10 ways the PRO Act could change the game for employers and organized labor

Organized labor is having a moment unlike anything it has seen in decades. Marty Walsh, sworn in as the Secretary of Labor in March, is the first former union official to hold the office since the Ford administration. President Joe Biden formed a task force in April dedicated to strengthening workers’ ability to organize.

And now, a piece of legislation sits before the Senate that, if passed, would either empower workers to democratize their workplaces or spell the end for small businesses — depending on whom you ask. Witnesses at a July 22 Senate hearing on the Protecting the Right to Organize (PRO) Act included Gracie Heldman, a worker at an industrial bakery in McComb, Ohio, who said her employer had harassed and intimidated organizers, and Jyoti Sarolia, a principal and managing partner at a California-based hospitality company, who said the law’s independent contractor and joint-employer provisions would hurt franchisors.

The bill, which passed the House in March, would amend the National Labor Relations Act — as well as parts of the Labor Management Relations Act of 1947 and the Labor-Management Reporting and Disclosure Act — to restrict businesses from certain practices and empower union organizers at work.

Here are 10 ways the bill would transform the current workplace.

1. Many more workers would be considered employees, rather than independent contractors.

The independent contractor provision is arguably the “most controversial” element of the bill, Patricia Campos-Medina, executive director of The Worker Institute at Cornell University, told Construction Dive’s sister publication HR Dive. The provision would expand the current definition of “employee” to include many workers who are currently treated by employers as independent contractors. 

Using an “ABC” test, the law would designate as independent contractors only those who are: (a) free from an employer’s control and direction; (b) performing a service outside of an employer’s usual course of business; and (c) engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. 

Some states, such as California, already have adopted the ABC test for wage and hour issues, unemployment and other purposes. California and a few other states have also passed laws that exclude app-based drivers from the independent contractor designation. 

Under the PRO Act, the employee designation would “codify” the ABC test “so it would apply in discerning who is eligible for coverage under the National Labor Relations Act,” said Mark Pearce, former chair of the National Labor Relations Board, and witness at the July 22 hearing. In other words, workers would be designated employees under the PRO Act specifically to provide greater access to the organizing and collective bargaining rights laid out in the NLRA and expanded upon in the proposed law.

Many in app-based gig jobs are misclassified as independent contractors, according to Campos-Medina said — particularly workers in fields like warehousing, administration and healthcare. “We call it the independent permanent workforce,” she said. “Because they’ve [been] going to the same work for the same employer for years, and they are still considered independent contractors.” An October 2020 report released by progressive group National Employment Law Project estimated worker misclassification rates in the United States at between 10% and 30%.

Some in the business community have expressed concerns about the potential impacts of broadening the “employee” designation. Speaking on behalf of the International Franchise Association during the hearing, Sarolia expressed said the ABC test would “likely define franchisees as employees of their brand, instead of the independent small business owners that they really are.”

2. State right-to-work laws would be overridden.

Twenty-seven states have “right-to-work” laws, according to the National Conference of State Legislatures — legislation that prohibits employers and unions from entering into “fair share” agreements, in which employees must pay “fair share fees” to unions that represent their interests. In other words, workers in right-to-work states cannot be compelled to pay union dues. (Sometimes people mistake right-to-work laws as giving workers the right to refuse to join a union, but that right is already federally granted by the NLRA.)

The PRO Act stipulates that states must allow private employers and unions to enter into fair share agreements, and consequently, that unionized workplaces may collect fees from all workers, even those outside of the union.

Advocates for eradicating right-to-work laws say they degrade the power of organizing. Right-to-work laws “starve unions,” Heidi Shierholz, witness at the hearing and senior economist and director of policy at the Economic Policy Institute, told HR Dive. “They say that [unions] that have to represent all these workers, legally — they have to represent everybody in the bargaining unit — cannot charge for any of those services.”

Opponents of such laws argue they are a matter of worker freedom and are necessary for economic growth. “Alabama’s right-to-work law has been a huge benefit for our state, because we’re in the car business,” Sen. Tommy Tuberville, R-Ala., said at the hearing. “[M]any industries would grind to a halt [without such laws], especially in Alabama. Employer costs would skyrocket, which could lead to a loss of jobs. Not to mention, states like Alabama [would] lose the ability to recruit companies.”

3. Employers would face steep fees for firing workers for trying to unionize.

One of the most consequential elements of the PRO Act is the provision that employers face fees ranging from up to $50,000 to $100,000 for firing an employee who is trying to organize a workplace. 

Currently, Shierholz told HR Dive, “there are no civil penalties for violating the NLRA; … if a worker is illegally fired for organizing, which happens all the time, the employer doesn’t have any penalties if they’re found guilty [by the National Labor Relations Board]. All they have to do is give back pay to the worker that is fired, minus any earnings that the worker got in the meantime.” The current penalty is so weak, workplaces are often incentivized to break the law to prevent the risk of unionization, Shierholz said.

“The biggest stumbling block for unions who are actually organizing workplaces right now is the ability of employers to fire workers and retaliate because of union activity,” Campos-Medina said. “If we’re able to get rid of the retaliation … I think we will see more unions.”

4. Employers would no longer be able to hold mandatory “captive audience” meetings. 

Another way some managers attempt to influence a union drive is through so-called “captive audience” meetings, which employees may be required to attend. Such events are “meetings of fear,” Campos-Medina said, “in which they tell [employees], ‘If you join a union, you’re going to lose your job.'” 

Heldman, in her testimony, described such meetings after workers filed a petition for representation by the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union: “They told us the plant could close, that we’d lose our wages and benefits, and that we’d be forced to go on strike,” she said. “If we didn’t go to these meetings, we’d be fired.”

The PRO Act would ban required or coerced attendance at captive audience meetings and other “campaign activities” of the employer unrelated to job duties.

5. Union-employer contracts would come together more quickly.

After employees vote to unionize the workplace, employers sometimes delay the formation of a collective bargaining agreement through “stalling techniques,” Shierholz told HR Dive — a strategy that can sometimes leave workers who have voted for union representation in limbo for years. According to an analysis of NLRB data featuring hundreds of newly formed unions vying for contracts, only 48% were able to achieve a contract within the first year; one-quarter of unions had no contract agreement within three years of formation. 

“Even if a union wins an election and is certified as the representative of the workers, the company can refuse to negotiate with the union indefinitely,” Campos-Medina said. “And negotiations get caught up in court, and [the contract] never happens.”

Pearce, now executive director, visiting professor at Georgetown University Law Center’s Workers’ Rights Institute, testified about a rehabilitation and nursing center that forestalled a collective bargaining agreement for seven years before being court-ordered to engage with bargaining efforts.

The PRO Act lays out a timeline for the collective bargaining process and, in the case of failure to reach an agreement, requires timely mediation and the involvement of a tripartite arbitration panel — including one member selected by the labor organization, one by the employer and a neutral third party member.

The bill also prohibits the delaying of union elections by having workers and the NLRB set union election procedures.

6. Union organizers would have access to employees’ contact information.

Of particular concern to some opponents of the bill is a provision that employers provide a voter list to the labor organization seeking to represent employees. The list would include employees’ homes addresses, work locations, shifts, job classifications and, if available to the employer, landline and cell phone numbers and personal email addresses.

Organized labor advocates argue the provision of such information is necessary for union representatives to communicate with employees, but opponents worry about the possibility of coercion and harassment. “Providing the [employee] contact information merely ensures that workers who would prefer to be left alone could not,” the Competitive Enterprise Institute, a conservative think tank, wrote on the provision.

7. Employees would have the right to use work devices to engage in organizing.

The PRO Act requires employers to allow employees the right to use work communication devices and systems to communicate about and conduct organizing efforts, “absent a compelling business rationale for denying or limiting such use.” 

“This means that managers could see an uptick in distraction in the workplace due to an increased dialogue on union organizing,” David Pryzbylski, a labor and employment attorney at Indianapolis-based Barnes & Thornburg LLP, told the Society for Human Resources Management. 

8. Employers would not be able to require employees to waive their right to collective or class-action litigation.

Among the other paperwork employees sign upon starting a job, employers sometimes include arbitration agreements, through which employees waive their right to participate in collective or class-action lawsuits. Though such agreements have been challenged by the NLRB, in 2018, the Supreme Court upheld the right of employers to use collective arbitration agreements under the Federal Arbitration Act in Epic Systems Corporation v. Lewis.

The PRO Act would not allow employers and employees to enter into such agreements.

9. A joint-employer provision would likely have implications for franchisors and staffing agencies.

An element of the bill that has the International Franchise Association worried, Sarolia testified at the hearing, is the joint-employer provision, in which the NLRA would be amended to define a joint employer as one who “codetermines or shares control over the employee’s essential terms and conditions of employment.” Such a standard would make “franchise brands responsible for actions taken by small businesses at the unit level,” Sarolia said. “This puts franchisors at risk of being sued for things they never did and had no power to stop.”

Under the joint-employer provision, staffing agencies may also be interpreted as joint employers, and therefore partially responsible for what happens to employees they pair with jobs in the contingent workforce. 

“These changes would mean hiring numerous attorneys at the franchisor level to oversee employment issues and claims over which the franchisor has no control,” Sarolia testified. “Ultimately, the additional costs to the franchisor would translate into additional cost[s] to independent owners like me, that would make the franchise business model untenable.”

Shierholz disagreed with the assertion that the franchise model would be hurt by the joint-employer provision. “The joint-employer standard actually protects the franchisee,” she told HR Dive. “As the situation is now, the franchisee … has already all the responsibilities of an employer. They already have the responsibility to be at the bargaining table. All the joint-employer standard would do would be to say, ‘The parent company that actually exerts control over the way you run your business — they also have to be at the bargaining table.'”

10. Workers of color, particularly Black employees, may see a decrease in the wage gap.

Finally — and of special interest to Shierholz — is the way the PRO Act could level the playing field for workers of color, especially Black workers, through its provisions that reinforce union strength.

“It’s worth bringing up just how important unionization is to racial economic justice,” Shierholz said. “People of color are more likely to be in unions than White workers. There are more White workers in unions, but that’s because there’s more White people. Black workers are more likely to be in unions than White workers, and the benefit that Black workers get from being in a union is greater than the benefit White workers get. Everyone gets benefits from being in the union, but the benefits are greater for people of color.”

A 2016 report from the Center for Economic and Policy Research found that Black union workers earn on average 16.4% higher wages than Black non-union workers, “even after controlling for systematic differences between the union and non-union workforce.” 

As the Black-White wage gap has worsened during the past 40 years, Shierholz said, unions could be one corrective. “One key contributor to [the worsening wage gap] is the decline of unions over that period.”