California’s landmark labor bill could limit newspaper distribution

Landmark labor legislation aiming to force Uber and Lyft to treat drivers as employees could prompt a statewide vote on independent contractor law and greatly curtail the distribution of printed newspapers.

Assembly Bill 5, which Gov. Gavin Newsom is expected to sign, would cement a 2018 California Supreme Court ruling requiring businesses to treat as company employees many laborers who currently work as independent contractors. The bill, which the Legislature approved Wednesday, has spurred fierce resistance from the major ride-hailing companies, who are funding an effort to put a counter-measure on the ballot in 2020.

Labor groups have touted AB 5’s passage as a step toward better working conditions for tens of thousands of California workers, though a litany of professions including insurance agents, lawyers, doctors, commercial fishers, and barbers would be exempt. Independent contractors are not guaranteed many of the protections that regularly employed workers enjoy, such as benefits and compensation for workplace injuries.

But AB 5 included no exemption for another field that has for decades been dominated by independent contractors: newspaper delivery. Newspaper publishers are making a last-minute push in Sacramento to persuade lawmakers to exempt their business from the new regulations for at least a year before the end of the legislative session on Friday.

Already facing challenges including declining print revenue, rising newsprint costs and the challenges of making online news profitable, industry representatives are asking for more time to implement costly delivery system overhauls.

The Press Democrat’s owner, Sonoma Media Investments, contracts with 110 carriers to deliver thousands of copies of the paper on 126 routes seven days a week, according to Chief Executive Officer Steve Falk.

These independent contractors rise before dawn and drive throughout the morning to deliver thousands of issues to subscribers in Sonoma, Mendocino and Lake counties, earning $1,000 to $1,500 or more per month for several of hours per day - but without protections and benefits earned by full-time employees of Sonoma Media Investments.

Falk said delivery fees are negotiated with each carrier and vary based on topography, length of the route and number of subscribers.

“As independent contractors, carriers have lots of flexibility in sharing the route with family members, delivering multiple routes within a family and using their own substitutes as desired,” Falk said. “None of that is possible with an employee delivery system.”

Newspaper distribution has been specifically exempt from typical employment classification under California regulations that have been on the books since 1987.

Now, California newspaper executives fear AB 5 could lead to a sharp spike in costs - early estimates indicate higher costs of about $3 million to $4 million for Sonoma Media Investments, Falk said. In his view, the current independent contractor system allows delivery workers much-needed flexibility that would be restricted if newspapers have to start hiring carriers like other employees. Doing away with that system could mean higher home-delivery costs, a “severe reduction” in delivery to rural areas, fewer editions per week, and uncertain employment prospects for current carriers, Falk said.

“The system is not broken, and the fix is going to severely hurt an industry that is already suffering with revenue declines,” Falk said.

Falk added that Sonoma Media Investment carriers make “minimum-wage plus” in delivery fees depending on their routes. Current routes available include $1,350 per month to deliver at least 300 papers per day to Sebastopol, $2,100 to haul 325 or more editions of the paper to Petaluma, and $1,000 to truck 190 to 200 papers to Sonoma, according to The Press Democrat’s website.

But generally, carrying the newspaper on long early-morning drives can be a low-paying job that is ripe for exploitation, said Steve Smith, a spokesman for the California Labor Federation, who represents more than 2 million union workers and pushed for AB 5’s passage.

“Although we understand the newspaper industry’s concern in terms of the financial situation and trying to keep papers going out to customers and keep a vibrant news environment, we want to make sure worker exploitation becomes a thing of the past,” Smith said.

He emphasized the demands of delivering a morning newspaper like The Press Democrat, finalized late in the day and delivered early the next morning, during the middle of the night. And without workers’ compensation or typical employee benefits, independent contractors are on their own if they’re hurt on a job that may not guarantee minimum wage, Smith said.

“You’re not entitled to the same protections that everyone else is under law,” he said.

AB 5’s passage has spurred the California News Publishers Association, which represents more than 500 newspapers in the state, into overdrive. Jim Ewert, general counsel for the association, was trying to gather votes Thursday after a Senate hearing on AB 170, which would give newspapers an extra year to comply with AB 5’s provisions for carriers before taking steps that he said could particularly impact rural areas on the fringe of delivery ranges with spotty access to digital news.

“You’re going to essentially create pockets where people are going to be less informed at a time when authoritative information is absolutely essential for self-government,” Ewert said.

This second, paper delivery-specific bill was proposed Tuesday evening and can’t be taken up on the Senate floor until 72 hours have passed, meaning it’s not eligible for votes until Friday evening - which happens to be the last night of the legislative session.

Its co-authors include Sen. Mike McGuire, D-Healdsburg, who described the measure as “a deal that addresses the needs of workers across California and provides newspapers with an additional year to make adjustments” to AB 5’s demands.

“There are legitimate and deep concerns about the long-term health of America’s newspaper industry,” McGuire said, adding that dozens of California industries besides newspapers received exceptions or exemptions from the new legislation.

AB 5 also would classify as employees people who are currently freelance writers and photographers for newspapers and who submit more than 35 pieces of work in a given year. That puts newspapers - particularly smaller weekly editions that rely on regular outside submissions - in a position of either increasing staff costs, or capping freelancer submissions and finding other ways to get the news out.

Falk noted there were no immediate plans to change The Press Democrat’s distribution system pending the fate of AB 170.

But AB 5 will likely accelerate the news industry’s increasing emphasis on digital news and the scaling-back of printed newspaper copies, he said, noting that other newspapers have eliminated relatively skimpy early-week editions.

“I would never do that if we had a choice,” Falk said, “even though the Monday, Tuesday paper would blow away if it’s too windy. I think it interrupts the habit - the reading habit. ... That is not a pleasant alternative, but we might not have a choice.”

This article includes information from the Associated Press. You can reach Staff Writer Will Schmitt at 707-521-5207 or will.schmitt@pressdemocrat.com. On Twitter @wsreports.