Your local newspaper is at risk: Legislature must act
Newspapers are part of the essential fabric of communities and a gateway to civic engagement. The Legislature must ensure that newspapers can continue to inform and serve California communities by adopting a permanent exemption for newspapers from AB 5.
The Legislature granted a one-year exemption in recognition that newspapers occupy a unique place in keeping our citizenry informed and engaged.
- Assembly Bill 5 (Gonzalez), which took effect January 1, 2020, codified the California Supreme Court’s Dynamex decision and established a three-pronged test before employers can classify workers as independent contractors. However, in recognition that reclassifying newspaper carriers as employees would have caused irreparable harm to carriers, newspapers, and the communities they serve, the Legislature passed and the Governor signed AB 170 which granted newspapers a one-year exemption to the “independent contractor” test for newspaper carriers.
- Under the exemption, newspapers will continue to be governed by the standard for determining proper classification as set forth in the decision of the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (Borello) (1989).
- Other industries that have societal value have also received exemptions and are governed by Borello. These are other industries that require specific skill sets and hold a special place in society. However, none of those industries is looked to as the “fourth estate” of government and included in the First Amendment.
Already operating under extreme financial pressure, local newspapers cannot survive if they must classify carriers as “employees.”
- According to data from the News Media Alliance and Pew Research Center, newspaper advertising revenue has fallen dramatically since its peak in 2005.
- Financial analyses show that with an estimated 8,000-10,000 carriers becoming employees, many community newspapers — ethnic, urban, rural, suburban and metro — will be unable to sustain operations.
- For those that continue to exist, operations will be drastically curtailed. Subscribers will lose specialized features like puzzles, comics and community listings, and papers will be forced to raise prices to offset the financial burden of hundreds of new employees.
- While publishers are increasing the delivery of news through digital channels, many people are not connected to the internet or prefer to receive a printed newspaper. In addition, print circulation shoulders the financial burden for journalists and digital content. If that base of support is reduced or eliminated, communities will lose a critical information source. Under both options, providing communities with news requires the use of employees and contractors to operate responsibly, fully, accurately, and efficiently.
- The loss of print circulation creates a negative spiral effect: less distribution of newspapers means less readership, which means less subscription and advertising revenue, resulting in less ability to employ journalists, and in turn less coverage of the community and less readership — a self-perpetuating cycle that repeats until communities have no access to local news.
Reclassifying carriers as employees would harm carriers.
- Carriers deliver papers in the early morning hours, and many head to full-time jobs upon completion of their routes. They intentionally desire to work independently, with limited oversight, and do not seek to work under the confines and structure of an employer-employee relationship.
- Many carrier positions are held by those who face barriers to traditional employment, including individuals with limited work experience. They will have difficulty finding new employment opportunities.
- Some carriers work for more than one publisher, and almost all use their own vehicle and/or independently arrange for friends or family members to cover their routes when they have conflicts — actions that clearly fall under those of an independent contractor.
- A significant number of traditional carrier positions will be eliminated, causing disproportionate harm to families, women and individuals with job barriers who depend on these positions for income.
Local newspapers cultivate community knowledge and engagement, thwarting disinformation and injustice.
- A 2019 Pew Research analysis found an overwhelming majority of adults values local journalism’s connection to their communities, with 85% saying it is very/somewhat important for journalists to understand their community’s history and 81% indicating that it is very/somewhat important for them to be personally engaged with their local area.
When local newspapers curtail operations or shut their doors, communities suffer.
- The Journal of Law, Economics and Organization study identified a multitude of blows to civic health when newspapers close — from declining citizen engagement to increased corruption and declining government performance.
- One analysis of cities with steep declines in newsroom staff found less competition in mayoral races. Fewer people bothered to run and the authors found some evidence that people were less inclined to vote.
- Without news oversight, there is little accountability. A Brookings Institution paper found that without a local newspaper, municipal borrowing costs rose by 5 to 11 basis points (or about a 20th to a 10th of a percent), costing the average local government an additional $650,000 per bond issue. Cost for local citizens also increases due to a greater risk of mismanaged projects that are backed by local taxes and fees.
- A 2018 study found that levels of toxic emissions spewed by local plants were reduced by 29 percent when they were covered by local newspapers.
For carriers, communities and newspapers, the Legislature should ensure the AB 5 clean-up bill — AB 1850 (Gonzalez) — is amended to permanently bring newspaper carriers under the Borello Standard before it reaches the governor’s desk.