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Supreme Court Rejects Worker Classification Law Challenge

The California law, which makes it harder for companies to classify workers as contractors to legally guarantee minimum wages, overtime pay and compensation benefits, was challenged by freelance groups.

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(TNS) — The Supreme Court rejected a challenge Monday, June 27, by groups of freelance journalists and photographers to a California law that makes it harder for companies to classify workers as contractors rather than employees.

The law, AB5, took effect in 2020 and affirmed standards set by the state Supreme Court in 2018. It defined workers hired by a company as employees unless they performed work for their own business that was outside the scope of the company's usual activities and were free of the hiring company's control. Employees, unlike contractors, are legally guaranteed minimum wages, overtime pay and workers' compensation benefits.

But organizations representing hundreds of freelancers in California said companies were unwilling to hire them because of the additional expenses, and they filed suit claiming the law violated their First Amendment rights as journalists. They continued their legal challenge even after lawmakers narrowed AB5 to exempt some categories of writers, photographers and performing artists from the law and deleted a provision that had automatically classified as an employee anyone submitting more than 35 articles or photos to a company in a year.

The Supreme Court, however, denied review without comment Monday of an appeal by two organizations of freelancers after a federal judge and an appellate court upheld AB5.

In a 3-0 ruling in October 2021, the Ninth U.S. Circuit Court of Appeals in San Francisco said the California law regulates economic activity and does not interfere with freedom of speech or the press.

"It does not, on its face, limit what someone can or cannot communicate," Judge Consuelo Callahan said in the appeals court's decision. "Nor does it restrict when, where, or how someone can speak. It instead governs worker classification."

Although AB5 may make some jobs less available, Callahan said, "workers remain able to write, sculpt, paint, design, or market whatever they wish," and the state is not regulating the content of their speech.

That was disputed Monday by the lawyer who filed the Supreme Court appeal.

Under the California law, "the freedom to freelance depends on what a writer or photographer has to say and how much they speak," said attorney Jim Manley of the Pacific Legal Foundation, who represented the American Society of Journalists and Authors and the National Press Photographers Association. He noted that AB5 and the followup law still classify a new worker as an employee if the worker replaced an employee who was doing the same type and amount of work.

"The court's decision to not hear our appeal is a loss for the thousands of freelancers who have built thriving careers through the freedom and flexibility that independent contracting provides," Manley said.

Attorney General Rob Bonta's office, in a filing defending the state law, told the court that AB5 "does not regulate speech or differentiate between speakers based on their message."

In a separate case, the Supreme Court rejected an appeal last October by trucking companies challenging the classification of truck owner-operators as employees under AB5. An appeal by another trucking group is still pending before the high court.

The ride-hailing companies Uber and Lyft won an exemption from AB5 in November 2020 when state voters approved Proposition 22, allowing them to classify their drivers as contractors, after a campaign in which the companies spent more than $200 million.

But an Alameda County judge struck down Prop. 22 last August, saying the measure interfered with the Legislature's authority under the state constitution to regulate workers' compensation and also addressed multiple subjects, violating another constitutional standard. The case is now awaiting review by a state appellate court.

The Supreme Court case is American Society of Journalists & Authors v. Bonta, 21-1272.


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