Legislative inaction could be disastrous for news industry

By Thomas W. Newton and James W. Ewert

California News Publishers Association

A recent California Supreme Court decision combined with inaction by the legislature could spell disaster for the newspaper industry and the communities that newspapers serve.

Last year, California’s high court overruled its own 30-year-old precedent and declared that workers can maintain independent contractor status only if a business and contractor can pass a three-part test known as the ABC test. While there’s merit to the court’s decree that a simpler test was needed, it’s also true that the one-size-fits-all test doesn’t work for everyone in California’s dynamic economy.

That’s where the California Legislature comes in. A bill known as AB 5 is supposed to strike a balance by both codifying the ABC test and providing exemptions to protect independent status for certain time-tested independent work relationships.

Some professions – including doctors, lawyers, hairdressers and real estate agents – sought and received relief in the bill. Yet many long-standing independent contractor relationships remain in peril.

Without legislative relief, millions of independent workers in California, including independent newspaper carriers, will not pass the new test. The reason most independent workers won’t pass the test is not because of anything to do with their working conditions; it’s because the “B” prong of the ABC test allows independent contractor relationships only where the worker performs work that is outside the usual course of the hiring entity’s business.

Opponents of the “gig economy” argue that everything will work out and all these workers will just become employees.

In the case of newspaper carriers, no, they won’t.

It remains to be seen what exactly will happen if newspapers aren’t granted relief from the ABC test in AB 5, but one thing is clear: Thousands of independent carrier positions will be eliminated.

For those folks lucky enough to be in an area where newspaper delivery is still an option, they will have to pay a lot more for it. Those in more rural or sparsely populated areas simply won’t have the option to get a newspaper delivered to their home, at any price. Digital connectivity can be spotty in rural areas, where engaged citizens who receive printed news deeply value their daily delivery.

As newspaper circulation is reduced, advertising revenue is reduced. Reduction of both circulation and ad revenue will force newspapers to employ fewer journalists. This will result in fewer stories being told, less investigation of corruption, and ultimately, an inability for citizens to gain the information necessary for self-governance. All of this at a time when access to authoritative, reliable information is more important than ever.

A community with a strong newspaper is a strong community. Recent research says both readers and non-readers substantially benefit from their newspaper: cleaner government, better economy, more folks willing to run for office, better environment, lower government debt, less corruption. Newspapers create a community forum for the betterment of all.

Newspapers aren’t Uber or Lyft. It also isn’t an unfathomably complicated task to provide relief for newspaper carriers without opening the door to those who seek to exploit workers. For the past 40 years, newspapers and carriers have complied with a stringent regulation that governs when a newspaper carrier can be considered an independent contractor. This test is tough but fair, and solely applies to newspaper delivery, yet it won’t be worth the paper it’s printed on unless AB 5 is amended to recognize it.

If the legislature adjourns without helping newspapers and carriers and the communities they serve by simply recognizing the stringent test that has worked for the last 40 years, it won’t kill all newspapers immediately, but it might kill some. And it will definitely be a major blow to an industry already facing declining revenues. In the long run, though, this failure of the legislature to act would be a tipping point in the history of California newspapers and the public’s right to know.

Thomas W. Newton is the executive director of the California News Publishers Association. James W. Ewert is its general counsel and advocate.