9th Circuit Denies Motion to Preliminarily Enjoin Codification of the ABC Test

On October 11, 2022, the United States Court of Appeals for the Ninth Circuit affirmed the Central District of California’s denial of a motion for a preliminary injunction to restrain the California Attorney General from applying California’s “ABC test,” as codified in California’s Assembly Bill 5 (“AB 5”), to political canvassers.

Under precedent established in Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018) to prove workers are independent contractors not subject to wage orders,[1] California hiring entities must satisfy the ABC test, which asks: (A) whether 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; (B) whether the person performs work that is outside the usual course of the hiring entity’s business; and (C) whether the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. However, AB 5does not apply to several occupations.

Plaintiffs here, Mobilize the Message LLC, Moving Oxnard Forward Inc., and the Starr Coalition for Moving Oxnard Forward (collectively, “Plaintiffs”), challenged AB 5’s application to political canvassers, as classifying doorknockers and signature gatherers as employees instead of independent contractors would significantly increase Plaintiffs’ operating costs.

Specifically, Plaintiffs claim that A.B. 5 violates the First Amendment because it discriminates against speech based on its content. They argue that because California determines the employment status of canvassers under the ABC test, but classifies direct sales salespersons, newspaper distributors, and newspaper carriers under a different test articulated in S.G. Borello & Sons, Inc v. Dept. of Industrial Relations, 48 Cal. 3d 341 (1989), the state discriminates based on content and improperly prioritizes commercial speech over political speech.

The majority of the Ninth Circuit panel accepted the Plaintiffs’ assertion that applying AB 5 is likely to increase the chances that doorknockers and signature gatherers will be classified as employees. Employee classification would impose greater costs on Plaintiffs, and as a result, Plaintiffs may not be able to hire as many workers for these positions. However, the panel also held that workplace regulations that incidentally inhibit the expression of political speech do not violate the First Amendment.  The court clarified that AB 5 does not target certain types of speech, but rather applies across California’s economy, so Plaintiffs are not unfairly burdened by the application of the test and do not present a viable claim for content-based discrimination.

The majority ultimately concluded that the ABC test depends on the nature of an individual’s work rather than the speech they use, noting that the Supreme Court has rejected the claim that any examination of speech or expression inherently triggers First Amendment violations.  Accordingly, since Plaintiffs did not successfully establish a First Amendment claim, the Court affirmed the denial of the motion for a preliminary injunction against applying AB 5.

Updates will be posted to this blog as the matter progresses. The case caption for this action is Mobilize the Message, LLC v. Bonta, No. 21-55855, filed in the United States Court of Appeals for the Ninth Circuit.

The legal team at Miller Shah LLP has significant experience representing misclassification matters. If you have any questions regarding this subject or this post, please contact Chiharu Sekino (cgsekino@millershah.com) or Mark Xiao (mxiao@millershah.com). The firm can also be reached toll-free at (866) 540-5505.

Miller Shah LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. The firm is an active member of International Advisory Group (IAG Global), which provides clients access to excellent legal and accounting resources around the globe. For more information about the firm, please visit www.millershah.com.