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California Freelancers Held to Worker Test, Ninth Circuit Says (2)

Oct. 6, 2021, 5:17 PMUpdated: Oct. 6, 2021, 9:48 PM

Freelance journalists and photographers can’t move forward with their claims that a rigid worker classification law stifles their First Amendment free speech rights, the Ninth Circuit said Wednesday.

The American Society of Journalists and Authors and the National Press Photographers Association asked the U.S. Court of Appeals for the Ninth Circuit to strike down part of a 2019 state law known as Assembly Bill 5, which codified the three-part test to determine employee status.

A.B. 5 does have exceptions for freelancers, but those suing argued that a limit to the volume of worker-produced projects impairs their legal right to speak and publish. A trial court last year sided with the state and dismissed the freelance groups’ lawsuit. The state defended the law, arguing that the legislation regulated commercial conduct, not speech.

“The laws do not regulate speech, but rather economic activity,” wrote U.S. Circuit Judge Consuelo Callahan, who penned the decision for the three-judge panel. “We further conclude that the legislature’s occupational distinctions are rationally related to a legitimate state purpose.”

California Attorney General Rob Bonta’s office said in a statement emailed Wednesday that they’re “pleased with the decision” and will “continue to defend laws that are designed to protect workers and ensure fair labor and business practices.”

California amended the state’s worker status law to expand the number of professional exemptions—including some journalists, musicians, comedians, and barbers. However, the freelance groups said the law’s remaining provisions still limit freedom of expression.

The legal fight is the latest since the California Supreme Court in 2018 first created a three-part “ABC test” that makes it harder for companies to classify workers as independent contractors. Before that decision, the state relied on a more lenient, multi-factor test.

The state law that codified the test created an exemption for journalists and other freelancers that said if the worker produced fewer than 35 pieces of work in a single year, the previous test could apply to their classification status. These restrictions, the groups argued, reduced work opportunities and inhibited their freedom to freelance.

Seeking Further Review

The law was later amended dropping the number of work produced but adding that for the previous test to apply workers can’t directly replace an employee who performed the same work at the same volume for the hiring entity.

“Under California law, the freedom to freelance depends on the type of speech you produce: marketers, grant writers and fine artists can freelance, but journalists and videographers cannot,” said Jim Manley, attorney with the Pacific Legal Foundation, which represents the freelance groups.

The Ninth Circuit failed to apply the U.S. Supreme Court’s rulings about the “function or purpose” of speech that violates the First Amendment, he said, adding that the groups will ask the full appeals court or the Supreme Court to review the case.

The ABC standard likewise has threatened the independent contractor model used by gig companies—including Uber Technologies Inc., Lyft Inc., and Postmates Inc.—that saves them millions of dollars in wages, taxes, unemployment insurance, workers’ compensation, and other benefits granted only to employees.

Under the ABC test, workers are presumed employees and not contractors based on employer control over how work is performed, whether the services are within the company’s normal course of business, and whether workers have an independently established role.

Callahan was joined by Ninth Circuit Judge Danielle Forrest and Judge Richard Seeborg from the U.S. District Court for the Northern District of California, who was sitting by designation.

The Pacific Legal Foundation represents the freelance groups. The California Office of Attorney General represents the state.

The case is Am. Soc’y of Journalists and Authors, Inc. v. Bonta, 9th Cir., No. 20-55734, opinion 10/6/21.

(Updated to add comment from the California Attorney General's Office in the fifth paragraph.)

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Travis Tritten at ttritten@bgov.com; Andrew Harris at aharris@bloomberglaw.com

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