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For the second time in as many years, the Protecting the Right to Organize Act (PRO Act) has made its way through the U.S. House of Representatives and awaits its ultimate fate with the Senate.
A year ago, when the House first passed the PRO Act in February 2020, former President Donald Trump promised to veto the bill if it ever reached his desk before it was voted down in the Republican-controlled Senate. Now, President Joe Biden has promised to sign the bill if he gets the chance and Democrats hold the slimmest margin in the Senate.
While there’s still skepticism the wide-ranging bill will receive enough backing to pass, if it were to come to fruition, it would significantly alter national employment law, said Jim Paretti, shareholder at Littler Mendelson P.C.’s Workplace Policy Institute.
“The PRO Act is the most dramatic rewrite of labor law since 1947 if not since the adoption of NLRA (National Labor Relations Act) itself,” Paretti said. “It’s organized labor’s wish list on a range of measures … it would be a world of hurt for employers.”
The PRO Act contains several controversial amendments to the NLRA. For example, the bill would codify the Obama administration National Labor Relations Board’s expansive joint employer doctrine under Browning-Ferris, which the Trump administration board overruled through a final rule effective April 27, 2020. The proposed definition of “joint employer” under the PRO Act would specifically permit “indirect or reserved control standing alone” to be sufficient to support a “joint employer” finding.
The PRO Act also would change the board’s union election rules and impose a new arbitration procedure on employers. If no collective bargaining agreement is successfully negotiated to agreement within 90 days, a contract may be imposed on the parties by a “tripartite arbitration panel established in accordance with such regulations as may be prescribed.” The imposed contract would be binding upon the parties for a period of two years, unless the parties agreed otherwise in writing.
“Were it to become law, it would tip the balance of the NLRA, which originally was designed to be a balanced statute,” Paretti said. “When Congress enacted it, it’s always been with the mindset that the government is not here to put its thumb on the scale, the government is here to make sure the scale is fair and balanced and both sides make their arguments. It’s my view that the PRO Act really tips the scale in the favor of organized labor.”
Employers also would be prohibited from “locking out” employees and from permanently replacing strikers, but the PRO Act would allow intermittent strikes. At the same time, the PRO Act would strip away employer protections against secondary activity, which would “threaten to enmesh neutral third-party contractors with labor disputes arising on a common jobsite,” noted the National Law Review.
“The PRO Act is the most dramatic rewrite of labor law since 1947 if not since the adoption of NLRA (National Labor Relations Act) itself. It’s organized labor’s wish list on a range of measures … it would be a world of hurt for employers.”– Jim Paretti, shareholder at Littler Mendelson P.C.’s Workplace Policy Institute
The PRO Act would also allow individual employees to bring civil lawsuits in federal court alleging their own “unfair labor practice” claims and to recover back pay, front pay, consequential damages, liquidated damages, punitive damages, and attorneys’ fees. Corporate directors and officers also could be held personally liable for violations.
Paretti said for employers already operating with a unionized environment, the stakes would be dialed up with the enactment of the PRO Act, especially in cases of arbitration and unfair labor practices. Employers that don’t fall into that category would need to prepare accordingly, he said.
“If you’re currently not a unionized employer, if this were to become law, I suspect a number of recognition petitions filed with the board [would] start to increase over night,” Paretti said. “You’d have bigger and broader bargaining units, less opportunity for employers to participate in the process. This is one that has consequences for all employers.”
Beyond the PRO Act
The U.S. Department of Labor (DOL) issued Notices of Proposed Rulemaking to withdraw the joint employer and independent contractor final rules, which were published during the Trump administration.
The joint employer rule went into effect March 16, 2020 and addressed the standard for determining whether an employee may be deemed to be jointly employed by two or more employers. The rule adopted the “four-factor balancing test” that considers whether the potential joint employer has the power to:
- Hire or fire the employee;
- Supervise and control the employee’s work schedules or conditions of employment to a substantial degree;
- Determine the employee’s rate and method of payment; and
- Maintain the employees’ employment records.
While the joint employer rule has already taken effect, the DOL is delaying the Trump administration’s independent contractor rule that was finalized in January under the Fair Labor Standards Act. The independent contractor rule was slated to take effect on March 8, however, the Biden administration asked federal agencies to freeze pending regulations to give new leaders time to review them. The independent contractor rule has officially been delayed for 60 days.
The delayed rule adopts an “economic reality” test for determining which workers qualify as independent contractors or employees and would primarily consider two “core factors” and three “guidepost factors” for determining if the worker is economically dependent.
The two “core factors” are the nature and degree of the worker’s control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. These factors, the DOL asserts, help determine if a worker is economically dependent on someone else’s business or is in business for themselves.
The three other factors that may serve as additional guideposts in the analysis are:
- the amount of skill required for the work;
- the degree of permanence of the working relationship between the worker and the potential employer;
- and whether the work is part of an integrated unit of production.
Paretti said in both instances, the new administration is looking to act as quickly as possible to undo employment rules enacted by the prior administration. However, both will require more evidenced-based convincing to achieve recension.
“Just because you’re a new administration, you don’t just get a free pass to say ‘everything the previous administration did, we’re going to put on hold.’ You have to articulate a basis,” Paretti said. “If the department is going to do a 180 on what joint employer or what independent contractor means, it has to be more than ‘we don’t like the old definition.’ They have to articulate legitimate basis for doing that and I don’t know with respect to either of those two rules that they’ve done so.”
About the Author
Brett Christie is the managing editor of Workspan Daily.