Mobilize the Message, LLC v. Bonta

50 F.4th 928

MOBILIZE THE MESSAGE, LLC; Moving Oxnard Forward, Inc.; Starr Coalition for Moving Oxnard Forward, Plaintiffs-Appellants,

v.Rob BONTA, in his official capacity as Attorney General of California, Defendant-Appellee.

No. 21-55855

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 7, 2022 San Francisco, California

Filed October 11, 2022

Alan Gura (argued), Institute for Free Speech, Washington, D.C., for Plaintiffs-Appellants.

Jose A. Zelidon-Zepeda (argued), Deputy Attorney General; Heather Hoesterey, Supervising Deputy Attorney General; Thomas S. Patterson, Senior Assistant Attorney General; Rob Bonta, Attorney General of California; Office of the Attorney General, San Francisco, California; for Defendant-Appellee.

Before: Andrew D. Hurwitz and Lawrence VanDyke, Circuit Judges, and Joan N. Ericksen,^* District Judge.

Opinion by Judge Ericksen ;

Dissent by Judge VanDyke

OPINION

ERICKSEN, District Judge:

For certain purposes, California classifies "a person providing labor or services for remuneration" as an employee unless the hiring entity satisfies the "ABC test" adopted in Dynamex Operations West, Inc. v. Superior Court , 4 Cal.5th 903, 232 Cal.Rptr.3d 1, 416 P.3d 1 (2018). Cal. Lab. Code § 2775(b)(1). Section 2775 and Dynamex do not apply to several occupations. E.g., id. § 2783. For workers in the exempt occupations, the multifactor test of S.G. Borello & Sons, Inc. v. Department of Industrial Relations , 48 Cal.3d 341, 256 Cal.Rptr. 543, 769 P.2d 399 (1989), governs in determining whether the worker is an employee or an independent contractor.

Mobilize the Message, LLC, Moving Oxnard Forward, Inc., and Starr Coalition for Moving Oxnard Forward (collectively "Plaintiffs") claim that this California law violates the First Amendment. They sued the California Attorney General and moved for a preliminary injunction to restrain him from classifying their doorknockers and signature gatherers according to the ABC test. The district court denied the motion. Plaintiffs appealed. We have jurisdiction under 28 U.S.C. § 1292(a)(1) and affirm.

I

A

"Few problems in the law have given greater variety of application and conflict in results than the cases arising in the borderland between what is clearly an employer-employee relationship and what is clearly one of independent, entrepreneurial dealing. This is true within the limited field of determining vicarious liability in tort. It becomes more so when the field is expanded to include all of the possible applications of the distinction." Dynamex , 232 Cal.Rptr.3d 1, 416 P.3d at 14 (quoting NLRB v. Hearst Publ'ns, Inc. , 322 U.S. 111, 121, 64 S.Ct. 851, 88 L.Ed. 1170 (1944) ).

"[A]t common law the problem of determining whether a worker should be classified as an employee or an independent contractor initially arose in the tort context—in deciding whether the hirer of the worker should be held vicariously liable for an injury that resulted from the worker's actions." Id. "[T]he question whether the hirer controlled the details of the worker's activities became the primary common law standard for determining whether a worker was considered to be an employee or an independent contractor." Id. Before Borello , "California decisions generally invoked this common law ‘control of details’ standard beyond the tort context, even when deciding whether workers should be considered employees or independent contractors for purposes of the variety of 20th century social welfare legislation that had been enacted for the protection of employees." Id. "In addition to relying upon the control of details test, ... the pre- Borello decisions listed a number of ‘secondary’ factors that could properly be considered in determining whether a worker was an employee or an independent contractor." Id. 232 Cal.Rptr.3d 1, 416 P.3d at 15.

Borello addressed the distinction between employees and independent contractors for purposes of California's Workers' Compensation Act. The California Supreme Court stated that "the concept of ‘employment’ embodied in the Act is not inherently limited by common law principles"; that "the Act's definition of the employment relationship must be construed with particular reference to the ‘history and fundamental purposes’ of the statute"; and that, "under the Act, the ‘control-of-work-details’ test for determining whether a person rendering service to another is an ‘employee’ or an excluded ‘independent contractor’ must be applied with deference to the purposes of the protective legislation." 256 Cal.Rptr. 543, 769 P.2d at 405–06. After summarizing the purposes of the Act, the court acknowledged that "[t]he Act intends comprehensive coverage of injuries in employment"; that the Act "accomplishes this goal by defining ‘employment’ broadly in terms of ‘service to an employer’ and by including a general presumption that any person ‘in service to another’ is a covered ‘employee’ "; and that the Act's exclusion of "independent contractors" "recognizes those situations where the Act's goals are best served by imposing the risk of ‘no-fault’ work injuries directly on the provider, rather than the recipient, of a compensated service." Id. 256 Cal.Rptr. 543, 769 P.2d at 406.

Borello did not adopt "detailed new standards for examination of the issue." Id. Rather, it explained:

[T]he Restatement guidelines heretofore approved in our state remain a useful reference. The standards set forth for contractor's licensees in section 2750.5 are also a helpful means of identifying the employee/contractor distinction. The relevant considerations may often overlap those pertinent under the common law. Each service arrangement must be evaluated on its facts, and the dispositive circumstances may vary from case to case.

Id. 256 Cal.Rptr. 543, 769 P.2d at 406–07 (citations omitted). The court also noted a "six-factor test developed by other jurisdictions which determine independent contractorship in light of the remedial purposes of the legislation." Id. 256 Cal.Rptr. 543, 769 P.2d at 407. Recognizing "many points of individual similarity between these guidelines and [its] own traditional Restatement tests," the court concluded that "all [of the factors] are logically pertinent to the inherently difficult determination whether a provider of service is an employee or an excluded independent contractor for purposes of workers' compensation law." Id.

Borello came "to be viewed as the seminal decision" in California on whether a worker is an employee or an independent contractor. Dynamex , 232 Cal.Rptr.3d 1, 416 P.3d at 15. California courts have applied it "in distinguishing employees from independent contractors in many contexts, including in cases arising under California's wage orders." Id. 232 Cal.Rptr.3d 1, 416 P.3d at 27.

In Dynamex , the California Supreme Court addressed "what standard applies, under California law, in determining whether workers should be classified as employees or as independent contractors for purposes of California wage orders , which impose obligations relating to the minimum wages, maximum hours, and a limited number of very basic working conditions (such as minimally required meal and rest breaks) of California employees." Id. 232 Cal.Rptr.3d 1, 416 P.3d at 5. Under the applicable wage order, "to employ" meant "(a) to exercise control over the wages, hours, or working conditions, or (b) to suffer or permit to work, or (c) to engage, thereby creating a common law employment relationship." Id. 232 Cal.Rptr.3d 1, 416 P.3d at 6 (quoting Martinez v. Combs , 49 Cal.4th 35, 109 Cal.Rptr.3d 514, 231 P.3d 259, 278 (2010) ). Acknowledging "the disadvantages, particularly in the wage and hour context, inherent in relying upon a multifactor, all the circumstances standard for distinguishing between employees and independent contractors," id. 232 Cal.Rptr.3d 1, 416 P.3d at 35, the Dynamex court "conclude[d] it is appropriate, and most consistent with the history and purpose of the suffer or permit to work standard in California's wage orders, to interpret that standard as: (1) placing the burden on the hiring entity to establish that the worker is an independent contractor who was not intended to be included within the wage order's coverage; and (2) requiring the hiring entity, in order to meet this burden, to establish each of the three factors embodied in the ABC test":

(A) that the worker 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; and (B) that the worker performs work that is outside the usual course of the hiring entity's business; and (C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

Id. (footnote omitted).

"Although Dynamex was initially limited to wage orders, with Borello applying outside that context, the California legislature codified the ABC test and expanded its applicability through the enactment of" Assembly Bill No. 5 in 2019.¹ Am. Soc'y of Journalists & Authors, Inc. v. Bonta , 15 F.4th 954, 958 (9th Cir. 2021) (footnote omitted) (citations omitted), cert. denied , ––– U.S. ––––, 142 S. Ct. 2870, ––– L.Ed.2d –––– (2022). "The legislature gave several reasons for taking this step. It found that misclassification caused workers to ‘lose significant workplace protections,’ deprived the state of needed revenue, and ultimately contributed to the ‘erosion of the middle class and the rise in income inequality.’ With [Assembly Bill No. 5], the legislature declared, it was protecting ‘potentially several million workers.’ " Id. (citations omitted). Assembly Bill No. 5 "did not apply Dynamex across the board, however, but specified that the Borello standard would continue governing many occupations and industries." Id. at 958–59. A direct sales salesperson,² a newspaper distributor, and a newspaper carrier³ are...