What’s in the PRO Act that’s bad for small businesses?
Now we know. Alignable conducted a thorough survey, getting responses from 11,606 participants. The majority – 61% – of respondents expressed fear about how the PRO Act legislation could affect small businesses.
“Just as small business owners are starting to feel more optimistic about surviving the COVID Crisis, certain legislators in Washington are plotting to crush them once again — this time with what we’re calling the PRO Act Virus,” said Eric Groves, Alignable Co-founder and CEO of Alignable tells us. “And we’re not being dramatic, we’ve collected the data and we’re highlighting the impact this bill could have on millions of small business owners.”
Nearly Two-Thirds Worry About PRO Act Impact on Small Business
Currently, the PRO Act is pending action by the Senate. Recently the Biden administration indicated that the PRO Act could become part of a proposed $2.3 trillion infrastructure bill.
In short, it does 2 things that could seriously affect small business owners, especially very small businesses and solo entrepreneurs.
- The PRO Act is pro-union legislation. The “PRO” stands for Protecting the Right to Organize. The PRO Act was passed by the House last month and is pending action in the Senate.
- The PRO Act would require companies to hire many independent contractors as W-2 employees. It would follow what’s called the ABC guidelines to define independent contractors.
Groves tell us if the bill is passed, it could have a devastating impact on those businesses, freelancers, and entrepreneurs.
To find out more from the survey on the impact of the PRO Act on small businesses, we asked Groves to detail some of the findings. He says nearly half of small businesses would refuse to take on more work right away if they can’t use freelancers due to rules in the PRO Act.
“Based on the responses to our poll, 40% of business owners indicated they would need to turn away the work associated with projects or sales requiring freelancers to complete,” Groves says. “This net result would be small businesses losing revenue. In fact, 45% of business owners told us this loss of business could shut down their companies.”
PRO Act Impact on Freelancers
Freelancers, he says, fear they could, in extreme circumstances, lose 76% of their business.
And freelancers are the ones being forgotten in the debate about the PRO Act. Those in favor right now focus on the labor organization arm of the legislation.
“Our policymakers and political influencers need to realize that, if thousands of freelancers are vehemently opposed to the legislation along with the U.S. Chamber of Commerce, they need to dig deeper and understand what they are proposing and all of its potential impact,” Groves says.
Takeaways from Alignable Survey on PRO Act
Here are some more key takeaways from the Alignable survey on the PRO Act:
- The majority (61%) of independent contractors anticipate losing 76% or more of their business. (That’s largely because only 17% of small business owners said they could afford to hire freelancers as W-2 employees).
- Looking at demographics, 67% of women-owned businesses would lose most of their business, with many saying they’re parents who freelance to accommodate children’s schedules. Veterans were similar with 65% reporting the same massive loss of revenue.
- Nearly half (45%) of all small businesses would be forced to shut down, as many depend on hiring freelancers to win business, manage costs, and keep companies afloat.
- Minority-owned businesses also could suffer major losses, as 62% said they’re “vitally or highly dependent” upon having a side hustle to stay afloat.
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This is thoroughly explained article about Pro act and its impact on small scale industries.
I understand that government feels big companies like Uber and Lyft are abusing the independent contractor designation. However, SMBs will always need freelancers to fill their needs BEFORE they’re able to hire full time employees. Maybe that means saying the bill only applies to businesses with more than 50 independent contractors or something, but this is a classic example of a trying to fix one issue and causing lots of collateral damage (which is common when the federal government is involved because their action is applied to the entire country).
Lisa L. Price
Hi Robert Brady,
Exactly! The paint with a broad brush legislation style never works. There are many freelancers who chose to run their biz that way, and don’t want to be employees.