Employment Status of Independent Agents Threatened

On March 9, the U.S. House passed H.R. 842, the Protecting the Right to Organize (PRO) Act, mostly along party lines, as expected. The PRO Act’s intention is to reform current labor law in a variety of areas.

For PIA members, the bill’s most significant provision would amend the National Labor Relations Act (29 U.S.C. 152(3)) by expanding the definition of “independent contractor” by replacing the existing definition with an “ABC” test to define an “employee.”

The new language states that an individual must be classified as an employee 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.” 

Importantly, all three elements of the ABC test must be met for a worker to remain independent.

This provision would negatively affect the relationship between independent insurance agents and the insurance industry, and it could force independent agents to work as employees, regardless of their preference. It could complicate the tax liabilities of many insurance agents, and it could disrupt current insurance distribution models by threatening producers’ ability to work independently, undermining the independent insurance agency system.

Passage of the ABC test set forth in the PRO Act would upend the employment classification of independent agents and, by imposing federal law on our state-based insurance regulatory system, threaten the very existence of that system.

Status: The bill is now awaiting action in the Senate, where it would require 60 votes to pass. At the same time, PIA is working with our allies to add a carveout exempting independent agents from the ABC test if and when the bill is considered in the Senate.

Take Action Today!

PIA has issued an action alert, which can be found here, to enable you to easily ask your Senators to oppose the PRO Act unless a strong exemption for insurance agents is added to the ABC classification test.