Legislature passes one-year exemption for newspaper carriers from AB 5

The state Legislature approved a bill Monday that would grant California newspapers a one-year extension before they must comply with a law increasing labor protections for delivery workers, a delay publishers say is crucial as they transition from a print product to a digital one.

On the final day of the legislative session, the state Assembly passed AB 323, which would allow newspapers to continue classifying carriers as independent contractors through Jan. 1, 2022. As of Monday evening, the vote was 60-2 in the lower chamber. The state Senate passed the bill by a 39-0 vote on Sunday.

A spokesman for Gov. Gavin Newsom would not comment on whether he would sign the bill.

The state’s newspaper sector argued that many smaller papers would be forced to close without the exemption. Classifying independent contractors as employees would impose at least $80 million in new costs on the newspaper industry, which is already grappling with a sharp drop in retail advertising following shelter-in-place rules to slow the spread of COVID-19, said Chuck Champion, president and CEO of California News Publishers Association, which which represents more than 400 daily and weekly newspapers.

“Publishers told me that they would not be able to survive the effects of this,” said Champion. “Some publishers were talking about reducing the number of days they would be able to distribute. ... It would have been literally taking a meat ax to the industry.”

The legislation by Assemblywoman Blanca Rubio, D-Baldwin Park, was co-authored by two North Bay lawmakers, state Sens. Bill Dodd, D-Napa, and Mike McGuire, D-Healdsburg, among others. It would extend a temporary exemption for the newspaper industry that was put in place last year in response to enactment of AB 5, which provides so-called “gig workers” greater protections from being classified as independent contractors and makes them eligible for benefits such as overtime, sick leave and unemployment pay.

Rubio’s bill originally sought a two-year exemption for newspapers, but that was scaled back to one year in order to pass before the Legislature adjourned.

“Simply put — newspapers are an essential public service,” Dodd said in a statement Monday. “We must do what we can to keep the reporters reporting, the presses running and the newspapers flying onto our doorsteps so we can continue to know about the things that affect our lives.”

Delivery costs for The Press Democrat would have increased 60% without the exemption, which could have forced cutbacks in distribution to rural parts of west Sonoma County and more distant areas in Mendocino and Lake counties, said Steve Falk, CEO of Sonoma Media Investments, which owns The Press Democrat.

“All of those areas become very questionable when delivery costs go up that significantly,” Falk said.

The newspaper industry argued that it needs more time to comply with AB 5 as it transitions from a print product— which is still coveted by older Baby Boomer readers — to a digital news report for younger readers delivered on their smartphones.

About 70% of the subscribers to The Press Democrat still take a printed newspaper, Falk said. But interest in local news has surged with COVID-19 and the recent wildfires, boosting the number of digital subscribers to pressdemocrat.com to just under 14,000, or around 30%.

“It’s double the growth of what we projected this year,” he said of digital subscribers.

Digital subscribers could be as much as 70% within five years, Falk said, with the remaining 30% print readers.

Lawmakers were voting late Monday on a second bill by the author of AB 5, Assemblywoman Lorena Gonzalez, D-San Diego, that would exempt about two-dozen additional professions from her landmark labor law forcing companies to treat contractors like employees.

Among other things, AB 2257 would end what critics had said were unworkable limits on services provided by freelance writers, editors, photographers and newspaper cartoonists, with certain restrictions to make sure they are not replacing current employees.

It would add further exemptions for musicians with single-engagement live performances, those involved with sound recordings or musical compositions, insurance inspectors, real estate appraisers and inspectors, manufactured housing salespersons, youth sports coaches, people engaged by an international exchange visitor program, and competition judges. Gonzalez also added those engaged in consulting services or animal services, along with landscape architects and professional foresters.

The measure cleared the Senate on a 39-0 vote. Gonzalez predicted her bill would also clear the Assembly.

The Associated Press contributed to this story. You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.