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California’s “Gig Worker Bill” and Its Impact on Freelance Journalists and Photographers

By Christopher Hickman

On January 1, 2020, California's "Gig Worker Bill" (or, Assembly Bill No. 5) ("AB 5"), became law, after approval by the governor on September 18, 2019. The bill has changed, in no small measure, the rules employees must use to determine whether a worker is classified as an employee or an independent contractor in California. The decision impacts independent contractors, since they are not entitled to most of the benefits that employees receive, including minimum wage, overtime pay, and worker's compensation. The law does not apply to workers outside of California. However, its passage has spurred other states to consider adopting similar messages. How, then, has the law impacted freelance journalists and photographers in California, and what are the potential implications of the law throughout the country?

The origins of this law can be traced, in part, to the California Supreme Court's decision in Dynamex Operations W. v. Superior Court, 4 Cal.5th 903 (2018) ("Dynamex"). In this voluminous decision, wherein the issue was whether a group of delivery drivers should be classified as employees or independent contractors for the purpose of the wage orders adopted by the adopted by California's Industrial Welfare Commission ("IWC"), the Court ultimately rejected the multi-factor "right to control" test set forth in S.G. Borello & Sons Inc. v. Department of Industrial Relations, 48 Cal.3d 341(1989) ("Borello") in favor of a new test (the "ABC test"). Under the ABC test, a worker is considered an independent contractor if it is established:

(A) that the worker is free from the control and direction of the hirer in connection with the performance of  the work, both under the contract for the performance of such work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity's business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. Dynamex, 4 Cal.5th at 916.

In broad strokes, the ABC test is narrower than Borello's "right to control" test, which balanced nine factors to determine a worker's classification based on a case-by-case basis. (Of the nine factors, the first – whether the person doing the work is engaged in the service that is the company's primary business – was given the most weight.) The Borello test focused on how much control a potential employer exercised over a worker. The ABC test, however, presumes that the worker is an employee, unless the employee proves otherwise. Companies were thereafter advised to be mindful of the new ABC test when they "create[d] and administer[ed] independent contractor relationships."

In the aftermath of Dynamex, AB 5 was passed, expanding the Dynamex decision, but not necessarily codifying it in all respects. The Dynamex test is no longer applied solely to wage orders adopted by the IWC; now, it applies to the entire California Labor Code, the California Unemployment Insurance Code, and wage orders.

However, the ABC test is not applied across the board. For example, it is not applied to workers' compensation benefits or determining worker status in matters involving discrimination and retaliation.

AB 5 also exempts specified occupations from the application of the ABC test, including licensed insurance agents, commercial fishermen, and registered securities broker-dealers. For these occupations, the nine-factor Borello test applies. Exempt occupations also include "others performing work under a contract for professional services." Graphic designers, grant writers, and fine artists qualify as "professional services." So, too, do still photographers and photojournalists, freelance writers, editors, and newspaper cartoonists. However, the photographers cannot license photos to the employer in question more than thirty-five times per year. (There is still another carve-out here for people who work on motion pictures.) The freelance writers, editors and cartoonists, also, cannot provide content submissions to an employer more than thirty-five times per year.

The impact of AB 5 at the national level is an open question; however, this is a touchstone moment for workers in the "gig economy" age. Several states are considering similar legislation (though they appear to be waiting for an early assessment of the economic consequences of the bill in California). Illinois, Oregon, and Washington have proposed similar legislation. Prior to the COVID-19 outbreak, Governor Andrew Cuomo hinted in his State of the State Address that he was considering an ABC-lite test in New York. While New Jersey has applied the ABC test for years, the state government, too, has considered legislation along the lines of AB 5. Notably, while New Jersey rigorously enforces the ABC test, the state is not inclined to go after freelance journalists. California, on the other hand, makes little distinction between professions in its enforcement of labor laws and has a $20 million budget to enforce AB 5.

Conversely, other states are providing a more favorable landscape for independent contractors. Arizona, Florida, Iowa, and Kentucky, for example, have programs in place providing designated "gig" workers an opportunity to operate through "marketplace platforms" in order to establish themselves as contractors, not employees; the test in "marketplace platform" bills is thought to be a pretty easy one to pass and has attracted some controversy.

A nationwide shift to the AB 5 model, where everyone is assumed to be an employee unless the employer can prove otherwise, is not likely. In February, the House of Representatives passed legislation that would alter federal labor law in many ways, including making the ABC test the law of the land in some significant respects; however, this legislation is not likely to pass in the Senate.

Absent a groundswell in public opinion, the ABC test won't get the federal seal of approval anytime soon. People are currently pleased with the "gig economy" and its benefits; to alter the current model at the national level would be expensive and take years. Thus, at the state and federal level, the impact of AB 5 (and, by extension, the potential impact on freelance journalists nationwide) is negligible, save for those states that are currently watching California for some indication of the bill's economic impact.

Though the economic impact on California is undetermined, there is still notable pushback against AB 5 in the state. By February, thirty-four separate pieces of legislation related to the bill were introduced in the legislature; most of the legislation focused on "expand[ing] the list of occupations not required to be considered an employee of a business and exempt[ing them] from mandatory payroll taxes and workplace benefits." Assemblywoman Lorena Gonzalez, who authored AB 5, even introduced a revision, which included lifting the thirty-five article and photo cap imposed on freelance journalists and photographer and instead attaching that worker's status as a non-employee to whether their contract sets an amount and a time of payment. (The revision hasn't yet made its way through the legislature, leaving the cap in place.)

Additionally, passage of the bill was met almost immediately with legal challenges, including a lawsuit aimed at protecting the autonomy of freelance journalists. American Society of Journalists and Authors, Inc. and National Press Photographers Association v. Xavier Becerra, Case No.: 2-19-cv-10645 ("American Society of Journalists"), challenges the application of AB 5 to 'writers, editors, still photographers, and visual journalists" in violation of the First and Fourteenth Amendments "by drawing unconstitutional content-based distinctions about who can freelance."

As was stated earlier, AB 5 has dozens of exemptions for various workers, including one for "professional services." This is defined to include a number of services a freelancer can provide, provided they have, among other things, a license and a place of business outside the putative employer's address. If you meet those requirements, you also have to satisfy the "professional services" description.

Freelance writers and photographers are among the handful of workers subject to the thirty-five-submissions limit, a component of their "professional services" exemption. Once they hit thirty-five submissions, they are effectively foreclosed from working with that publisher as an independent contractor for the rest of the year. (While there is a carveout in the bill's section on photographers for photographers in "motion pictures," you become an employee of the company for which you worked after shooting a single video.)

Dozens of publishers have, as a result, blacklisted California freelancers. The enforcement risk falls entirely on the publication, and it's deemed an unacceptable risk to have to tally thirty-five assignments. As a result, journalists have been subject to a reduced opportunity to publish and printed daily newspapers are feeling the sting.

Many freelancers prize the freedom and flexibility of independent contractor work: they can control their business expenses, decide when and where they work, more effectively balance work and life responsibilities (such as caring for a family member). The Plaintiffs in American Society of Journalists argue that AB 5 has taken those choices from them.

The Plaintiffs contend that the press has been singled out in violation of the First and Fourteenth Amendments. Since the press are the only "professional services' subject to the thirty-five-submission cap, the government has singled them out based solely on the content they provide. By way of example, when a freelancer is writing ad copy, then they're free to operate on a freelance basis, but if the same writer is writing a news article, then the thirty-five-submission cap comes into effect. Plaintiffs say that the regulation should be subject to strict scrutiny because this is a speech-based limitation and not narrowly tailored to any compelling government objective. How, goes the argument, do you offer an exemption to a grant writer but not a member of the press? Additionally, if the press is singled out for potentially onerous taxation, shouldn't that also be subject to strict scrutiny? For example, Plaintiffs argue that their members can deduct business expenses on their federal taxes for, among other things, professional memberships, educational and networking conferences, travel, insurance, and home offices, whereas an employee cannot. This may cause those folks who report on the government to be burdened with taxes and regulations that constrain their ability to report.

The state denies any content-based distinction in AB 5; rather, the distinction is based on occupation, so the law is subject to minimal scrutiny. And though one can argue that an exemption for "professional services" is not based on the job you have but the content you produce, the District Court agreed with the state, dismissed the case and denied a preliminary injunction.

The situation for the press nationally, remains unchanged for the time being since AB 5 went into effect. In California, however, the impact of AB 5 on journalists may well be significant and deleterious. (The added impact of the Coronavirus pandemic obviously helps no one in the media.). The American Society of Journalists Plaintiffs intend to appeal the District Court's decision. Additionally, the attempted legislative fix by AB 5's author is potentially positive, though the proposed new legislation has its own problems. In the meantime, the press in California must wait on the 9th Circuit and possible fixes to AB 5; both these propositions are as uncertain as future employment opportunities.

Christopher Hickman is Senior Counsel, Media and Intellectual Property, at BuzzFeed.

 
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