Why California’s AB 5 does not automatically and arbitrarily limit the amount a writer can write for an entity as an independent contractor.
I recently read several articles geared towards freelance writers, which discussed the perils of California’s AB 5. The bill seeks to codify tests to determine the classification of independent contractors and employees in California.
Ultimately, the goal is to protect individuals that should be receiving the same protections as employees and limit the potential for a hiring entity to misclassify the individual.
Why are freelance writers particularly worried?
Many writers are worried the bill will kill their business by placing a limit on the amount of content a writer can write for a hiring entity before becoming an employee — thus, deterring hiring entities from hiring writers beyond a certain point.
This worry is misguided, although not completely incorrect if the writer does a lot of work for a publication or other entity in the writing business.
However, the notion that the bill prevents writers from submitting more than 35 pieces of content to a business is not overtly clear from a simple reading of the bill. Rather, this question must first be answered:
Are writers performing work that is outside the usual course of the hiring entity’s business when they perform work for publications and other content creation companies?
If the answer is no, then everyone’s initial fear is realized. However, I’m not sure if the answer is automatically no. But first, a little background and analysis of the bill.
What does the number 35 actually mean and how is it applied?
The 35 content submission limit is not a limit on the amount a writer can write before becoming an employee of the hiring entity. Rather, the number 35 defines the amount writing a writer can do for a business before that business must use the test in subdivision (2)(a)(1) to classify the writer as an independent contractor or employee.
First let us review the section where the number 35 appears — subdivision 2(c)(2)(B)(x).
(2) For purposes of this subdivision:
B) “Professional services” means services that meet any of the following:
(x) Services provided by a freelance writer, editor, or newspaper cartoonist who does not provide content submissions to the putative employer more than 35 times per year. Items of content produced on a recurring basis related to a general topic shall be considered separate submissions for purposes of calculating the 35 times per year. For purposes of this clause, a “submission” is one or more items or forms of content by a freelance journalist that: (I) pertains to a specific event or topic; (II) is provided for in a contract that defines the scope of the work; (III) is accepted by the publication or company and published or posted for sale.
If you read the above quoted section, you can see that subsection (x) is just one part of a definition for “professional services”. Now let’s review where the definition for “professional services” is applied in the subdivision:
(c)(1) Subdivision (a) and the holding in Dynamex do not apply to a contract for “professional services” as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:
The section then goes on to list several factors used to determine whether the relationship is that of an employee or independent contractor. When reading the definition for professional services and its application in subdivision (c)(1), the conclusion is this:
A freelance writer and hiring entity relationship classification will be determined by Borello if the writer provides 35 or less pieces of content to the hiring entity annually. Even if you do write 35 or less pieces for an entity, you could still be an employee if the factors in Borello are not met.
However, if the freelance writer provides more than 35 pieces of content to the writer, then the holding in Dynamex and subdivision (a) will apply. Subdivision (a) states:
(a) (1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(B) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Moving Forward as a Freelance Writer or Hiring Entity Under AB 5.
The issue moving forward for freelance writers and hiring entity’s that engage with freelance writers is this:
Understanding which test will determine the classification of your business relationship.
What about freelance writers who freelance more than 35 times for a publication or other business?
The scenario where I envision this issue will be most problematic for writers and hiring entities is the scenario where the hiring entity is in the writing or editing business (i.e. the writer is not performing work for the hiring entity outside the usual course of the hiring entity’s business) and the writer is providing more than 35 pieces of content annually. In such a scenario, the hiring entity will have to be careful that its ‘freelance writer’ is not in fact, an employee.
In this context, the issue becomes the application of the test in subdivision (a)(1) and Dynamex. Specifically, the application of (a)(1)(B):
How do you define when a freelance writer is performing work that is outside the usual course of the hiring entity’s business, especially when that business is a publication?
I didn’t see a blanket statement in the bill that assumes all publishers and writers are engaged in the same usual course of business for purposes of that subsection.
As a publication, you are likely engaged in a specific type of writing whether that be by genre, format, or some other measurement. As a freelance writer, you probably write on a wide range of topics and in a wide range of formats. Or vice versa.
It is unclear how part (B) of the test in (a)(1) will be applied to writers working with publications and other companies in the writing and content creation business.
Therefore, such a relationship might eventually have to be determined by a court of law as one that “cannot be applied” to subdivision (a)(1) and would follow Borello as stated bellow:
(3) If a court of law rules that the three-part test in paragraph (1) cannot be applied to a particular context based on grounds other than an express exception to employment status as provided under paragraph (2), then the determination of employee or independent contractor status in that context shall instead be governed by the California Supreme Court’s decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello).
If you are either a freelance writer or hiring entity, particularly a publication or similar business, in California, then you should consult an attorney about your business relationship. Have an attorney review any contracts, or even better, have them prepare a new contract that can help classify your preferred relationship under this new law and provide practical steps for limiting the chance of being classified in an unintended manner.
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