The state of California will overhaul its labor law next month and publishers are taking a careful look at how a dizzying array of new legal standards will apply to California authors, editors, illustrators, and other publishing workers previously engaged as independent contractors.
On January 1, 2020, California Assembly Bill 5 (AB5) will take effect statewide, requiring employers to reclassify many gig workers (the law is meant to improve working conditions as companies like Uber) as employees. Once an independent contractor is classified as an employee, the employer must meet minimum wage standards, pay overtime, and provide sick days. In addition, employers must pay premiums for workers comp, disability, and unemployment insurance for these workers they once treated as independent contractors.
The law’s long list of requirements and exceptions has led some legal commentators to suggest that companies avoid using creatives who live in California all together. (At present, it is not clear if the statute will apply to publishers located outside of California). Calee Lee, the founder of California-based Xist Publishing, has decided to suspend all new contracts until the publisher has more clarity on how to handle relationships with independent contractors. “One suggestion was to leave the state and to discontinue working with California authors and illustrators,” she said, describing the range of advice she has received. Her indie press specializes in e-books for children, releasing 765 children’s digital books since 2011. “We are working to figure out a way to comply with the law and to continue working with the people that we love and respect, [the California creatives] who have helped us build our business,” said Lee.
“Do not be afraid,” said Angela Bole, the CEO of the Independent Book Publishers Association which is based in California. “You can definitely hire California creatives. You should certainly think about the amount of work that you're giving them and understand what the exemption rules say.”
AB5 was created to codify and apply independent contractor standards from two different California legal opinions. “The essence of the problem, from both the creator standpoint and the engaging party standpoint, is the burden of proof,” said Ivan Hoffman, a California attorney who has written extensively about AB5. Hoffman detailed the long list of qualifications that an employer must meet to prove that a California creative is properly engaged as an independent contractor (rather than an employee).
First, the employer must consider the 2018 legal precedent of Dynamex Operations West v. Superior Court, a state ruling requiring employers to use an “ABC test” before classifying a worker as an independent contractor. By that test, these three conditions must be met:
- The independent contractor must not be controlled or directed by the hiring party.
- The independent contractor does work that is not part of the employers’ normal business.
- The independent contractor regularly performs this kind of work, independent of the employer.
Beyond the “ABC test,” the new law also applies standards from a 1989 California Supreme Court employment law case that asks the hiring party to consider 11 additional factors before labeling a worker as an independent contractor.
“The operative question is, why would I do that [as a hiring party]?” said Hoffman after cataloging all these considerations. “Why would I take a chance on engaging a California party? I could go anywhere else to get the same editing or the same graphic art. I could go overseas or I could find another state in the in the United States doesn't have those stringent requirements.”
IBPA's Bole noted that lawmakers in a number of other states are considering similar types of labor law changes. “It would be terrible to penalize an entire state’s worth of creatives because of this,” she said. “California is the first place to put this into law, but it's not going to be a last. It's going to be something you're going to have to deal with, eventually, across the country.”
Consequences and Exceptions
Although no one knows what future enforcement will look like, not following these labor laws could lead to lawsuits from independent contractors; some sort of intervention by the California Labor Commissioner’s Office; or through audits by state and federal tax authorities.
“The only ‘safe harbor’ under California law is to treat the worker as an employee from the outset,” writes attorney Jonathan Kirsch in a forthcoming article in the Jan/Feb 2020 IBPA Independent magazine. “But that approach can be so costly and burdensome that the solution is a nonstarter for most publishers.”
Kirsch, who specializes in publishing and IP law, urged publishers to limit independent contractors to jobs that are not fulfilled by an employee within the company and to make sure these business relationships pass the new tests for compliance. Independent contractor status stands on more solid legal grounds when the independent contractor has a business license or operates as an independent business entity (rather than a sole proprietor).
AB5 also contains pages of exceptions, some of which could help publishers continue to classify some California creatives as independent contractors. According to the new law, the “ABC test” does not apply to “services provided by a freelance writer, editor, or newspaper cartoonist.” Instead, the employer must consider the number of “content submissions” the independent contractor makes each year. As long as the freelance writer or editor makes less than 35 “content submissions” a year, they can still be labeled an independent contractor.
“I can't imagine a book editor doing more than 35 books a year for us,” said Maggie Langrick, publisher of LifeTree Media, when asked about this important exception to AB5’s new regulations. She serves on IBPA’s advocacy committee, helping other publishers navigate these new legal waters.
Langrick is in the process of moving her nonfiction press from Vancouver to California, so the publisher has carefully considered these new rules. Langrick called the 35 submission rule "a generous allowance that is going to allow most small business owners to continue operating as they are,” and she is sticking by her plans to move to the Golden State.
Editor's note: Boog works as an independent contractor in California.
