While the Biden administration’s implantation earlier this year brought about renewed optimism in the construction industry, a Democratic-backed labor rights bill — the Protecting the Right to Organize Act (PRO) — reintroduced earlier this year has passed the House.
As the bill awaits a vote in the Senate, there are many anxious voices representing unions, contractors, and employers as they deliberate how the law — or pieces of it — could impact business as a whole should it eventually reach President Biden’s desk.
Although expectations on this new version becoming law remain somewhat cynical — the original bill passed the Democratic-majority House last year before dying in the then Republican-controlled Senate — the bill has moved through Congress at a quicker pace than previous and now awaits a potential vote on the floor of the Senate should Majority leader Chuck Schumer (D-NY) reach the 50 co-sponsor threshold in this 117th Congressional Session.
On April 20, West Virginia Senator Joseph Manchin announced he would be the bill’s 46th sponsor, stating that he had come around on the bill’s provisions that extended federal labor laws and organizing rights for independent contractors.
“When people believe they need a union and they vote to get a union to represent them, 50 percent of them fail,” Manchin told reporters in a virtual press conference. “So just the fairness of the system is why I’m involved. I want to make sure it’s fair. I want to make sure that people are treated right, that they’re paid fairly and they get good benefits.”
With Maine’s Angus King — an Independent who caucuses with Democrats — Virginia’s Mark Warner, and Arizona Senators Kyrsten Sinema & Mark Kelly being the remaining Democratic holdouts, the chances of the bill being brought to the floor for debate is looming, but no traction seems to have stirred action on the matter at the time of writing.
Still, with this bill floating around, let’s explore what the PRO Act entails, why construction unions are so against it, and what would the industry look like should it be passed in the foreseeable future.
What is the PRO Act?
There have been thousands of efforts throughout the years to expand workers’ rights further, but perhaps nothing as grandiose as the updated PRO Act has reached such possibility of sweeping reform.
Many supporters and critics of the bill appear focused on five key provisions that would drastically change the power dynamic between worker and employer.
These provisions include:
- Allowing unions to override “right-to-work” laws in 27 states that allow employers to either demand or deny union membership as a prerequisite for employment.
- The elimination of employer interference in union elections such as mandatory company-sponsored meetings.
- More opportunities for settling impasses during union organization.
- The prevention of immigration-status factoring into employment, and
- Stiff monetary penalties for company leadership infringing on these potentially established grounds.
The bill currently has a lot of support, from numerous unions pressing most of the mostly onboard Democratic Party to even a few Republicans. Five House Republicans joined the Democrats in the 225-206 House vote: Reps. John Katko (New York) and Don Young (Alaska), along with co-sponsors Jeff Van Drew and Chris Smith (both representing New Jersey), and Pennsylvania’s Brian Fitzpatrick.
However, with the bill set to make sweeping changes to labor costs in the construction industry, many contractors trade groups have been pushing back hard against the PRO Act and its components.
How the PRO Act redefines “contractor” and “employer”
At the core of the construction industry’s concerns with the PRO Act is an overhaul of the National Labor Relations Act’s redefinition of “employee vs. contractor.”
The construction business practice of hiring independent contractors and subcontractors has long been standardized as the norm. Workers in specific niches are called to fill in short-term staffing on a project whose general contractor might not have experience with. This practice also allows the hiring contractor to save money based on not having to pay employee benefits or withhold taxes.
The PRO Act — with all its sweeping reforms to regulations held since the early 20th century — mainly troubles the construction workforce due to its suggested revamp of the IRS’ determining factors of an independent contractor.
“The general rule,” the IRS says, “is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”
Classifying contractor status under the PRO Act
Under the PRO Act, a three-prong “ABC Test” would be implemented to determine a workers’ status as either an employee or independent contractor. If those three conditions are not met, a worker is then classified as an independent contractor.
These include the following:
A: The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact,
B: The worker performs work that is outside the usual course of the hiring entity’s business, and
C: The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
It is the second point, B, that is the most pointed out by critics as being a disruptor for the construction industry and employer to contractor relations, as specific contractors — such as drywall or lumber — often hire independent mechanics to ease the burden of short staffing. Self-performing and licensed contractors might even run afoul of NLRA provisions.
The first penalty for employers miscommunicating what their designation is to a worker is $50,000, but this could jump to $100,000 depending on the violation — fines that critics say are very hefty for an industry that is comprised of multiple small businesses who instinctively utilize contractors.
With this apparent catch-22 scenario within the construction business, several fear that the penalties introduced in the PRO Act would inadvertently result in more fines — $12.1 billion more in fines, according to the Associated Builders and Contractors — than any other industry.
Strong opposition from contractor associations
Two of the nation’s largest contractor groups —The Associated General Contractors of America (AGC) and the Associated Builders and Contractors (ABC) — are both sternly pushing back on the PRO Act.
The groups consider the bill’s name (“Protecting the Right to Organize”) misleading and disingenuous, and both surmise that unions would have excessive leverage in unionizing and collective bargaining.
Perhaps the biggest concern that AGC raised was the PRO Act’s reversal on a ban of “secondary boycotts.” This measure prevented unions from picketing against an employer even if they had no direct dispute with them — which in theory is applied to branches of the employer’s chain, but AGC CEO Stephen Sandherr said in a statement that “these boycotts will force many workers to suffer, without pay, for disputes where they do not stand to benefit,” and that the bill would bring about “a new era of labor unrest that will stifle future economic activity and job growth.”
ABC’s main point deals with the effects this would have on an economy still recovering from a year of pandemic fallout.
“While the construction industry has already recovered three-quarters of the jobs lost during the COVID-19 pandemic, contractors need to hire hundreds of thousands of workers in 2021 just to keep up with the demand for construction services,” said ABC CEO Michael Bellaman.
“If the PRO Act becomes law, it will limit the ability for the construction industry to bring back or hire those professionals,” Bellaman added.
While AGC and ABC are the loudest voices advocating for a deeper look into the PRO Acts impact on the construction industry and its workers (going as far as to sway the holdouts with calls, meetings, and other negotiations), the largest federation of unions in the country, The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), has come out in full support of the bill.
As of time of reporting, there are no further co-sponsors to bring the bill closer to its 50-sponsor threshold. Republicans who oppose the bill have planned to filibuster, an intentional prolonging of a debate so that a vote count may never be reached — but Democrats have recently been planning on making changes to the long-held political tactic now that they have a razor-thin edge in the Senate compared to last year’s Republican Senate majority, which stopped the original PRO Act in its tracks.
Senator Schumer has quite a while to bring the bill to the floor for a vote: all the way up until the final sessions of the 117th congress on December 31, 2022.