How Would PRO Act Impact Construction Business?

construction industry

Passage of the PRO Act would represent the biggest change in labor law in decades. –National Law Review

On March 9, 2021, the United States House of Representatives passed the Protecting the Right to Organize (PRO) Act. They also passed it in 2019, but it never made it out of the Senate. The bill currently has 45 backers. It needs 60.

The impact on construction business operations could be profound because PRO passage may reclassify some independent contractors as employees.

Construction Business Operations Depend on Independent Contractors

Independent contractors step in when short-term talent is needed. Employers don’t pay benefits, workers’ compensation, or withhold taxes. It’s an uncomplicated business arrangement that is beneficial to employers. We use the IRS guidelines to define construction business independent contractors and their work. If passed, the PRO Act would make employment guidelines much more stringent. It would also expand unionization rights.

Workers will be considered employees unless:

  • The service is performed outside the usual course of the business of the employer.
  • The worker is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
  • The worker 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.

Most of the time, an independent contractor’s work is performed within “the usual course of business.” This could be the most significant change and there will be harsh penalties ($50,000-$100,000) for violations, including miscommunicating to the worker what their role is (employee vs. independent contractor). Those fines could be devastating to a small construction business.

The Associated Builders and Contractors (ABC) have said the independent contractor provision will increase costs for construction business employers by $12.1 billion annually. The Associated General Contractors of America (AGC) says, “The PRO Act is anti-worker, anti-privacy, and anti-recovery.”

Data for Construction Business Building

Construction Monitor is the source for U.S. building statistics. Call 800.925.6085 (International/435.586.1205) or contact us to learn more about ways to use building permit data to build your business.

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