9th Circ. rejects freelancer groups' challenge to California's AB5

3 minute read

The James R. Browning U.S. Court of Appeals Building, home of the 9th U.S. Circuit Court of Appeals, is pictured in San Francisco, California. REUTERS/Noah Berger

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  • Panel says state law regulates employment relationships, not speech
  • Organizations suing claimed AB5 threatened freelancers' livelihoods
  • Court also rejected trucking industry challenge to law

(Reuters) - A U.S. appeals court on Wednesday said California's strict worker classification law does not violate the free-speech rights of freelance writers and photographers, and state lawmakers were justified in distinguishing between occupations.

A unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals said the 2019 law known as AB5 regulates economic activity and not speech. The panel said it made sense that the law exempted certain industries in which worker misclassification has been less of a problem.

The court rejected a bid by the American Society of Journalists and Authors and the National Press Photographers Association to revive their challenge to AB5. The groups claimed that many freelancers make more money as independent contractors, and could be out of work altogether if they failed to secure jobs as full-time employees.

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But the 9th Circuit panel said those kinds of indirect impacts on speech do not rise to the level of violating the 1st Amendment of the U.S. Constitution.

"Whether employees or independent contractors, workers remain able to write, sculpt, paint, design, or market whatever they wish," Circuit Judge Consuelo Callahan wrote.

The ASJA and its lawyers at the Pacific Legal Foundation did not immediately respond to requests for comment. Nor did the California Attorney General's office.

The ruling came after a 9th Circuit panel in April ruled that AB5 was not preempted by federal regulations governing the trucking industry because it applies generally to all businesses.

AB5 codified a test created by the California Supreme Court in the 2018 case Dynamex Operations West Inc v. Superior Court. The "ABC test" says workers are a company's employees if they are under its direct control, engaged in its usual course of business, or do not operate their own independent businesses.

The ASJA in its 2019 lawsuit claimed AB5 unreasonably blocks many freelance journalists from being treated as independent contractors based on the content of their speech, while exempting similar work performed for marketing or artistic purposes.

The state argued that AB5 is a generally applicable regulation on commerce and does not implicate workers' speech.

U.S. District Judge Philip Guttierez last year sided with the state and dismissed the case. He said the categories of workers outlined in the law plainly do not turn on the substance of a worker's speech.

The 9th Circuit on Wednesday agreed. AB5 is aimed at employment relationships, which are a traditional area of state regulation.

"Even assuming that the ABC test constitutes an economic burden akin to a tax, its applicability does not turn on what workers say but, rather, on the service they provide or the occupation in which they are engaged," Callahan wrote.

The panel included Circuit Judge Danielle Forrest and U.S. District Judge Richard Seeborg of the Northern District of California, who sat by designation.

The case is American Society of Journalists and Authors v. Bonta, 9th U.S. Circuit Court of Appeals, No. 20-55734.

For the ASJA: James Manley of the Pacific Legal Foundation

For California: Jose Zelidon-Zepeda of the California Attorney General's office

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.