AB 5 Makes Political Campaigns in California More Expensive
Political campaigns, think twice before hiring independent contractors in California. The practice of designating staff as independent contractors who assist in common campaign activities such as voter outreach, volunteer recruitment, and event coordination, may result in severe financial consequences.
California’s (in)famous Assembly Bill 5 fundamentally shifts how California courts distinguish between “independent contractors” and “employees.” In short, most workers will presumptively be employees, placing the onus on the employer to show otherwise. This means more than mere semantics, especially for current and aspiring politicians planning political campaigns in California.
AB 5 codifies the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal. 5th 903. Among the more controversial rulings in recent California history, Dynamex established a three-prong test to distinguish independent contractors from employees, for purposes of wage and hour issues.
The “ABC” test—as it’s commonly known—puts the burden on hiring parties to rebut a presumption that workers are employees, not independent contractors. A worker is an employee unless the hiring entity demonstrates the worker may do the job in any manner desired, the worker is doing a job the hiring entity rarely does, and the worker typically does that type of work. With a few exceptions, your hired-hand is an employee, unless you can rebut all three prongs. AB 5 has no exemptions for seasonal or temporary workers. As such, just because you are only paying the campaign worker for the last two months of the campaign, if the individual is doing work that is typical for political campaigns, the courts are most likely going to classify the worker as an employee, and penalize you for misclassification.
In enacting AB 5, the California Senate sought to provide ride-sharing workers—such as those driving for Lyft and Uber—protections associated with traditional employment. But the California Senate overshot its mark, and political campaigns are just one of many types of employers that will pay the price—literally.
Here’s AB 5 in practice: In the past, political campaigns often paid workers a flat rate—say $100 per day or $2,000 a month. The campaign worker would often coordinate volunteers, run phone banks, and knock on doors. As a result of AB 5, these campaign workers must be classified as employees, because coordinating volunteers and voter contacts are normal activities of a campaign.
In light of the 2018 elections, where several California Congressional seats were flipped due to ballot harvesting, AB 5 has just significantly increased the cost of conducting an effective GOTV campaign. Campaigns cannot rely on digital ad campaigns to ensure that their voters turn in their Vote-by-Mail ballots. Campaigns cannot afford to rely completely on volunteers when it comes to GOTV efforts. Campaigns need to have paid employees to organize and conduct voter outreach programs.
One disgruntled “independent contractor” can quickly destroy a campaign with time-consuming and expensive employment litigation. In 2016, low-level Democratic National Committee staffers, who were tasked with posting on social media and conducting phone surveys, filed a federal class action suit against the DNC for unpaid overtime wages, claiming they worked 80-90 hours per week and were actually employees despite their independent contractor moniker. The two-year legal fight ended in 2018 with the DNC narrowly evading liability. While the DNC avoided liability, it only did so because the court found that the campaign workers were not employees. If this lawsuit were brought in California today, the court would have no choice but to find that the campaign workers should have been classified as employees, and that the DNC would have been be liable for unpaid overtime wages, missed meal and rest periods, failure to pay minimum wages, and failure to pay all wages due at termination, resulting in a very, very costly judgment, to include attorneys’ fees and costs, likely on a class-action basis.
The good news for campaigns is that AB 5 changed nothing for unpaid staffers and volunteers. To boot, while AB 5 amends both the Labor and Unemployment Insurance Codes, it didn’t change the general exemption eliminating the requirement of campaigns to pay unemployment insurance.
Still, AB 5’s harm will be immense. While outside consulting firms will likely retain their independent contractor status, paid, low-level staffers will now be “employees.” Campaigns will pay California’s top-dollar minimum wage for grass-roots workers, including those canvassing and circulating fliers, the boots on the ground. As employees, these staffers must also receive sick leave, overtime, workers’ compensation, health insurance, etc.
Even worse, a prudent campaign will be compelled to purchase additional insurance to prevent liability for injuries inflicted by campaign staffers. AB 5, coupled with today’s political climate, enables an unfortunately common left-right political altercation to morph into a campaign-bankrupting lawsuit. This wasn’t the case when staffers were independent contractors, because employers aren’t generally liable for torts committed by independent contractors; that’s not true for employees, a reality that will force campaigns to select staffers conservatively. Nationwide campaigns should be especially alarmed, because staffers will keep their employee status in California despite being independent contractors everywhere else.
AB 5 doubtless will crush public-office dreams for prospective politicians running against veteran politicians having more campaign funds.
The ante is high. So, how do campaigns know whether to treat their staffer as an employee or independent contractor? Campaigns should minimize risk by choosing staffers wisely. For questions about practical compliance with AB5, call the employment and election law attorneys at the Dhillon Law Group, who are advising on these issues for clients statewide.
Mark P. Meuser is Of Counsel for Dhillon Law Group.
Dante Quilici is a law clerk for Dhillon Law Group.
