California newspapers win 1-year exemption on labor rule for carriers
Published 4:55 PM EDT Sep 14, 2019
On the final day of California’s legislative session, the state’s newspaper industry won a temporary reprieve in a fight over pay for carriers.
In the early hours of Saturday, the Assembly voted 62-4 to send AB170 to the governor’s desk. The “carveout” bill gives publishers a one-year extension to comply with a new landmark labor measure, AB5, that would reclassify many workers now considered independent contractors — including newspaper delivery people — as employees.
Gov. Gavin Newsom, a Democrat, is expected to sign both bills into law.
Though AB 170 passed, it wasn’t without controversy. In the hours before the final floor vote, Assemblymember Lorena Gonzalez issued an emotional plea against the bill. The Democrat from San Diego told her colleagues on the Labor and Employment Committee that she was disgusted by the exemption and that she would not vote for it — even though she authored and introduced the legislation.
“This is a terrible bill and I do not plan to vote for it,” she said as she introduced AB 170 on the Assembly floor. Clarifying that she was not urging other lawmakers to vote down the carveout, she said that she was forced to take it up as a condition for the state Senate to approve AB 5. The exemption for newspaper publishers, she said, ran counter to her initial intent in the original legislation: to hold employers accountable.
In the end, AB 170 passed, with wide support in both houses, after lawmakers called on the newspaper industry to use the year extension wisely to make positive changes. (AB 5 is to take effect in January 2020, giving publishers until January 2021 to comply.)
More: What is California’s AB 5? The bill could make gig economy workers like Uber drivers employees
Newspapers say AB 5 could kill their business
AB 5 has been heralded by labor advocates as a step toward protecting millions of low-wage contractors who are not covered by labor laws and do not receive important benefits and protections including minimum wage, overtime or paid sick leave. The landmark bill codifies and clarifies a state Supreme Court decision requiring employers to pass a strict, three-pronged test before they can classify workers as independent contractors.
Employers save roughly 30% in costs by using independent contractors rather than employees. Critics say employers have evaded workplace condition requirements and shifted payroll tax burdens to workers through overuse of the practice.
Giant gig-based tech companies like Uber and Lyft that built empires on contract labor were seen as the main targets of the bill, but multiple industries will be affected. AB 5 inspired a frenzy of lobbying efforts in recent weeks, as employers looked for ways to delay or permanently avoid complying with the new ABC test.
More: California’s controversial labor bill has passed the Senate. Experts forecast more worker rights, higher prices for services
Newspapers were among them, and many used their editorial pages to cry foul on the bill, which would require reclassification of their carriers — low-wage workers who deliver papers before dawn, every day of the week, often for less than minimum wage.
Publishers argued that AB5 would deliver a fatal blow to the struggling news industry, especially smaller minority, local papers that could buckle under the additional costs of employing carriers.
“If you believe newspapers play an essential role in strengthening democracy and holding powerful leaders accountable, now is the time to speak up about Assembly Bill 5,” The Sacramento Bee said in an editorial last month before the AB170 temporary exemption was drafted. “The bill, as currently written, could force many California newspapers out of business.”
Regina Brown Wilson, executive director of California Black Media, also spoke out against AB 5 without a newspaper exemption. “It would not only hurt the Black press,” she wrote. “It would make business nearly impossible for the more than 100 Latinx, Asian-American, Native American, and other small niche independent papers as well.”
Multiple publishers face lawsuits from carriers
Many lawmakers rose to defend the newspaper industry, citing its civic importance. Some fondly recalled taking up a paper route to make some cash when they were young and emphasized that many carriers work to supplement their income, not live on it.
Most who spoke before the votes said they saw the necessity of an extension — even as they called for accountability.
“It is not the author’s desire or mine to see another year where newspaper carriers are abused or mistreated by the people they have contracts with,” Sen. Holly Mitchell, a Democrat from Los Angeles, said as she introduced AB 170 in the Senate.
Hundreds of lawsuits have been filed by carriers against publishers in recent years, especially in the wake of California’s Dynamex Supreme Court decision that defined how employers could classify independent contractors.
A number of publishers and distributors have lost suits filed by carriers in recent years. In 2014, the San Diego Tribune and its then-owner, The Copley Press Inc., lost an $11 million claim made by 1,200 paper carriers. Last year, carriers filed a class-action suit against the Chicago Tribune and this year GateHouse Media settled with carriers for $425,000, following years of litigation. According to Gonzalez, there are more than 500 suits currently pending against publishers.
If the governor signs AB 170, courts may have a reason to delay or dismiss such suits.
While the measure does contain language indicating the exemption could be extended, lawmakers said Friday they would be disinclined to grant any.
Industry representatives said they would use the time wisely to work on a solution. “The newspaper industry will try to figure out a model that works for distribution within the means the industry has, and to work with the legislature to try to use the intent expressed in AB 5,” said Jim Ewert, general counsel for the California News Publishers Association, who negotiated with legislators to secure the one-year reprieve.
“I think we have every intention to do what we can to get there,” he added. “We are committed to do that.”