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Ninth Circuit Upholds Law Under Which Some Freelancers Are Now Employees
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday upheld the constitutionality of a California Labor Code section enacted last year that renders some freelance journalists employees rather than independent contractors, rejecting the contention that the statute impinges upon freedom of the press.
Writing for a three-judge panel, Circuit Judge Consuelo M. Callahan declared that §2778 and other provisions added by AB 5 “do not regulate speech but, rather, economic activity,” adding that “the legislature’s occupational distinctions are rationally related to a legitimate state purpose.”
Her opinion affirms the dismissal of an action with prejudice by District Court Judge Philip S. Gutierrez of the Central District of California. That action was brought on behalf of its members by the American Society of Journalists and Authors (“ASJA”) and the National Press Photographers Association (“NPPA”).
Under the California Supreme Court’s 1989 decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations, freelancers were independent contractors. Sec. 2778, however, renders some free-lancers employees, applying to them the “ABC” test adopted by the California Supreme Court in 2018 in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, a case dealing with wage-and-hour issues.
ABC Test Defined
Chief Justice Tani Cantil-Sakauye said in Dynamex:
“Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the hiring entity establishes: (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.”
AB 5 codifies the ABC test and expands its application. However, §2778 provides an exemption for certain professionals. An exemption applies to some but not all exemption freelancers.
Statute Amended
As it read initially, and as of the time the litigation commenced, there was an exemption for those who submitted less than 35 articles, photos or other journalistic works per year. That was changed to peg the journalist’s status to whether he or she replaced an employee.
Labor Code §2778(b)(I)(i) now exempts a “still photographer, photojournalist, videographer, or photo editor who works under a written contract that specifies the rate of pay and obligation to pay by a defined time, as long as the individual providing the services is not directly replacing an employee who performed the same work at the same volume for the hiring entity; the individual does not primarily perform the work at the hiring entity’s business location…and the individual is not restricted from working for more than one hiring entity.”
The exemption is declared inapplicable “to a still photographer, photojournalist, videographer, or photo editor who works on motion pictures, which is inclusive of, but is not limited to, theatrical or commercial productions, broadcast news, television, and music videos.”
Allegations of Complaint
According to the complaint, “the constitutional rights of ASJA’s and NPPA’s members are impaired, threatening the livelihood of those who work as freelancers.”
The pleading explains:
“Classifying Plaintiffs’ members as employees rather than freelance independent contractors brings significant new costs and disadvantages to the members. For professionals engaged in ‘original and creative’ work. AB 5 adds costs their client-turned-employer will have to pay, such as unemployment taxes workers’ compensation taxes, state disability insurance, paid family leave, and sick leave. Some of these costs are borne by an employer, but they all make Plaintiffs’ members’ work more costly—and thus less attractive—to the client-turned-employer. The additional burden on Plaintiffs’ members’ ability to engage in independent journalism is a direct result of their classification as employees….” It goes on to say (with paragraph numbering omitted):
“Freelance journalists who are forced to become employees due to AB 5 will lose the copyright to their work.
“Control over their workload is also a primary concern for Plaintiffs’ members, and is what leads many of them to make the choice to work independently.
“In a tumultuous industry that continues to lay off employees, Plaintiffs’ members find safety in flexibility. Rather than being tied to a single employer, Plaintiffs’ members are able to adapt their workload to their financial needs, balance their work with their other responsibilities, and spread their workload across multiple clients to minimize risk.”
Freelancers would lose the freedom and flexibility they crave, under AB 5, the complaint avers.
District Court Decision
Rejecting a First Amendment challenge, Gutierrez said that the provisions “are not content-based, do not single out the press, serve a governmental interest…that is unrelated to the suppression of speech, and Plaintiffs have not made any allegations that the law was adopted to favor or disfavor any message.”
He saw no merit in an equal protection argument put forth by the plaintiffs, saying that “that the groups of exemptions (marketers, graphic designers, grant writers, and travel agents, on the one hand, and photographers, photojournalists, freelance writers, and editors, on the other) attacked by Plaintiffs are not ‘similarly situated,’ for constitutional purposes and, even if they were, there is a conceivable, rational basis for the distinctions.”
The judge granted leave to amend but the plaintiffs declined the opportunity and appealed.
Callaghan’s Decision
Callaghan shared Gutierrez’s view that there is no affront to the First Amendment, setting forth:
“Section 2778… regulates economic activity rather than speech. It does not. on its face, limit what someone can or cannot communicate. Nor does it restrict when, where, or how someone can speak. It instead governs worker classification by specifying whether Dynamex’s ABC test or Borello’s multi-factor analysis applies to given occupations under given circumstances. In other words, the statue is aimed at the employment relationship—a traditional sphere of state regulation….Such rules understandably vary based on the nature of the work performed or the industry in which the work is performed, and section 2778 is no different in this regard.6 But whether employees or independent contractors, workers remain able to write, sculpt, paint, design, or market whatever they wish.” She added that “contrary to ASJA’s contention, the law is not rendered generally inapplicable just because some other professionals—among them lawyers, human-resource administrators, and creative marketers—enjoy different, or even broader, carveouts from the ABC test.”
There’s no equal protection problem, the judge remarked, because “like many other employment laws, section 2778 permissibly subjects workers in different fields to different rules.”
The case is American Society of Journalists and Authors, Inc. v. Bonta, 20-55734.
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