzzsaw: If you're in the same business as a client, you must be an employee, and, presumably the company would hire you, even if you've only been putting in a few hours a week for them. Yet, instead, most employers are just not working with California freelancers anymore.” [Emphasis added.]
California—the ‘Petri Dish of Bad Ideas’
Although the Pennsylvania task force is using New Jersey’s ‘ABC Test’ definition, it is the same definition as California’s disastrous ‘ABC Test,’ which has devastated so many lives.
A brief history of the ‘ABC Test’
In 2018, the California Supreme Court ruled on a case involving worker misclassification. In the court’s ruling, known as the Dynamex Decision, the court established the so-called ‘ABC Test’—a list of three factors that, when combined, indicates the individual is an employee and not an independent contractor.
Then, in 2019, a union-organizer-turned-state-politician named Lorena Gonzales introduced a bill called Assembly Bill 5 (or AB5), which codified the California Supreme Court’s ‘ABC Test.’
California legislators passed Assembly Bill 5 (or AB5), which codified the ‘ABC Test’ into state law in late 2019, making it effective in California a mere three months later, on Jan. 1, 2020.
Even before AB5’s ‘ABC Test’ officially became law in 2020, the immediate devastation to freelance writers began to be felt when Vox Media slashed 300 California-based freelance writers from its roster.
The effects of the ‘ABC Test.’
As the California law took effect in 2020, the ‘ABC Test’ began to immediately freelancers—or gig workers—in that it caused thousands of individuals across hundreds of professions to almost immediately lose work—from writers and musicians to independent truck drivers.
An early 2020 report by California’s Legislative Analyst’s Office estimated that, in California alone, “roughly 1 million workers will need to meet the ‘ABC Test’ to continue working as independent contractors.”
However, that pre-pandemic estimate may have been short of the actual number, as the report notes:
This estimate includes workers who report being self-employed in their main job and who work in professions that are not exempt under AB 5. It also includes workers who earn self-employment income on the side. It does not include (1) self-employed managers, who may be small business owners; (2) self-employed truckers, journalists, or drivers, whose status is being decided in the courts; or (3) self-employed workers in professions exempt from the ABC test under AB 5. [Emphasis added.]
The effects of the ‘ABC Test’ in California “left women business owners reeling; saw lawsuits filed against the state by trucking firms, franchises, and freelance journalists and photographers; led state lawmakers to pass cleanup legislation so that more than 100 professions are now exempted; and persuaded 59% of Californians to vote in favor of exempting app-based rideshare and delivery drivers from the law,” wrote Kim Kavin, a freelance writer and one of the leaders of Fight For Freelancers USA.
Death By A
Thousand 50 Cuts.
Following California’s enactment of the ‘ABC Test’ (through AB5), the U.S. House of representatives passed the Protecting the Right to Organize Act (or PRO Act) in both 2020 and, again, in 2021.
The PRO Act is a pro-union bill to almost entirely rewrite the nation’s labor laws and contains more than two dozen individual items—among the many items is the enactment of the ‘ABC Test’ at the federal level.
However, since the PRO Act is currently stalled in the U.S. Senate—and may be impossible to pass after the 2022 mid-term elections—unions and their political allies are trying to put the ‘ABC Test’ into effect in the statehouses.
Only time will tell whether the Pennsylvania’s General Assembly imports California’s catastrophic ‘ABC Test’ and wipes out its gig economy.
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