Existing law, as established in the case of Dynamex Operations W. Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for those purposes.

Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is known as the ABC test, as described above. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.

Existing law exempts specified occupations and business relationships from the application of Dynamex and the provisions described above. These exemptions include a temporary exemption for newspaper distributors working under contract with a newspaper publisher and newspaper carriers, as those terms are defined, until January 1, 2025. Existing law, as part of that temporary exemption, requires every newspaper publisher or distributor that hires or directly contracts with newspaper carriers to submit prescribed information on carrier payroll taxes, wage rates, and wage claims to the Labor and Workforce Development Agency (LWDA), on or before March 1, 2022, March 1, 2023, and March 1, 2024.

This bill would extend the operation of that exemption until January 1, 2030. The bill would require the information on carrier payroll taxes, wage rates, and wage claims to be reported to the LWDA on or before March 1, 2025, March 1, 2026, March 1, 2027, March 1, 2028, and March 1, 2029.

Existing law, as established in the case of Dynamex Operations W. Inc. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex), creates a presumption that a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits arising under wage orders issued by the Industrial Welfare Commission. Existing law requires a 3-part test, commonly known as the ABC test, to determine if workers are employees or independent contractors for those purposes.

Existing law establishes that, for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entitys business, and the person is customarily engaged in an independently established trade, occupation, or business. This test is known as the ABC test, as described above. Existing law charges the Labor Commissioner with the enforcement of labor laws, including worker classification.

Existing law exempts specified occupations and business relationships from the application of Dynamex and the provisions described above. These exemptions include a temporary exemption for newspaper distributors working under contract with a newspaper publisher and newspaper carriers, as those terms are defined, until January 1, 2025. Existing law, as part of that temporary exemption, requires every newspaper publisher or distributor that hires or directly contracts with newspaper carriers to submit prescribed information on carrier payroll taxes, wage rates, and wage claims to the Labor and Workforce Development Agency (LWDA), on or before March 1, 2022, March 1, 2023, and March 1, 2024.

This bill would extend the operation of that exemption until January 1, 2030. The bill would require the information on carrier payroll taxes, wage rates, and wage claims to be reported to the LWDA on or before March 1, 2025, March 1, 2026, March 1, 2027, March 1, 2028, and March 1, 2029.

Existing law, the Gambling Control Act, provides for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission and the investigation and enforcement of those activities and establishments by the Department of Justice. Existing law establishes the Bureau of Gambling Control under the direction of the department.

Existing law requires the commission to establish a 10-member Gaming Policy Advisory Committee composed of representatives of controlled gambling licensees and members of the general public in equal numbers. Existing law requires the executive director of the commission to convene the committee, from time to time, for the purpose of discussing matters of controlled gambling regulatory policy and any other relevant gambling-related issue.

This bill would increase the membership of the committee from 10 to 12 members and would require the additional members to include one representative of academia who possesses knowledge on matters related to gaming and one representative from the bureau. The bill would require the executive director to convene the committee at least twice every calendar year, rather than from time to time.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 224

Author:(Blanca Rubio and Umberg)

As Amended Ver:August 21, 2024

Majority vote

SUMMARY

Extends the sunset date on the exemption from the 3-part ABC test for employment status for newspaper distributors and carriers from January 1, 2025, to January 1, 2030. Requires continued annual reporting by newspaper publishers and distributors for five years on information regarding newspaper carrier average pay rates, wage claims, and misclassification.

Senate Amendments

1. Delete prior version of the bill.
2. Extend the sunset date on the exemption from the 3-part ABC test for employment status for a newspaper distributor who is working under contract with a newspaper publisher and a newspaper carrier from January 1, 2025, to January 1, 2030.
3. Require newspaper publishers and distributors to continue to annually report to the Labor Workforce and Development Agency (LWDA), by March 1, 2025 until March 1, 2029, information regarding newspaper carrier average pay rates, wage claims, and misclassification.

COMMENTS

The use of newspaper carriers to deliver the printed news dates back to the late 19th Century. While much has changed in the demographics and working conditions of carriers since then, questions remain around carrier misclassification. The employment status of newspaper carriers has been, and continues to be, litigated. As recently as 2017, a California appellate court – applying the Borello test for causes of action under the Labor Code – affirmed a trial court decision that newspaper carriers were employees.^[1] In addition, in Sawin v. The McClatchy Co. (d/b/a Sacramento Bee), No. 34-2009-00033950 (Cal. Super. Ct. Sept. 22, 2014), the Superior Court for Sacramento County found that the Bee's carriers were employees on the grounds that they were an integral part of the publisher's business, picked up the newspapers at the Bee's warehouses, and delivered them to the Bee's clients.

While this measure continues the temporary exemption for newspaper publishers and distributors who utilize carriers from the application of the ABC test, it conditions the exemption on annual reporting of key data on carrier classification, including information on wage claims or lawsuits filed by carriers. This data can better inform state policy makers on employment trends in the industry and how they can best be addressed.

According to the Author

"The newspaper profession continues to face financial challenges resulting from loss of ad revenue, transitioning to digital platforms, and a decline in subscriptions. Despite this, the industry is making significant strides in transitioning to digital media. Newspapers continue to provide critical information on issues ranging from local to international and often they are the sole source of information for many of our communities. By providing additional time for this transition, jobs for journalists, editors, and news production workers will be protected, while simultaneously supporting the current age of news media."

The author continues, "Countless community publications, many of which serve exclusively ethnic communities, are print only and would not financially survive if they are forced to reclassify their workforce as employees."

Arguments in Support

The California News Publishers Association, sponsor of the bill, states, "Without extension of the sunset clause in AB 224, publications already struggling to survive will see costs increase anywhere from 40 to 100 percent. A recent survey of California publications shows that 40 percent of publications would have to consider closing their doors forever, 64 percent would eliminate delivery areas, 57 percent would raise prices, and 71 percent would reduce staff.

In a crisis and in everyday life, news organizations play an essential role in California and in local communities. No other industry impacts the well-being of the neighborhoods they serve by keeping their communities informed and up to date on local news. In an age where disinformation has an ever-increasing impact on the lives and decisions made by Californians, the best antidote to disinformation is accurate and authoritative news coverage provided by credible sources like printed newspapers and news websites.

Since the previous extension, more and more publications have moved to distributing newspapers through the mail service. This means a drop in the number of daily newspapers, decreasing the amount of vital, trusted news coverage in smaller communities.

Extending the current sunset date for newspaper carriers will allow hundreds of publications across the state to keep serving their communities and protect thousands of newspaper carrier positions."

Arguments in Opposition

The California Labor Federation is opposed and states, "AB 5 was a compromise measure to maintain protection for the most vulnerable workers and clarify that the decision does not apply to specified professionals like real estate agents, doctors, lawyers, and accountants. It created one simple, standard definition of employment across all codes for most California workers. This helps businesses comply, reduces unfair competition, and saves the taxpayers billions of dollars per year.

While AB 5 did not exempt news delivery, a companion bill gave the newspaper industry an additional year to come into compliance. Newspaper delivery is a dangerous job. It fits squarely within the court decision as work that is core to the business. These workers are so underpaid that the Newspaper Publishers were quoted saying they are largely immigrant families, and the entire family works to deliver the papers. That is why the legislation only provided for one additional year under the Borello test before the industry has to come into compliance with the Dynamex test.

This bill would extend the exemption, which was always meant to be temporary, for newspaper distributors, until 2030. The extension would trap this low-wage workforce indefinitely in dangerous and unfair working conditions. It would be unfair to those newspapers like the Sacramento News & Review that treats its delivery drivers as employees. It would leave taxpayers to foot the bill for the safety net benefits these workers need and deserve."

FISCAL COMMENTS

According to the Senate Appropriations Committee:

1. LWDA would potentially incur costs in excess of $50,000 per year annually through 2029, to collect and analyze specified data (General Fund).
2. Administrative costs to the Department of Industrial Relations (DIR) would likely be minor and absorbable.

VOTES:

ASM GOVERNMENTAL ORGANIZATION: 22-0-0

YES: Santiago, Lackey, Aguiar-Curry, Berman, Bryan, Cervantes, Megan Dahle, Davies, Garcia, Gipson, Jones-Sawyer, Low, Mathis, McCarty, McKinnor, Jim Patterson, Quirk-Silva, Ramos, Robert Rivas, Blanca Rubio, Ta, Villapudua

ASM APPROPRIATIONS: 14-0-2

YES: Holden, Megan Dahle, Calderon, Wendy Carrillo, Dixon, Mike Fong, Addis, Lowenthal, Papan, Pellerin, Robert Rivas, Sanchez, Weber, Wilson

ABS, ABST OR NV: Bryan, Mathis

ASSEMBLY FLOOR: 74-0-6

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

ABS, ABST OR NV: Cervantes, Vince Fong, Friedman, Villapudua, Waldron, Wilson

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

UPDATED

VERSION: August 21, 2024

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0004925

1. Espejo v. The Copley Press, Inc. (2017) 207 Cal.App.5th 329, 342-352. ↑

CONCURRENCE IN SENATE AMENDMENTS

CSA2 Bill Id:AB 224

Author:(Blanca Rubio and Umberg)

As Amended Ver:August 21, 2024

Majority vote

SUMMARY

Original Committee of Reference: G.O.

Extends the sunset date on the exemption from the 3-part ABC test for employment status for newspaper distributors and carriers from January 1, 2025, to January 1, 2030. Requires continued annual reporting by newspaper publishers and distributors for five years on information regarding newspaper carrier average pay rates, wage claims, and misclassification.

Senate Amendments

Current Committee Recommendation: >

1. Delete prior version of the bill.
2. Extend the sunset date on the exemption from the 3-part ABC test for employment status for a newspaper distributor who is working under contract with a newspaper publisher and a newspaper carrier from January 1, 2025, to January 1, 2030.
3. Require newspaper publishers and distributors to continue to annually report to the Labor Workforce and Development Agency (LWDA), by March 1, 2025 until March 1, 2029, information regarding newspaper carrier average pay rates, wage claims, and misclassification

COMMENTS

The use of newspaper carriers to deliver the printed news dates back to the late 19th Century. While much has changed in the demographics and working conditions of carriers since then, questions remain around carrier misclassification. The employment status of newspaper carriers has been, and continues to be, litigated. As recently as 2017, a California appellate court – applying the Borello test for causes of action under the Labor Code – affirmed a trial court decision that newspaper carriers were employees.^[1] In addition, in Sawin v. The McClatchy Co. (d/b/a Sacramento Bee), No. 34-2009-00033950 (Cal. Super. Ct. Sept. 22, 2014), the Superior Court for Sacramento County found that the Bee's carriers were employees on the grounds that they were an integral part of the publisher's business, picked up the newspapers at the Bee's warehouses, and delivered them to the Bee's clients.

While this measure continues the temporary exemption for newspaper publishers and distributors who utilize carriers from the application of the ABC test, it conditions the exemption on annual reporting of key data on carrier classification, including information on wage claims or lawsuits filed by carriers. This data can better inform state policy makers on employment trends in the industry and how they can best be addressed.

According to the Author

“The newspaper profession continues to face financial challenges resulting from loss of ad revenue, transitioning to digital platforms, and a decline in subscriptions. Despite this, the industry is making significant strides in transitioning to digital media. Newspapers continue to provide critical information on issues ranging from local to international and often they are the sole source of information for many of our communities. By providing additional time for this transition, jobs for journalists, editors, and news production workers will be protected, while simultaneously supporting the current age of news media.”

The author continues, “Countless community publications, many of which serve exclusively ethnic communities, are print only and would not financially survive if they are forced to reclassify their workforce as employees.”

Arguments in Support

The California News Publishers Association, sponsor of the bill, states, “Without extension of the sunset clause in AB 224, publications already struggling to survive will see costs increase anywhere from 40 to 100%. A recent survey of California publications shows that 40% of publications would have to consider closing their doors forever, 64% would eliminate delivery areas, 57% would raise prices, and 71% would reduce staff.

In a crisis and in everyday life, news organizations play an essential role in California and in local communities. No other industry impacts the well-being of the neighborhoods they serve by keeping their communities informed and up to date on local news. In an age where disinformation has an ever-increasing impact on the lives and decisions made by Californians, the best antidote to disinformation is accurate and authoritative news coverage provided by credible sources like printed newspapers and news websites.

Since the previous extension, more and more publications have moved to distributing newspapers through the mail service. This means a drop in the number of daily newspapers, decreasing the amount of vital, trusted news coverage in smaller communities.

Extending the current sunset date for newspaper carriers will allow hundreds of publications across the state to keep serving their communities and protect thousands of newspaper carrier positions.”

Arguments in Opposition

The California Labor Federation is opposed and states, “AB 5 was a compromise measure to maintain protection for the most vulnerable workers and clarify that the decision does not apply to specified professionals like real estate agents, doctors, lawyers, and accountants. It created one simple, standard definition of employment across all codes for most California workers. This helps businesses comply, reduces unfair competition, and saves the taxpayers billions of dollars per year.

While AB 5 did not exempt news delivery, a companion bill gave the newspaper industry an additional year to come into compliance. Newspaper delivery is a dangerous job. It fits squarely within the court decision as work that is core to the business. These workers are so underpaid that the Newspaper Publishers were quoted saying they are largely immigrant families, and the entire family works to deliver the papers. That is why the legislation only provided for one additional year under the Borello test before the industry has to come into compliance with the Dynamex test.

This bill would extend the exemption, which was always meant to be temporary, for newspaper distributors, until 2030. The extension would trap this low-wage workforce indefinitely in dangerous and unfair working conditions. It would be unfair to those newspapers like the Sacramento News & Review that treats its delivery drivers as employees. It would leave taxpayers to foot the bill for the safety net benefits these workers need and deserve.”

FISCAL COMMENTS

According to the Senate Appropriations Committee:

1. LWDA would potentially incur costs in excess of $50,000 per year annually through 2029, to collect and analyze specified data (General Fund).
2. Administrative costs to the Department of Industrial Relations (DIR) would likely be minor and absorbable.

VOTES

ASM GOVERNMENTAL ORGANIZATION: 22-0-0

YES: Santiago, Lackey, Aguiar-Curry, Berman, Bryan, Cervantes, Megan Dahle, Davies, Garcia, Gipson, Jones-Sawyer, Low, Mathis, McCarty, McKinnor, Jim Patterson, Quirk-Silva, Ramos, Robert Rivas, Blanca Rubio, Ta, Villapudua

ASM APPROPRIATIONS: 14-0-2

YES: Holden, Megan Dahle, Calderon, Wendy Carrillo, Dixon, Mike Fong, Addis, Lowenthal, Papan, Pellerin, Robert Rivas, Sanchez, Weber, Wilson

ABS, ABST OR NV: Bryan, Mathis

ASSEMBLY FLOOR: 74-0-6

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

ABS, ABST OR NV: Cervantes, Vince Fong, Friedman, Villapudua, Waldron, Wilson

ASM LABOR AND EMPLOYMENT: 6-1-0

YES: Flora, Alanis, Wendy Carrillo, Lee, Reyes, Zbur

NO: Ward

SENATE FLOOR: 40-0-0

YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

UPDATED

VERSION: August 21, 2024

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0005056

1. Espejo v. The Copley Press, Inc. (2017) 207 Cal.App.5th 329, 342-352. ↑

 THIRD READING  

Bill No: AB 224

Author: Blanca Rubio (D) and Umberg (D)

Amended: 8/21/24 in Senate

Vote: 21

PRIOR VOTES NOT RELEVANT

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/28/24 – PURSUANT TO SR 29.10

AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab

SUBJECT: Worker status: employees and independent contractors: newspaper distributors and carriers

SOURCE: California News Publishers Association

DIGEST:

This bill 1) extends the existing exemption for newspaper distributors and carriers from the ABC test under Dynamex (AB 5, Gonzalez, Chapter 296, Statutes of 2019) until January 1, 2030 and instead applies the Borello test, and 2) requires newspaper distributors and carriers to submit specified information to the Labor Workforce and Development Agency.

ANALYSIS:

Existing law:

1. Establishes a comprehensive set of protections for employees, including a time-sure minimum wage, meal and rest periods, workers’ compensation coverage in the event of an industrial injury, sick leave, disability insurance (DI) in the event of a non-industrial disability, paid family leave, and unemployment insurance (UI). (Labor Code §§201, 226.7, 246, 512, 1182.12, & 3600 and UI Code §§1251 & 2601)
2. Provides that for purposes of the Labor Code and the Unemployment Insurance Code, where another definition of “employee” is not otherwise specified, and for the wage orders of the Industrial Welfare Commission (IWC), a person providing labor or services for remuneration shall be considered an employee unless the hiring entity satisfies the 3-part ABC test (per Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903):
3. 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.
4. The person performs work that is outside the usual course of the hiring entity’s business.
5. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. (Labor Code §2775)
6. Exempts from the application of the ABC test, and instead, applies the definition of an employee as set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) (Borello), to specified occupations and business relationships, including newspaper distributors working under contract with a newspaper publisher, as defined, or a newspaper carrier. This newspaper distributor exemption expires on January 1, 2025. (Labor Code §2783)
7. Requires every newspaper publisher and distributor that hires or directly contracts with newspaper carriers to submit to the Labor and Workforce Development Agency (LWDA), on or before March 1, 2022, March 1, 2023, and March 1, 2024, the following information related to their workforce each year:
8. The number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year.
9. The average wage rate paid to carriers classified as independent contractors and as employees.
10. The number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law. (Labor Code §2783)
11. Specifies that for the March 1, 2022 reporting date only every newspaper publisher and distributor shall also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three years. (Labor Code §2783)
12. Provides the following definitions:
13. “Newspaper” means a newspaper of general circulation, as defined in Section 6000 or 6008 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspaper’s own publication, whether that publication be designated a “shoppers’ guide,” as a zoned edition, or otherwise. “Newspaper” may also be a publication that is published in print and that may be posted in a digital format, and distributed periodically at daily, weekly, or other short intervals, for the dissemination of news of a general or local character and of a general or local interest.
14. “Publisher” means the natural or corporate person that manages the newspaper’s business operations, including circulation.
15. “Newspaper distributor” means a person or entity that contracts with a publisher to distribute newspapers to the community.
16. “Newspaper carrier” means a person who effects physical delivery of the newspaper to the customer or reader, who is not working as an app-based driver, as defined in Chapter 10.5 (commencing with Section 7448) of Division 3 of the Business and Professions Code, during the time when the newspaper carrier is performing the newspaper delivery services. (Labor Code §2783)

This bill:

1. Extends the exemption for newspaper distributors working under contract with a newspaper publisher and newspaper carriers from the ABC test from January 1, 2025 to January 1, 2030.
2. Requires every newspaper publisher and distributor that hires or directly contracts with newspaper carriers to submit to the Labor and Workforce Development Agency, on or before March 1, 2025, March 1, 2026, March 1, 2027, March 1, 2028, and March 1, 2029 the following information related to their workforce each year:
3. The number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year.
4. The average wage rate paid to carriers classified as independent contractors and as employees.

c) The number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law.

1. Specifies that for the March 1, 2025 reporting date only, every newspaper publisher and distributor shall also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three years.

Background

Within the Labor Code, the employer-employee relationship is essential when determining which rights and obligations are applicable in a given situation. California’s wage and hour laws (e.g., minimum wage, overtime, and meal and rest breaks), workplace safety laws, and retaliation laws protect employees, but not independent contractors. Additionally, employees can go to state agencies such as the Labor Commissioner’s office to seek enforcement of these laws, whereas independent contractors must resolve their disputes or enforce the rights under their contract through other means.

Employers lawfully using the independent contract model trade control over working conditions, like worker supervision and availability, in exchange for being released from many of the primary obligations of being an employer. This includes paying overtime, remitting payroll taxes, securing workers’ compensation coverage, and ensuring a healthy and safe work environment. Unfortunately, this model creates incentives for employers to misclassify employees as independent contractors. For several decades, misclassification strained the employer-employee relationship, forcing law-abiding employers to compete with businesses that do not follow the rules. In 2017, California’s Employment Development Department Tax Audit Program conducted 7,937 audits and investigations, resulting in assessments totaling $249,981,712, and identified nearly half a million unreported employees.^[1]

The misclassification issue culminated in a 2018 California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. Under Dynamex, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions (ABC test):

1. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
2. The worker performs work that is outside the usual course of the hiring entity’s business; and
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

In 2019, AB 5 (Gonzalez, Chapter 296) codified the Dynamex decision, requiring the application of the ABC test to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders. AB 5 also provided specified industrial categories where the long-standing Borello test would remain the standard for determining who is an employee. Under Borello, in S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341, the California Supreme Court created an 11 point “economic realities” test to determine whether someone could lawfully be considered an independent contractor.

Also in 2019, AB 170 (Gonzalez, Chapter 415) provided newspaper distributors and carriers an exemption from the ABC test and specified that instead the Borello test would be applicable. The exemption was set to sunset January 1, 2021. In 2020, AB 323 (Rubio, Chapter 341), among other things, extended the sunset date on this exemption from January 1, 2021, to January 1, 2022. In 2021, AB 1506 (Kalra, Chapter 328) extended the exemption until January 1, 2025. This bill, AB 224 (Rubio) would extend the exemption until January 1, 2030.

Related\Prior Legislation

AB 1506 (Kalra, Chapter 328, Statutes of 2021) extended for three years an existing exemption for newspaper distributors and carriers from the ABC Test and required them to submit specified information to the LWDA on the number of carriers for which the publisher or distributor paid and did not pay payroll taxes for, as well as the wage rates and information to demonstrate compliance of their carriers with the Borello test.

AB 323 (Rubio, Chapter 341, Statutes of 2020) extended an existing exemption for newspaper distributors and carriers from the ABC test from January 1, 2021 to January 1, 2022, and required an assessment of the effectiveness of contracts to conduct outreach and marketing to specified communities.

AB 170 (Gonzalez, Chapter 415, Statutes of 2019) provided an exemption for newspaper distributors and carriers from the ABC test, as specified, until January 1, 2021. The bill specified that the applicable test for determining if an individual is an employee or an independent contractor in the newspaper distributor and carrier industry is the predecessor to that until January 1, 2021 newspaper distributors and carriers, as specified Dynamex developed by the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

AB 5 (Gonzalez, Chapter 296, Statutes of 2019) codified the decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) requiring that employers prove that their workers can meet a 3 part (ABC) test in order to be lawfully classified as independent contractors, and exempted from the test certain professions and business-to-business relationships.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• LWDA would potentially incur costs in excess of $50,000 per year annually through 2029, to collect and analyze specified data (General Fund).
• Administrative costs to the Department of Industrial Relations (DIR) would likely be minor and absorbable.

SUPPORT: (Verified 8/26/24)

California News Publishers Association (source)

Latino Media Collaborative

OPPOSITION: (Verified 8/26/24)

California Federation of Labor Unions

ARGUMENTS IN SUPPORT: According to the sponsors of the measure, the California News Publishers Association:

“The news media is in a critical transition. Our members have embraced new delivery models, while maintaining traditional revenue streams that serve our readers. Between 2008 and 2018, there was a national 68% decrease in advertising revenue, and almost two dozen daily papers closing in California in the last five years.

Without extension of the sunset clause in AB 224, publications already struggling to survive will see costs increase anywhere from 40 to 100 percent. A recent survey of California publications shows that 40 percent of publications would have to consider closing their doors forever, 64 percent would eliminate delivery areas, 57 percent would raise prices, and 71 percent would reduce staff…

Since the previous extension, more and more publications have moved to distributing newspapers through the mail service. This means a drop in the number of daily newspapers, decreasing the amount of vital, trusted news coverage in smaller communities.

Extending the current sunset date for newspaper carriers will allow hundreds of publications across the state to keep serving their communities and protect thousands of newspaper carrier positions. For those reasons, we are proud to sponsor AB 224(Rubio). We respectfully request your “aye” recommendation and vote.”

ARGUMENTS IN OPPOSITION: According to the California Federation of Labor Unions:

“Six years ago, in April 2018, the California Supreme Court issued a unanimous decision in Dynamex, adopting the ABC test to determine employment status. The Dynamex decision reflected the Court’s concern about widespread misclassification of workers, across all industries. Not only does it strip workers of basic rights on the job and safety net benefits, but it also puts responsible employers at a competitive disadvantage with companies that refuse to pay minimum wage, workers’ compensation, or social security taxes.

AB 5 was a compromise measure to maintain protection for the most vulnerable workers and clarify that the decision does not apply to specified professionals like real estate agents, doctors, lawyers, and accountants. It created one simple, standard definition of employment across all codes for most California workers. This helps businesses comply, reduces unfair competition, and saves the taxpayers billions of dollars per year.

While AB 5 did not exempt news delivery, a companion bill gave the newspaper industry an additional year to come into compliance. Newspaper delivery is a dangerous job. It fits squarely within the court decision as work that is core to the business. These workers are so underpaid that the Newspaper Publishers were quoted saying they are largely immigrant families, and the entire family works to deliver the papers. That is why the legislation only provided for one additional year under the Borello test before the industry has to come into compliance with the Dynamex test.

This bill would extend the exemption, which was always meant to be temporary, for newspaper distributors, until 2030. The extension would trap this low-wage workforce indefinitely in dangerous and unfair working conditions. It would be unfair to those newspapers like the Sacramento News & Review that treats its delivery drivers as employees. It would leave taxpayers to foot the bill for the safety net benefits these workers need and deserve”

Prepared by: Emma Bruce / L., P.E. & R. / (916) 651-1556

8/28/24 22:09:14

**** END ****

1. Employment Development Department 2018 Annual Report on Fraud Deterrence and Detection Activities, https://edd.ca.gov/About_EDD/pdf/Fraud_Deterrence_and_Detection_Activities_2018.pdf. ↑

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 224 (Blanca Rubio) - Worker status: employees and independent contractors: newspaper distributors and carriers

Bill Summary:

AB 224 would (1) extend the existing exemption for newspaper distributors and carriers from the ABC test under Dynamex (AB 5, 2019) until January 1, 2030 and instead apply the Borello test, and (2) require newspaper distributors and carriers to submit specified information to the Labor Workforce and Development Agency (LWDA).

Fiscal Impact:

• LWDA would potentially incur costs in excess of $50,000 per year annually through 2029, to collect and analyze specified data (General Fund).
• Administrative costs to the Department of Industrial Relations (DIR) would likely be minor and absorbable.

Background:

New business models and communications technologies have led many workers to supply their labor outside of the traditional employment relationship in recent years. An incentive exists for employers to misclassify their employees as independent contractors and illegally avoid paying the cost of benefits. Misclassified employees often are denied access to critical benefits and protections they are entitled to by law, such as the minimum wage, overtime compensation, family and medical leave, unemployment insurance, and safe workplaces. Employee misclassification generates substantial losses to the federal government and state governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds. Thus, the misclassification of employees represents a cost-shift from an employer to the employee and state taxpayers. Empirical evidence suggests the use of independent contractors has become more pervasive.

With respect to classification of employees, the primary court precedent is less than precise on who was an independent contractor and who was not. Specifically, in S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341, the California Supreme Court created an 11 point “economic realities” test on whether someone could lawfully be considered an independent contractor. Outside of particularly clear-cut instances, this made determining who was or was not an independent contractor complicated, expensive, and prone to litigation, resulting in considerable frustration for both worker and employer stakeholders.

The issue culminated with a 2018 Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. Under Dynamex, the test for whether a worker is an independent contractor or an employee was simplified to a three-prong test:

• (A) The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
• (B) The worker performs work that is outside the usual course of the hiring entity’s business; and
• C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

In 2019, AB 5 (Gonzalez) codified the Dynamex decision requiring that employers prove that their workers can meet the ABC test in order to be lawfully classified as independent contractors, and exempted from the test certain professions and business-to-business relationships. AB 5 also provided specified industrial categories where the long-standing Borello test would remain the standard for determining who is an employee.

Also in 2019, AB 170 (Gonzalez) provided newspaper distributors an exemption from the ABC test under Dynamex, instead specifying that the determination of employee or independent contractor status would be governed by Borello. Under AB 170, this exemption was originally scheduled to sunset on January 1, 2021. Instead, the sunset was extended two additional times, most recently by AB 1506 (Kalra, 2021), which set the sunset date on January 1, 2025.

Proposed Law:

This bill would do the following:

• Extend the exemption for newspaper distributors working under contract with a newspaper publisher and newspaper carriers from the ABC test from January 1, 2025 to January 1, 2030.
• Require every newspaper publisher and distributor that hires or directly contracts with newspaper carriers to submit to LWDA, on or before March 1, 2025, March 1, 2026, March 1, 2027, March 1, 2028, and March 1, 2029 the following information related to their workforce each year: (1) the number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year, (2) the average wage rate paid to carriers classified as independent contractors and as employees, and (3) the number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law.
• Specify that for the March 1, 2025 reporting date only, every newspaper publisher and distributor shall also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three years.

Related Legislation:

• AB 2955 (Committee on Labor and Employment, Chapter 443, Statutes of 2022) extended from January 1 2023 to January 1, 2026, the sunset date on the exemption from the application of the ABC test for commercial fishers working on an American vessel.
• AB 1561 (Committee on Labor and Employment, Chapter 422, Statutes of 2021) extended from January 1, 2022 to January 1, 2025, the sunset date on the exemption from the application of the ABC test for licensed manicurists and construction trucking subcontractors. This bill also clarified the scope of the exemption previously granted to a data aggregator and a research subject who willingly engages with a data aggregator to provide individualized feedback, as specified, and clarified that the exemption previously granted to occupations in the insurance industry also extends to an individual providing claims adjusting or third party administration work.
• AB 1506 (Kalra, Chapter 328, Statutes of 2021) extended for three years an existing exemption for newspaper distributors and carriers from the ABC Test and required them to submit specified information to the LWDA on the number of carriers for which the publisher or distributor paid and did not pay payroll taxes for, as well as the wage rates and information to demonstrate compliance of their carriers with the Borello test.
• AB 2257 (Gonzalez, Chapter 38, Statutes of 2020) recast and clarified the business-to-business referral agency, and professional services exemption from the ABC test for employment status and exempted additional occupations and business relationships.
• AB 323 (Rubio, Chapter 341, Statutes of 2020) extended an existing exemption for newspaper distributors and carriers from the ABC test from January 1, 2021 to January 1, 2022, and required an assessment of the effectiveness of contracts to conduct outreach and marketing to specified communities.
• AB 170 (Gonzalez, Chapter 415, Statutes of 2019) provided an exemption for newspaper distributors and carriers from the ABC test, as specified, until January 1, 2021. The bill specified that the applicable test for determining if an individual is an employee or an independent contractor in the newspaper distributor and carrier industry is the predecessor to that until January 1, 2021 newspaper distributors and carriers, as specified Dynamex developed by the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
• AB 5 (Gonzalez, Chapter 296, Statutes of 2019) codified the decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) requiring that employers prove that their workers can meet a 3 part (ABC) test in order to be lawfully classified as independent contractors, and exempted from the test certain professions and business-to-business relationships.

-- END --

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Lola Smallwood-Cuevas, Chair

2023 - 2024 Regular

Bill No: AB 224 Hearing Date: August 27, 2024

SUBJECT: Worker status: employees and independent contractors: newspaper distributors and carriers

KEY ISSUE

This bill 1) extends the existing exemption for newspaper distributors and carriers from the ABC test under Dynamex (AB 5, Gonzalez, Chapter 296, Statutes of 2019) until January 1, 2030 and instead applies the Borello test, and 2) requires newspaper distributors and carriers to submit specified information to the Labor Workforce and Development Agency.

ANALYSIS

Existing law:

1. Establishes a comprehensive set of protections for employees, including a time-sure minimum wage, meal and rest periods, workers’ compensation coverage in the event of an industrial injury, sick leave, disability insurance (DI) in the event of a non-industrial disability, paid family leave, and unemployment insurance (UI). (Labor Code §§201, 226.7, 246, 512, 1182.12, & 3600 and UI Code §§1251 & 2601)
2. Provides that for purposes of the Labor Code and the Unemployment Insurance Code, where another definition of “employee” is not otherwise specified, and for the wage orders of the Industrial Welfare Commission (IWC), a person providing labor or services for remuneration shall be considered an employee unless the hiring entity satisfies the 3-part ABC test (per Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903):
   1. 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.
   2. The person performs work that is outside the usual course of the hiring entity’s business.
   3. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. (Labor Code §2775)
3. Exempts from the application of the ABC test, and instead, applies the definition of an employee as set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) (Borello), to specified occupations and business relationships, including newspaper distributors working under contract with a newspaper publisher, as defined, or a newspaper carrier. This newspaper distributor exemption expires on January 1, 2025. (Labor Code §2783)
4. Requires every newspaper publisher and distributor that hires or directly contracts with newspaper carriers to submit to the Labor and Workforce Development Agency (LWDA), on or before March 1, 2022, March 1, 2023, and March 1, 2024, the following information related to their workforce each year:
   1. The number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year.
   2. The average wage rate paid to carriers classified as independent contractors and as employees.
   3. The number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law. (Labor Code §2783)
5. Specifies that for the March 1, 2022 reporting date only every newspaper publisher and distributor shall also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three years. (Labor Code §2783)
6. Provides the following definitions:
7. “Newspaper” means a newspaper of general circulation, as defined in Section 6000 or 6008 of the Government Code, and any other publication circulated to the community in general as an extension of or substitute for that newspaper’s own publication, whether that publication be designated a “shoppers’ guide,” as a zoned edition, or otherwise. “Newspaper” may also be a publication that is published in print and that may be posted in a digital format, and distributed periodically at daily, weekly, or other short intervals, for the dissemination of news of a general or local character and of a general or local interest.
8. “Publisher” means the natural or corporate person that manages the newspaper’s business operations, including circulation.
9. “Newspaper distributor” means a person or entity that contracts with a publisher to distribute newspapers to the community.
10. “Newspaper carrier” means a person who effects physical delivery of the newspaper to the customer or reader, who is not working as an app-based driver, as defined in Chapter 10.5 (commencing with Section 7448) of Division 3 of the Business and Professions Code, during the time when the newspaper carrier is performing the newspaper delivery services. (Labor Code §2783)

This bill:

1. Extends the exemption for newspaper distributors working under contract with a newspaper publisher and newspaper carriers from the ABC test from January 1, 2025 to January 1, 2030.
2. Requires every newspaper publisher and distributor that hires or directly contracts with newspaper carriers to submit to the Labor and Workforce Development Agency, on or before March 1, 2025, March 1, 2026, March 1, 2027, March 1, 2028, and March 1, 2029 the following information related to their workforce each year:
3. The number of carriers for which the publisher or distributor paid payroll taxes in the previous year and the number of carriers for which the publisher or distributor did not pay payroll taxes in the previous year.
4. The average wage rate paid to carriers classified as independent contractors and as employees.
5. The number of carrier wage claims filed, if any, with the Labor Commissioner or in a court of law.
6. Specifies that for the March 1, 2025 reporting date only, every newspaper publisher and distributor shall also report the number of carrier wage claims filed with the Labor Commissioner or in a court of law for the preceding three years.

COMMENTS

1. Background: Dynamex and AB 5

Within the Labor Code, the employer-employee relationship is essential when determining which rights and obligations are applicable in a given situation. California’s wage and hour laws (e.g., minimum wage, overtime, and meal and rest breaks), workplace safety laws, and retaliation laws protect employees, but not independent contractors. Additionally, employees can go to state agencies such as the Labor Commissioner’s office to seek enforcement of these laws, whereas independent contractors must resolve their disputes or enforce the rights under their contract through other means.

Employers lawfully using the independent contract model trade control over working conditions, like worker supervision and availability, in exchange for being released from many of the primary obligations of being an employer. This includes paying overtime, remitting payroll taxes, securing workers’ compensation coverage, and ensuring a healthy and safe work environment. Unfortunately, this model creates incentives for employers to misclassify employees as independent contractors. For several decades, misclassification strained the employer-employee relationship, forcing law-abiding employers to compete with businesses that do not follow the rules. In 2017, California’s Employment Development Department Tax Audit Program conducted 7,937 audits and investigations, resulting in assessments totaling $249,981,712, and identified nearly half a million unreported employees.^[1]

The misclassification issue culminated in a 2018 California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. Under Dynamex, a worker is considered an employee and not an independent contractor, unless the hiring entity satisfies all three of the following conditions (ABC test):

1. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;
2. The worker performs work that is outside the usual course of the hiring entity’s business; and
3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

In 2019, AB 5 (Gonzalez, Chapter 296, Stats. 2019) codified the Dynamex decision, requiring the application of the ABC test to determine if workers in California are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders. AB 5 also provided specified industrial categories where the long-standing Borello test would remain the standard for determining who is an employee. Under Borello, in S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341, the California Supreme Court created an 11 point “economic realities” test to determine whether someone could lawfully be considered an independent contractor.

Also in 2019, AB 170 (Gonzalez, Chapter 415) provided newspaper distributors and carriers an exemption from the ABC test and specified that instead the Borello test would be applicable. The exemption was set to sunset January 1, 2021. In 2020, AB 323 (Rubio, Chapter 341), among other things, extended the sunset date on this exemption from January 1, 2021, to January 1, 2022. In 2021, AB 1506 (Kalra, Chapter 328) extended the exemption until January 1, 2025. This bill, AB 224 (Rubio) would extend the exemption until January 1, 2030.

2. Need for this bill?

According to the author:

“The news media is in the middle of a critical transition. Like other industry sectors, market disruption has forced the news media to embrace new delivery models while maintaining traditional revenue streams that serve their customer base. Delivery of print publications is a key component of preserving the industry, and that revenue stream is dependent on the continuation of the independent contractor status for carriers.

Not all newspaper carriers work the same hours. Many carriers are contracted with distribution companies that allow them to deliver multiple, competing publications on the same route. The independent contractor status allows carriers to have the freedom and flexibility needed to accommodate their lifestyles. While newspapers are transitioning to the digital format, newspaper carriers are asking to preserve the independent contractor status…

This bill will extend the provisions exempting news publishers from AB 5 in current law for an additional 5 years, allowing them to operate independently with protections provided by law and through the legal system.”

3. Proponent Arguments:

According to the sponsors of the measure, the California News Publishers Association:

“The news media is in a critical transition. Our members have embraced new delivery models, while maintaining traditional revenue streams that serve our readers. Between 2008 and 2018, there was a national 68% decrease in advertising revenue, and almost two dozen daily papers closing in California in the last five years.

Without extension of the sunset clause in AB 224, publications already struggling to survive will see costs increase anywhere from 40 to 100 percent. A recent survey of California publications shows that 40 percent of publications would have to consider closing their doors forever, 64 percent would eliminate delivery areas, 57 percent would raise prices, and 71 percent would reduce staff…

Since the previous extension, more and more publications have moved to distributing newspapers through the mail service. This means a drop in the number of daily newspapers, decreasing the amount of vital, trusted news coverage in smaller communities.

Extending the current sunset date for newspaper carriers will allow hundreds of publications across the state to keep serving their communities and protect thousands of newspaper carrier positions. For those reasons, we are proud to sponsor AB 224(Rubio). We respectfully request your “aye” recommendation and vote.”

4. Opponent Arguments:

According to the California Federation of Labor Unions:

“Six years ago, in April 2018, the California Supreme Court issued a unanimous decision in Dynamex, adopting the ABC test to determine employment status. The Dynamex decision reflected the Court’s concern about widespread misclassification of workers, across all industries. Not only does it strip workers of basic rights on the job and safety net benefits, but it also puts responsible employers at a competitive disadvantage with companies that refuse to pay minimum wage, workers’ compensation, or social security taxes.

AB 5 was a compromise measure to maintain protection for the most vulnerable workers and clarify that the decision does not apply to specified professionals like real estate agents, doctors, lawyers, and accountants. It created one simple, standard definition of employment across all codes for most California workers. This helps businesses comply, reduces unfair competition, and saves the taxpayers billions of dollars per year.

While AB 5 did not exempt news delivery, a companion bill gave the newspaper industry an additional year to come into compliance. Newspaper delivery is a dangerous job. It fits squarely within the court decision as work that is core to the business. These workers are so underpaid that the Newspaper Publishers were quoted saying they are largely immigrant families, and the entire family works to deliver the papers. That is why the legislation only provided for one additional year under the Borello test before the industry has to come into compliance with the Dynamex test.

This bill would extend the exemption, which was always meant to be temporary, for newspaper distributors, until 2030. The extension would trap this low-wage workforce indefinitely in dangerous and unfair working conditions. It would be unfair to those newspapers like the Sacramento News & Review that treats its delivery drivers as employees. It would leave taxpayers to foot the bill for the safety net benefits these workers need and deserve”

5. Prior Legislation:

AB 2955 (Committee on Labor and Employment, Chapter 443, Statutes of 2022) extended from January 1 2023 to January 1, 2026, the sunset date on the exemption from the application of the ABC test for commercial fishers working on an American vessel.

AB 1561 (Committee on Labor and Employment, Chapter 422, Statutes of 2021) extended from January 1, 2022 to January 1, 2025, the sunset date on the exemption from the application of the ABC test for licensed manicurists and construction trucking subcontractors. This bill also clarified the scope of the exemption previously granted to a data aggregator and a research subject who willingly engages with a data aggregator to provide individualized feedback, as specified, and clarified that the exemption previously granted to occupations in the insurance industry also extends to an individual providing claims adjusting or third party administration work.

AB 1506 (Kalra, Chapter 328, Statutes of 2021) extended for three years an existing exemption for newspaper distributors and carriers from the ABC Test and required them to submit specified information to the LWDA on the number of carriers for which the publisher or distributor paid and did not pay payroll taxes for, as well as the wage rates and information to demonstrate compliance of their carriers with the Borello test.

AB 2257 (Gonzalez, Chapter 38, Statutes of 2020) recast and clarified the business-to-business referral agency, and professional services exemption from the ABC test for employment status and exempted additional occupations and business relationships.

AB 323 (Rubio, Chapter 341, Statutes of 2020) extended an existing exemption for newspaper distributors and carriers from the ABC test from January 1, 2021 to January 1, 2022, and required an assessment of the effectiveness of contracts to conduct outreach and marketing to specified communities.

AB 170 (Gonzalez, Chapter 415, Statutes of 2019) provided an exemption for newspaper distributors and carriers from the ABC test, as specified, until January 1, 2021. The bill specified that the applicable test for determining if an individual is an employee or an independent contractor in the newspaper distributor and carrier industry is the predecessor to

that until January 1, 2021 newspaper distributors and carriers, as specified Dynamex developed by the California Supreme Court in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.

AB 5 (Gonzalez, Chapter 296, Statutes of 2019) codified the decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) requiring that employers prove that their workers can meet a 3 part (ABC) test in order to be lawfully classified as independent contractors, and exempted from the test certain professions and business-to-business relationships.

SUPPORT

California News Publishers Association (Sponsor)

Latino Media Collaborative

OPPOSITION

California Federation of Labor Unions

-- END --

1. Employment Development Department 2018 Annual Report on Fraud Deterrence and Detection Activities, https://edd.ca.gov/About_EDD/pdf/Fraud_Deterrence_and_Detection_Activities_2018.pdf. ↑

 CONSENT  

Bill No: AB 224

Author: Aguiar-Curry (D)

Introduced: 1/10/23

Vote: 21

SENATE GOVERNMENTAL ORG. COMMITTEE: 14-0, 6/13/23

AYES: Dodd, Wilk, Alvarado-Gil, Archuleta, Ashby, Bradford, Glazer, Nguyen, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto

NO VOTE RECORDED: Jones

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 74-0, 5/18/23 (Consent) - See last page for vote

SUBJECT: Gaming Policy Advisory Committee

SOURCE: Author

DIGEST: This bill increases, from 10 to 12 members, the membership of the Gaming Policy Advisory Committee (GPAC) and requires the additional members to include one representative of academia who possesses knowledge on matters related to gaming and one representative from the Bureau of Gambling Control (Bureau). Additionally, this bill requires the executive director of the California Gambling Control Commission (Commission) to convene the GPAC at least twice every year, rather than from time to time.

ANALYSIS:

Existing law:

1. Provides, under the Gambling Control Act (Act), for the licensure and regulation of various legalized gambling activities and establishments by the Commission and the investigation and enforcement of those activities and establishments by the Bureau under the Department of Justice (DOJ).
2. Establishes a 10-member GPAC, composed of representatives of controlled gambling licensees and members of the general public in equal numbers.
3. Requires the executive director of the Commission to convene the GPAC, from time to time, for the purpose of discussing matters of controlled regulatory policy and any other relevant gambling-related issues.
4. Provides that the GPAC may not advise the Commission on Indian gaming.

This bill:

1. Increases, from 10 to 12 members, the membership of the GPAC.
2. Requires the additional members to include on representative of academia who possesses knowledge on matters related to gaming and one representative from the Bureau.
3. Requires the executive director of the Commission to convene the GPAC at least twice every year, rather than from time to time.

Background

Author Statement. According to the author’s office, “This bill seeks to revitalize the GPAC by ensuring the committee meets at least twice per year, thus making the GPAC more relevant to the Commission, gaming industry, and general public. Additionally, I also intend to add two more members to the GPAC to gather additional perspective on gaming issues.”

Gambling Control Act. The Act provides the Commission with jurisdiction over the operation of gambling establishments in California. The Act requires every owner, lessee, or employee of a gambling establishment to obtain and maintain a valid state gambling license. The Act assigns the Commission the responsibility of assuring that gambling licenses are not issued to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare.

The Act directs the Commission to issue licenses only to those persons of good character, honesty and integrity, whose prior activities, criminal record, if any; reputation, habits and associations do not pose a threat to the public interest of this state. The DOJ conducts background and field investigations and enforces the provisions of the Act in this regard.

Gaming Policy Advisory Committee. The stated mission statement for GPAC is to provide advisory recommendations to the Commission concerning matters of controlled gaming regulatory policy and other relevant gambling related issues, with special attention to guaranteeing the integrity of gambling operations and to deal effectively with problem gambling. GPAC may not advise the commission on Indian gaming.

One member is a representative of the Bureau, one member is a representative of the problem gambling field, one member is a representative of a licensed or registered Third-Party Provider of Proposition Player Services, two members are a representative of larger (25 tables or more) licensed gambling establishments, two members are a representative of small (less than 25 tables) licensed gambling establishments, one member is a law enforcement officer/investigator from local government where an approved ordinance allows controlled gaming, one member is a professional with an accounting background and one member is a member of the public at large.

Related/Prior Legislation

AB 2455 (Aguiar-Curry, 2022) would have increased the membership of the GPAC from 10 to 12 members and would require the additional members to include one representative of academia who possesses knowledge on matters related to gaming and one representative from the Bureau. Additionally, the bill would have required the executive director to convene the committee at least twice every calendar year, rather than from time to time. (Died at the Senate Desk)

AB 2923 (Waldron, 2022) would have increased the membership of GPAC from 10 to 12 members and would have required the committee to be composed of five representatives of controlled gambling licenses, five members of the public and two representatives from the DOJ. (Never Heard in the Assembly Governmental Organization Committee)

SB 935 (Dahle, 2021) would have increased the membership of GPAC from 10 to 12 members. (Never Heard in the Senate Governmental Organization Committee)

AB 2098 (Gallagher, 2020) would have increased the membership of GPAC from 10 to 12 members. (Never Heard in the Assembly Appropriations Committee)

AB 3170 (Gipson, 2020) would have required the executive director of GPAC to convene the committee at least twice annually. (Never Heard in the Assembly Appropriations Committee)

AB 208 (C. Garcia, 2019) would have increase the membership of GPAC form 10-12 and require the committee to be composed of five representatives of controlled gambling licenses, five members of the general public, and two representative from DOJ. (Never Heard in the Assembly Appropriations Committee)

AB 501 (Bigelow, 2019) would have increased the membership of GPAC from 10 to 12 members and require the committee to be composed of five representatives of controlled gambling licenses, five members of the general public, and two representative from DOJ. (Never Heard in the Assembly Governmental Organization Committee)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/14/23)

None received

OPPOSITION: (Verified 8/14/23)

None received

ASSEMBLY FLOOR: 74-0, 5/18/23

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

NO VOTE RECORDED: Cervantes, Vince Fong, Friedman, Villapudua, Waldron, Wilson

Prepared by: Felipe Lopez / G.O. / (916) 651-1530

8/16/23 10:11:43

**** END ****

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: AB Hearing Date: 6/13/2023

SUBJECT:

DIGEST: This bill increases, from 10 to 12 members, the membership of the Gaming Policy Advisory Committee (GPAC) and would require the additional members to include one representative of academia who possesses knowledge on matters related to gaming and one representative from the Bureau of Gambling Control (Bureau). Additionally, the bill requires the executive director of the California Gambling Control Commission (Commission) to convene the GPAC at least twice every year, rather than from time to time.

ANALYSIS:

Existing law:

1. Provides, under the Gambling Control Act (Act), for the licensure and regulation of various legalized gambling activities and establishments by the Commission and the investigation and enforcement of those activities and establishments by the Bureau under the Department of Justice (DOJ).
2. Establishes a 10-member GPAC, composed of representatives of controlled gambling licensees and members of the general public in equal numbers.
3. Requires the executive director of the Commission to convene the GPAC, from time to time, for the purpose of discussing matters of controlled regulatory policy and any other relevant gambling-related issues.
4. Provides that the GPAC may not advise the Commission on Indian gaming.

This bill:

1. Increases, from 10 to 12 members, the membership of the GPAC.
2. Requires the additional members to include on representative of academia who possesses knowledge on matters related to gaming and one representative from the Bureau.
3. Requires the executive director of the Commission to convene the GPAC at least twice every year, rather than from time to time.

Background

Author Statement. According to the author’s office, “this bill seeks to revitalize the GPAC by ensuring the committee meets at least twice per year, thus making the GPAC more relevant to the Commission, gaming industry, and general public. Additionally, I also intend to add two more members to the GPAC to gather additional perspective on gaming issues.”

Gambling Control Act. The Act provides the Commission with jurisdiction over the operation of gambling establishments in California. The Act requires every owner, lessee, or employee of a gambling establishment to obtain and maintain a valid state gambling license. The Act assigns the Commission the responsibility of assuring that gambling licenses are not issued to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare.

The Act directs the Commission to issue licenses only to those persons of good character, honesty and integrity, whose prior activities, criminal record, if any; reputation, habits and associations do not pose a threat to the public interest of this state. The DOJ conducts background and field investigations and enforces the provisions of the Act in this regard.

Gaming Policy Advisory Committee. The stated mission statement for GPAC is to provide advisory recommendations to the Commission concerning matters of controlled gaming regulatory policy and other relevant gambling related issues, with special attention to guaranteeing the integrity of gambling operations and to deal effectively with problem gambling. GPAC may not advise the commission on Indian gaming.

One member is a representative of the Bureau, one member is a representative of the problem gambling field, one member is a representative of a licensed or registered Third-Party Provider of Proposition Player Services, two members are a representative of larger (25 tables or more) licensed gambling establishments, two members are a representative of small (less than 25 tables) licensed gambling establishments, one member is a law enforcement officer/investigator from local government where an approved ordinance allows controlled gaming, one member is a professional with an accounting background and one member is a member of the public at large.

Prior/Related Legislation

AB 2455 (Aguiar-Curry, 2022) would have increased the membership of the GPAC from 10 to 12 members and would require the additional members to include one representative of academia who possesses knowledge on matters related to gaming and one representative from the Bureau. Additionally, the bill requires the executive director to convene the committee at least twice every calendar year, rather than from time to time. (Held at the Senate Desk)

AB 2923 (Waldron, 2022) would have increased the membership of GPAC from 10 to 12 members and would have required the committee to be composed of five representatives of controlled gambling licenses, five members of the public and two representatives from the DOJ. (Never Heard in the Assembly Governmental Organization Committee)

SB 935 (Dahle, 2021) would have increased the membership of GPAC from 10 to 12 members. (Never Heard in the Senate Governmental Organization Committee)

AB 2098 (Gallagher, 2020) would have increased the membership of GPAC from 10 to 12 members. (Never Heard in the Assembly Appropriations Committee)

AB 3170 (Gipson, 2020) would have required the executive director of GPAC to convene the committee at least twice annually. (Never Heard in the Assembly Appropriations Committee)

AB 208 (C. Garcia, 2019) would have increase the membership of GPAC form 10-12 and require the committee to be composed of five representatives of controlled gambling licenses, five members of the general public, and two representative from DOJ. (Never Heard in the Assembly Appropriations Committee)

AB 501 (Bigelow, 2019) would have increased the membership of GPAC from 10 to 12 members and require the committee to be composed of five representatives of controlled gambling licenses, five members of the general public, and two representative from DOJ. (Never Heard in the Assembly Governmental Organization Committee)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

None received

OPPOSITION:

None received

Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 224

Author:(Aguiar-Curry) – As Introduced Ver:January 10, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill increases the membership of the Gaming Policy Advisory Committee (GPAC) to 12 members and requires the two additional members to include a representative of academia with knowledge on gaming matters and a representative from the Bureau of Gambling Control (BGC).

This bill also requires the executive director of the California Gambling Control Commission (CGCC) to convene the GPAC at least twice per year, rather than from time to time, and further specifies the objective of the GPAC.

FISCAL EFFECT:

1. Minor and absorbable costs to the CGCC to expand the GPAC, as specified.
2. Minor and absorbable costs to the BGC to have at least one representative on the GPAC.

COMMENTS:

1. Purpose. According to the author, this bill seeks to revitalize the GPAC by ensuring the committee meets at least twice per year, thus making the GPAC more relevant to the CGCC, gaming industry, and general public. Additionally, the author intends to add two more members to the GPAC to gather additional perspective on gaming issues.
2. GPAC. The GPAC was enacted to provide advisory recommendations to the CGCC on matters of controlled gaming regulatory policy and other relevant gambling issues, with special attention to guaranteeing the integrity of gambling operations and dealing effectively with problem gambling. The GPAC’s 10 members include representatives from the Department of Justice, the problem gambling field, a Third Party Provider of Proposition Player Services, various-sized gambling establishments, law enforcement, the accounting industry, and the general public. The GPAC is prohibited from advising the CGCC on Indian gaming.
3. Prior Legislation. AB 2455 (Aguiar-Curry), of the 2021-22 Legislative Session, was identical to this bill. AB 2455 was withdrawn from Engrossing and Enrolling and held at the Senate Desk.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: March 8, 2023

ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION

Miguel Santiago, Chair

ABPCA Bill Id:AB 224 (

Author:Aguiar-Curry) – As Introduced Ver:January 10, 2023

SUBJECT: Gaming Policy Advisory Committee

SUMMARY: This bill requires the executive director of California Gambling Control Commission (CGCC) to convene the Gaming Policy Advisory Committee (GPAC) at least twice per year, rather than from time to time, and further specifies the objective of the GPAC. This bill also increases, from 10 members to 12 members, GPAC membership and requires the additional members to include a representative of academia with knowledge on gaming matters and a representative from the Bureau of Gambling Control. Specifically, this bill:

1) Increases the membership of the GPAC from 10 to 12 members.

2) Provides that one member shall be a representative of academia who possesses knowledge on matters related to gaming, and one member shall be a representative from the Bureau.

3) Requires the executive to convene the GPAC at least twice every calendar year for the purpose of discussing matters of controlled gaming regulatory policy and any other relevant gambling-related issue.

4) Provides that GPAC’s objective shall be to solicit input from various constituencies, including the public, on gaming policy issues for future consideration to the CGCC, as appropriate.

5) Clarifies that GPAC shall not advise the CGCC on Indian gaming.

EXISTING LAW:

1. Provides, under the Gambling Control Act (Act), for the licensure and regulation of various legalized gambling activities and establishments by the CGCC and the investigation and enforcement of those activities and establishments by the Bureau under the Department of Justice (DOJ).
2. Establishes a 10-member GPAC, composed of representatives of controlled gambling licensees and members of the general public in equal numbers. (CA Bus & Prof Code § 19817)
3. Requires the executive director of the CGCC to convene the GPAC, from time to time, for the purpose of discussing matters of controlled regulatory policy and any other relevant gambling-related issues. (CA Bus & Prof Code § 19817)
4. Provides that the GPAC may not advise the CGCC on Indian gaming. (CA Bus & Prof Code § 19817)

FISCAL EFFECT: The bill has been keyed fiscal by Legislative Counsel.

COMMENTS:

Purpose of the bill. This measure seeks to revitalize the GPAC by ensuring that the committee holds periodic meetings, rather than from time to time. AB 224 will help make GPAC more relevant to the CGCC, the gambling industry and the public. The CGCC is responsible for appointing and constituting the GPAC. Yet, under current law, there is no requirement that the GPAC meet. This legislation would make it easier for the CGCC to establish the committee and schedule it to meet at least twice a year. Finally, the bill would add two members to the GPAC (academia and the Bureau) to gather additional perspectives on related gaming matters.

Background:

Gambling Control Act. The Act provides the CGCC with jurisdiction over the operation of gambling establishments in California. Every owner, lessee, or employee of a gambling establishment is required to obtain and maintain a valid state gambling license. The Act assigns the CGCC the responsibility of assuring that they do not issue gambling licenses to, or held by, unqualified or disqualified persons, or by persons whose operations are conducted in a manner that is harmful to the public health, safety, or welfare.

The Act directs the CGCC to issue licenses only to those persons of good character, honesty and integrity, whose prior activities, criminal record, if any; reputation, habits and associations do not pose a threat to the public interest of this state. The DOJ conducts background and field investigations and enforces the Act.

GPAC Mission Statement. The stated mission statement for GPAC is to provide advisory recommendations to the CGCC concerning matters of controlled gaming regulatory policy and other relevant gambling related issues, with special attention to guaranteeing the integrity of gambling operations and to deal effectively with problem gambling. GPAC may not advise the commission on Indian gaming.

Current make-up of GPAC. One member is a representative of DOJ, one member is a representative of the problem gambling field, one member is a representative of a licensed or registered Third-Party Provider of Proposition Player Services, two members are a representative of larger (25 tables or more) licensed gambling establishments, two members are a representative of small (less than 25 tables) licensed gambling establishments, one member is a law enforcement officer/investigator from local government where an approved ordinance allows controlled gaming, one member is a professional with an accounting background and one member is a member of the public at large.

It should be noted that GPAC is responsible for appointing and forming the commission, but current law does not require them to meet.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Eric Johnson / G.O. / (916) 319-2531