AB 323: Expanded temporary AB 5 exemption for newspaper carriers

Governor Gavin Newsom signed Assembly Bill 323, the Save Local Journalism Act, into law to grant the newspaper industry an extra year to meet certain labor standards. AB 323 was passed in the context of an age of declining print journalism, with many local newspapers closing, and many in the public losing confidence in the industry.

AB 323 was written in response to AB 5, which outlawed businesses from using contractors unless those individuals passed the "ABC test." The ABC test provides that workers should be classified as employees, and not independent contractors, unless: (i) 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; (ii) the person performs work that is outside the usual course of the hiring entity's business; and (iii) the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Unless all three requirements are met, AB 5 requires that workers be classifieds as employees.

As written, AB 5 applied to many workers who physically delivered newspapers. Accordingly, many news organizations reacted negatively to AB 5, as they largely rely on these workers who would be reclassified under AB 5 as employees. And unlike more well-heeled industries like ride hailing and delivery services which bought an exemption to AB 5, the newspaper industry could not afford to sponsor a proposition on the ballot.

According to the Mercury News, this reclassification could raise expenses for California newspapers by "60 to 85%" monthly. The Mercury News further cautioned that without a change, "newspapers will be forced to severely reduce print delivery, especially in harder-to-reach areas that do not have easy access to local news providers, and other readers likely would face increased subscription costs." Additionally, "[l]ocal coverage also could be severely impacted as further cuts would probably be needed." Unsurprisingly, multiple news organizations reacted negatively to AB 5, responding with stories such as "Assembly Bill 5 is destroying local news outlets" (OC Register), and "California could lose community newspapers without legislative action" (Napa Valley Register).

In response, AB 323 was passed. Most importantly for news organizations, AB 323 (i) expanded the temporary exemption for newspaper carriers' classification from complying with AB 5 until Jan. 1, 2022; and (ii) deleted the condition that, to get the exemption, a newspaper carrier must work under contract either with a newspaper publisher or newspaper distributor. (Newspaper carriers are defined as "a person who effects physical delivery of the newspaper to the customer or reader.") Additionally, AB 323 also requires state agencies to assess, evaluate and report on how media and marketing and communication efforts are reaching "ethnic residents, including, but not limited to, Latino, African American, Asian-Pacific Islander, Indigenous, and Middle Eastern communities, and its LGBTQIA residents."

The bill took effect Jan. 1. For now, news organizations are largely breathing a sigh of relief for one more year.