August 2023

On June 20, the United States Supreme Court denied a petition by Mobilize the Message LLC (“Mobilize”) challenging California’s test for classifying workers as independent contractors.  We have previously addressed how California made it significantly harder to classify workers as independent contractors when it passed Assembly Bill 5 (“AB 5”).  The Recent Evolution of Independent Contractor Laws; California Assembly Bill 5: Drastic Changes to the Healthcare Industry Are Certain and Immediate; California Motor Carriers Are Subject to AB-5; Ten Common Employment Law Violations; New California Employment Laws for 2022; California Employment Law Update 2021.

Mobilize contracts with political campaigns to provide them with doorknockers and signature gatherers.  After the passage of AB 5 in 2019, Mobilize chose to leave California and has since declined prospective contracts with California clients because it cannot afford to hire its workers as employees. 

Mobilize and two of its potential California clients, Moving Oxnard Forward, Inc. and Starr Coalition for Moving Oxnard Forward, sued and moved for an injunction asking to delay enforcement of AB 5.  The plaintiffs contended that AB 5 created a two-tiered system where politically-focused canvassers were subject to the more burdensome ABC test, while other door-to-door occupations, such as sales workers, were subject to a more lenient test.  The plaintiffs argued that applying the more stringent test to politically-focused canvassers illegally constrained those groups’ free-speech rights.

In October, the Ninth Circuit affirmed the lower court’s decision to deny the injunction. The Circuit held that AB 5 is a generally applicable economic regulation that dictates which test applies based on the nature of a worker’s occupation, rather than the speech the worker expresses. 

The Circuit accepted the plaintiffs’ premise that applying the ABC test increases the likelihood that Mobilize’s doorknockers and signature gatherers will be classified as employees, which in turn imposes greater costs on the company and reduces the number of canvassers it can retain.  However, according to the Circuit, “[s]uch an indirect impact on speech . . . does not violate the First Amendment.”  The Supreme Court’s refusal to hear the plaintiffs’ appeal means that the Ninth Circuit’s ruling remains in place. 

The Mobilize case is yet another example of state and federal courts rejecting challenges to AB 5.  The implications are that AB 5’s strict requirements and limitations of independent contractor classifications are going to be enforced.  For many businesses, including Mobilize, this means a fundamental shift in how the business operates.

 

For more information contact:

Matthew Wallin

mwallin@gibbsgiden.com

(424) 317-4423

Matthew Wallin is a partner in the Los Angeles office where he practices labor and employment law.  He has extensive experience defending private business and public entities in litigation and advising clients on labor compliance issues.  

This post was prepared with assistance from Taylor Jennings.

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