The PRO Act Will Limit Your Ability to be a Self-Employed Consultant!
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If you’re self-employed, or thinking about it, or you know someone who is self-employed, THIS IS IMPORTANT! We need to take action now to protect our right to be hired and paid on a business-to-business basis as independent contractors. If the PRO Act passes in its current form, you will likely be hired as a temporary employee.
On March 8, 2021 the U.S. House of Representatives passed the PRO Act that includes the “ABC Test” that’s part of the controversial California law AB-5. The ABC Test is a huge problem for us as independent consultants because part B states that an independent contractor must perform work that is outside the usual course of business of the hiring entity. This means that as an independent consultant, you can't subcontract to another consulting firm, nor can you hire subcontractors to help you with your own consulting work. Instead, you would have to be hired (or hire others) as a temporary employee on a W-2 tax basis, not on a 1099 tax basis.
This is a big deal for us as self-employed professionals because how you are paid affects how much tax you owe. Generally speaking, you pay significantly less tax when you’re paid on 1099 tax basis, deduct your business expenses, and contribute to your own retirement plan. That’s why PICA's motto is “Friends don’t let friends W-2.”
If the PRO Act goes into law as it is currently written, it’s going to be much harder to qualify as an independent contractor and get paid on a 1099 tax basis. An article published on CNBC sums it up well: I backed Biden and the Democrats but their pro-union bill could kill my career.
Our ability to make a living as a self-employed professional is at risk! This is why each of us needs to do our part to help make our voices heard by the U.S. Senate before they vote on the PRO Act.
Three Easy Steps to Help Our Cause
The PRO Act is going to the U.S. Senate for a vote, so take action now by letting your state senators (especially Democratic senators) know how you feel about the PRO Act with the ABC test. It's easy, and it should take about five minutes. Here's how to do it.
1. Go to this website to find out how to contact your U.S. Senator. Select your state and your two senators will pop up.
2. Call the numbers below their photos and leave voicemails that say something like this:
"Hello, my name is Liz Steblay and I live in Reno. I'm calling to urge you to NOT vote for the PRO Act as long as it has the ABC Test as part of it. The ABC Test would significantly impact my ability to earn a living as an independent consultant. The IRS test works fine for the purposes of worker classification, and the real purpose of the PRO Act doesn't need the ABC Test provision. Please do what you can to get the ABC Test removed before the PRO Act goes to a vote. My livelihood, and that of millions of other self-employed professionals may depend on it. If you'd like to better understand my perspective, please call me at (123) 456-7890 or send me an email at myemailaddress@here.com. How you vote on this issue will determine my vote in the next election! Thank you."
3. Click on the name above their photo. This will take you to their website where they likely have a contact form. Here is some sample text for you to adapt when you fill out the form and/or send them an email.
Suggested subject line: The PRO Act - No ABC Test!
Senator Rosen,
Please don’t make the same mistake that California did with AB-5 – do not vote in favor of the PRO Act with the ABC Test as part of it.
As a Democrat, I’m sure you are inclined to vote in favor of the PRO Act but please don’t do it blindly! Part B of the ABC Test has HUGE ramifications for anyone who is self-employed, making it extremely difficult for someone to qualify as an independent contractor including journalists, translators, musicians, independent consultants, solopreneurs, and over 50 million other self-employed people.
The IRS test is fine; we don’t need the ABC test. This article published on NBC News sums it up well: https://www.nbcnews.com/think/opinion/i-backed-biden-democrats-their-pro-union-bill-could-kill-ncna1260289.
How you vote on this issue will determine my vote in the next election.
NO ABC TEST!
-- Liz Steblay
Founder of the Professional Independent Consultants of America (PICA) www.IndependentConsulting.org
Reno, NV
Please do at least one of these things now before you forget!
Next, be sure you stay informed. Hashtags to follow include #NoPROAct and #IRSnotABC and there’s always lively discussion about the latest developments in the Facebook group “Fight for Freelancers USA”.
NOW IS THE TIME TO TAKE ACTION. It only takes five minutes. Protect your right to be self-employed!
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