In advance of a hearing set to take place on July 22 in the Senate Health, Education, Labor and Pensions (HELP) Committee, PIA joined fellow insurance and financial trade groups in a letter to committee leadership expressing concerns about S. 420, The Protecting the Right to Organize (PRO) Act.
The PRO Act would reform current labor law in a variety of areas. However, the bill would change the definition of “independent contractor” in a way that would cause significant disruption to the independent financial services and property casualty insurance industries. Specifically, the bill 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 disrupt current insurance distribution models by threatening producers’ ability to work independently, undermining the independent insurance agency system.
The bill passed the House earlier this year, and PIA will continue to oppose this legislation unless it is substantially modified to include something like a carveout for independent agents. We will continue to work with Congress on this issue.