The PRO Act Pitfall

By: Mark Webb
Mark Webb
Mark Webb

On April 28, before a Joint Session of Congress, President Biden said many things. Included in his address was, “Good guys and women on Wall Street, but Wall Street didn’t build this country. The middle class built the country, and unions built the middle class. So that’s why I’m calling on Congress to pass the Protect the Right to Organize Act — the PRO Act — and send it to my desk so we can support the right to unionize.”

Among its many provisions, as stated in the House Education and Labor Committee Fact Sheet on H.R. 842:

“The bill prevents employers from misclassifying their employees and prevents workers from being denied remedies due to their immigration status. It also sets a ‘joint employer’ standard that ensures employees across the country have the right to collectively bargain with all of the companies that control the terms and conditions of their employment.”

One effect of the Biden Administration is apparently to shorten the distance between Sacramento and Washington D.C. to blocks rather than thousands of miles. The impact of the PRO Act in California may be negligible.

But, that in part depends on whether the Department of Labor will be able to allow the many exemptions to the ABC Test embodied in Assembly Bill 5 (Gonzalez), Assembly Bill 2257 (Gonzalez), and whatever further exemptions will be added this year in the California Legislature. Given the leadership of the Department, I suspect this will occur.

The real impact of the PRO Act will be felt in right-to-work states which so often are cited as destination points for businesses frustrated with California’s fiscal and political environment. Fundamental to the PRO Act is the notion that the government must both intervene for and empower labor to right the wrongs inherent in management. The various provisions of the PRO Act, much like California’s Labor Code Private Attorneys General Act (PAGA), begin with the assumption that management is inherently exploitative of labor. The history of the labor movement justifies that assumption.

It does not automatically follow, however, that labor unions are quasi-governmental agencies. It also does not mean that the role of government is to tip the scales of public policy heavily and permanently in the favor of labor or, for that matter, management. More than one President, and more than one candidate for President, have made it clear that labor builds things and management profits from it. That glib repartee ignores the risk inherent in building a business, competing successfully in the marketplace, and paying wages to workers so critical to making an entrepreneurial vision a reality.

Policymakers in Washington should examine more carefully the environment created by Sacramento relating to labor-management issues before being so willing to emulate it. The conflict between labor and management may well be eternal, but efforts to fully and finally resolve this conflict through more and more laws and regulations will inevitably fail.


Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.