A new bill has freelancers split over labor reform. The implications for employers could affect who and how you screen your contingent workforce.
The U.S. House of Representatives passed the Protecting the Right to Organize Act (PRO Act) in March. The current form of the bill changes the National Labor Relations Act of 1935 and some other related laws that impact workers’ rights to organize.
Freelancers are divided over the bill’s inclusion of an “ABC test” that defines who is and who is not an employee for the purpose of unionizing.
While the Senate will likely continue debating the inner workings of the bill for a while, it’s an important reminder for employers about the need to background check independent contractors, freelancers, and gig workers.
Freelancers are self-employed contractors and gig workers who take on projects. While they may be hired to complete projects for companies or organizations, freelancers are not considered employees and do not receive the same traditional protections such as paid sick leave and unemployment insurance. Most employers refer to freelancers as being part of their contingent or extended workforce.
Here are some fast facts:
Now, back to that ABC test. In brief, it says any worker must be considered an employee unless they A) control their own schedule, B) work in an industry different from their clients’, and C) can prove that they are “customarily engaged in an independently established trade, occupation, profession, or business.” A person must pass all three of these tests to be considered a freelancer using this rule.
Freelancing groups are divided about how the ABC test would classify workers. Reports say most freelancers are concerned they’d be reclassified as employees under the test. They’d receive benefits and vacation but lose the independence (and in some cases gigs) that come with being your own boss.
What the PRO Act shouldn’t change is who employers background check – assuming you’re already following best practices and screening both full-time employees and freelancers.
Make no mistake about it – screening independent contractors is legal. Employers largely have the same liability issues with these workers as with regular employees, and more employers are choosing to screen these workers to mitigate risk. In some industries and some states, employers are required to conduct background checks on all workers, regardless of employment status.
The Society for Human Resource Management (SHRM) says employers may conduct background checks on any workers, including freelancers, performing jobs on their worksites. SHRM also advises employers to refer to state laws, client relationships, and government contract requirements before conducting background checks.
The laws for screening freelancers are the same laws pertaining to full-time and part-time hires, as well as volunteers. The Fair Credit Reporting Act (FCRA) is the chief federal law and it is overseen by the Equal Employment Opportunity Commission (EEOC) and the Federal Trade Commission (FTC). The FCRA applies any time an employer obtains a pre-employment background check from a third party.
There is no need to develop a separate screening policy for your extended workforce. In fact, you should treat everyone equally to remain compliant and avoid discrimination complaints. This post provides a good refresher on how to review your screening program and policy to ensure you’re being consistent, compliant, and efficient with all types of workers.
Some critics say gig workers are businesses, not individual employees, and therefore don’t need to be screened. If freelancers are operating as something more than a sole proprietor, then yes, they are a business. However, the FTC says that status doesn’t negate them from a background check. The FCRA states that background checks should be conducted for “employment purposes,” and since the freelancer is being hired for “employment purposes,” a background check is warranted.
The bottom line for employers is the PRO Act doesn’t change the fact you should be screening everyone – from your contingent workforce to full-time employees – who perform work for your business. You will need to make sure, however, that if the bill with the ABC test language in it passes, any former freelancer who now qualifies as an employee is background checked according to your employment guidelines and your state’s laws. If you should have known something from a background check, you can be liable for negligent hiring.
If you have concerns about managing the screening needs for your extended workforce, please reach out to one of our EBI experts.
Understanding the complexities of background screening is what we do best. Our team of compliance experts, customer care advocates, and unique services like our Trusted Advisor Program means you are never alone when you partner with EBI.
Writer. Digital marketer. Storyteller. An award-winning writer and editor, Tricia O'Connor is the Marketing Content Manager at EBI. Tricia worked as a broadcast and print journalist for nearly two decades writing and producing programming for high-profile networks like ESPN Radio, History Channel, and Hallmark Channel, as well as contributing editorial work to publications nationwide. Tricia joined the EBI marketing team in 2019 and is responsible for content strategy, development, and engagement. Tricia earned a master's degree in journalism from the Medill School of Journalism at Northwestern University and is a proud undergraduate alumna of Wheaton College in Massachusetts.