From JDSupra, Manatt, Phelps & Phillips, LLP discusses a recent case in which the court said that California’s independent contractor statute, AB5, does not impermissibly infringe First Amendment rights by classifying doorknockers and signature gatherers according to the ABC test. Mannatt, Phelps & Phillips, LLP writes:
The U.S. Court of Appeals for the Ninth Circuit has again upheld California’s Assembly Bill 5, the 2019 law that adopted the ABC test to determine whether a worker is an employee or independent contractor, in a First Amendment challenge.
In 2019, the legislature enacted AB 5, which adopted the ABC test used by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles.
Under AB 5, all workers are assumed to be employees, not contractors, unless the employer can affirmatively satisfy the ABC test by proving three things: (A) that the worker is free from the control and direction of the hirer when performing the work, both under the contract for the 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 that involved in the work performed.
AB 5 faced immediate challenges, including a lawsuit filed by a political committee, a California nonprofit, and a company that provides doorknocking and signature-gathering services. The plaintiffs argued that the law violates the First Amendment because it imposes content-based restrictions on speech.
A U.S. district court disagreed, denying the plaintiffs’ motion for a preliminary injunction that sought to restrain enforcement of AB 5, and a panel of the Ninth Circuit affirmed.
While recognizing that “[f]ew problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent, entrepreneurial dealing,” the court also noted that the First Amendment does not prevent restrictions directed at commerce or conduct from imposing incidental burdens on speech.
AB 5 “does not restrict what, when, where, or how a worker may communicate,” the Ninth Circuit wrote. “California’s classification of a worker as an employee or an independent contractor is ‘aimed at the employment relationship—a traditional sphere of state regulations.’ It is a regulation of economic activity, not speech.”
The court relied heavily on American Society of Journalists and Authors, Inc. v. Bonta, where, in a challenge brought by freelance writers and photographers, the Ninth Circuit previously considered whether AB 5 regulates speech and concluded that it does not.
For purposes of the appeal, the panel accepted the plaintiffs’ assertion that application of the ABC test to their doorknockers and signature gatherers increased the likelihood that they would be classified as employees, which would also impose greater costs on the plaintiffs, and that as a result, they might not retain as many doorknockers and signature gatherers.
“Such an indirect impact on speech, however, does not violate the First Amendment,” the court explained. “Economic regulations can, of course, ‘implicate the First Amendment when they are not ‘generally applicable’ but instead target certain types of speech and thereby raise the specter of government discrimination.’ [AB 5] does not target certain types of speech. Unless an occupational exemption exists, the ABC test ‘applies across California’s economy.’ Thus, plaintiffs are not unfairly burdened by application of the ABC test to their doorknockers and signature gatherers.”
The panel further rejected the argument that AB 5’s exemptions for direct-sales salespersons, newspaper distributors and newspaper carriers constitute content-based discrimination, as the exemptions “do not depend on the communicative content, if any, conveyed by the workers but rather on the workers’ occupations.”
One member of the panel filed a dissenting opinion, calling the majority’s explanation that AB 5’s exemptions focus on economic activity and not protected expression “a false dichotomy.”
To read the opinion in Mobilize the Message, LLC v. Bonta, click here.
Why it matters: AB 5 continues to survive the many legal challenges that have come its way, from the most recent lawsuit involving doorknockers and signature gatherers to freelance writers and photographers and, earlier this year, the Supreme Court’s refusal to consider the law when it denied cert in a suit brought by the California Trucking Association.