Find out how the decision would affect freelance workers and businesses
The U.S. Supreme Court has denied the petition claiming the Assembly Bill 5 (AB5) law violates freelance journalists’ right to free speech.
According to Reuters, the American Society for Journalists and Authors (ASJA) and the National Press Photographers Association, the groups representing freelance workers, filed the petition against the “controversial” AB5 because it exempts other workers from the law but not them.
What does this mean for freelancers?
The California Labor and Workforce Development Agency (LWDA) defined AB5 as a bill the Gov. Gavin Newsom signed into law in September 2019 addressing employment status when “a hiring entity claims that the person it hired is an independent contractor.”
It further said that AB5 now requires the “ABC test” application to determine whether California workers are employees or independent contractors.
Reuters reported that in a 2019 lawsuit, ASJA claimed that the AB5 law unreasonably hinders freelance writers from being treated as independent contractors based on the content of their speech while exempting similar work performed for marketing and artistic purposes.
Under the AB5 law, businesses would be more challenged to treat workers as independent contractors rather than employees, according to Reuters.
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Moreover, the news outlet said this would be a big hit for freelancers considering that freelance groups claimed that most freelance workers generate more income as independent contractors and could be out of work altogether if they fail to secure jobs as full-time employees.
While the California Attorney-General’s office did not immediately comment on the Court’s decision, the representative of freelancer groups, Jim Manley, said the decision would hurt many workers.
Manley said the Court’s decline of the petition is “a loss for the thousands of freelancers who have built thriving careers through the freedom and flexibility that independent contracting provides.”
‘Regulation of employment not speech’
In October 2021, the 9th U.S. Circuit Court of Appeals rejected the challenge of the same group of freelance workers on the AB5 law.
The Court said AB5 only hopes to regulate economic activities and not hinder a worker’s freedom of speech.
“It does not, on its face, limit what someone can or cannot communicate. Nor does it restrict when, where, or how someone can speak,” the panel said. “The statute is aimed at the employment relationship—a traditional sphere of state regulation.”
Crucial for businesses
Reuters reported that the AB5 law could drive up business labor costs because employees are entitled to the minimum wage, overtime, and other benefits, making them much more expensive than independent contractors.
With the new law in place, Reuters reported that it could affect industries employing approximately 450,000 independent contractors and saddle employers with an increase of 30% or more labour costs.
“Trade groups and ‘gig economy’ companies lobbied heavily against AB5, claiming it would deprive many workers of flexibility and the opportunity to work multiple jobs,” Reuters said.
