Henry Rademacher

Lawsuits Continue to Pile Up Against California Nanny State Law

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Posted by Henry Rademacher on Friday, January 10th, 2020, 5:31 PM PERMALINK

It has been a rough start for California Assembly Bill 5 (AB5). Although it has only been in effect since January 1, the controversial law has already been the subject of several lawsuits, as well as two court rulings unfavorable to the bill and its advocates.

In December, a lawsuit was filed by the American Society of Journalists and Authors (ASJA) in conjunction with the National Press Photographers Association (NPPA). They argue that AB5 is unconstitutional under the First and Fourteenth Amendment, meaning that the law fundamentally mishandles issues of free speech and equal protection under the law.

Uber and Postmates filed another legal challenge a few days later. They argue that “AB5 violates several constitutional rights including the equal protection and due process clauses of the Fourteenth Amendment, the Ninth Amendment, and the contracts clause of Article I.”

The California Trucking Association (CTA), which filed its lawsuit back in November, had yet another point of contention with AB5, arguing that it “violates the U.S. Constitution’s Supremacy Clause, which makes federal law the supreme law of the land. As the complaint explains, AB5 violates federal prohibitions on state laws.” Essentially, the CTA argued that specific provisions of AB5 are preempted by the Federal Aviation Administration Authorization Act of 1994.

The Harbor Trucking Association is also a plaintiff in the suit filed by the CTA.

In response to the CTA’s suit, on December 31, U.S. District Judge Roger Benitez issued a temporary restraining order preventing AB5 from being enforced “against any motor carrier in California, pending a final resolution of the lawsuit brought by the CTA.” A hearing on Judge Benitez’s ruling is scheduled for January 13.

Some media reports, including the San Francisco Chronicle, have portrayed this injunction as a minor bump in the road for AB5 and something likely to be overturned on appeal. However, the language used by Judge Benitez in his ruling indicates that the preemption argument has merit. In fact, Judge Benitez wrote, “the Court is persuaded by the likelihood of Plaintiffs’ success on the FAAAA preemption ground.”

Shortly after Judge Benitez issued the temporary restraining order, AB5 suffered another blow in court, this time at the state level. On Wednesday, January 8, Judge William F. Highberger of the Los Angeles Superior Court issued a ruling echoing the one issued by Judge Benitez. According to Judge Highberger, “an independent contractor/employee test required by the new state law, known as Assembly Bill 5, is preempted by the Federal Aviation Administration Authorization Act of 1994.”

So, where do we stand? After only being in effect for 10 days, AB5 has been the subject of multiple lawsuits, brought by a diverse array of plaintiffs. Court rulings at the state and federal level have indicated that the law is unconstitutional, while additional lawsuits are likely in the near future.

Photo Credit: Håkan Dahlström


Vox Drama is Only the Beginning of California's War on Independent Contractors

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Posted by Henry Rademacher on Wednesday, December 18th, 2019, 4:05 PM PERMALINK

Vox Media caused a bit of a stir when they announced plans to lay off 200 freelance writers in preparation for January 1st, when California Assembly Bill 5 (AB5) is scheduled to take effect. 

The new law limits companies’ abilities to classify workers as independent contractors rather than employees. AB5 was widely seen as a response to perceived abuse of workers by the “gig economy,” specifically companies like Uber and Lyft. 

Vox had previously been effusive in their support of AB5. But it turned out the law’s strict classification of the terms “independent contractor” and “employee” made it, in their own words, “impossible,” for Vox to continue using their current business model. The problems AB5 causes are by no means limited to journalism. More than 1 million workers in California will be directly affected by it, with many likely to lose their job rather than gain full time employment.

The writers who are being terminated wrote primarily for SB Nation, a division of Vox that focuses on sports coverage. AB5 mandates that a freelance writer who publishes more than 35 pieces per year for a given site must be classified as an employee. Because SB Nation is primarily a blog-style, high-volume website, they were never going to be able to comply with such a provision.

Possibly in response to the Vox situation, the American Society for Journalists and Authors (ASJA) filed a lawsuit against California on December 17. The suit alleges that AB5 is unconstitutional due to its mishandling of free speech, freedom of the press, and equal protection under the law. The National Press Photographers Association (NPPA) is also a plaintiff in the lawsuit. 

JoBeth McDaniel, chair of ASJA’s First Amendment Committee stated, “Many journalists choose to freelance because we encountered discrimination, harassment and bullying in staff positions. Others -- such as parents, caregivers and the disabled -- need the flexibility of setting their own schedules and workloads.”

The flexibility they provide has always been one of the things that makes gig economy jobs appealing. What legislators and bureaucrats do not understand, or understand but choose to ignore, is that many people employed by the gig economy are not looking for full-time employment. Groups like students and single parents often want to make extra money, but do not have enough time to work a full-time job.

This is not the last time we will be hearing about AB5. Similar legislation is currently being considered in New York, New Jersey, and Massachusetts. 

Photo Credit: Ken Kanouse


Kansas Governor’s Internet Sales Tax Is Not Legal, State AG Says

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Posted by Henry Rademacher on Tuesday, October 1st, 2019, 4:37 PM PERMALINK

Not legal? Not a problem for Kansas Governor Laura Kelly.

The Kansas Democrat recently championed an internet sales tax based on old legislation that does not comply with the parameters of the Supreme Court’s decision in Wayfair v. South Dakota.

As one might expect, Derek Schmidt, the Attorney General of Kansas, insists that the Kelly administration does not have the authority to unilaterally raise taxes in such a manner.

While GOP legislators called for a halt to the implementation of the plan, “the (revenue) department's top administrator, Secretary Mark Burghart, a veteran tax attorney himself, said in a statement that the department is obligated to follow its current course unless told otherwise by the courts.”

So the Governor is now pushing an unconstitutional policy, and one that her state’s own Attorney General says she does not have the authority to implement.

Americans for Tax Reform is beyond concerned with Kansas’ aggressive new internet sales tax. The controversial new policy requires that all online retailers remit sales tax in the state of Kansas, with no sales or transaction thresholds – meaning tiny individual operations are obligated to collect.

Historically, Kansas has been stridently pro-business and anti-tax. However, this new policy is one of the most aggressive taxes in the country and will have substantial ramifications for both businesses and taxpayers in Kansas. 

Adding to the confusion, Governor Kelly vetoed multiple bills to reform the Kansas tax code, and impose an internet sales tax. Yet, Kelly was not happy because these bills cut taxes overall, in order to make up for the new burden created by the internet sales tax.

The new tax has the potential to substantially erode the economy of Kansas. By failing to provide even modest protections for small businesses in her hyper-aggressive new tax, Kelly’s tax policy is likely to drive away out of state businesses selling to Kansas residents. The new tax also has the potential to open a floodgate of compliance issues that will plague the businesses which remain operational.

Add to that, the serious questions about its constitutionality. When the Supreme Court issued its ruling last year in Wayfair Vs. South Dakota, it “outlined a series of requirements that the court felt made the law acceptable” including “a minimum sales or transaction threshold, specifically preventing states from going after small businesses and sellers doing very little business in a state.” Because the Kansas law has no such threshold, it should be unconstitutional.

This situation is a major test for the Wayfair decision. Every American is at risk if a state’s Governor can bulldoze right over the Supreme Court’s limits on interstate taxation and start grabbing money from out-of-state residents who cannot vote them out.

The stakes are sky-high for all taxpayers, and ATR continues to encourage Kansas legislators to fight against the Governor’s power-grab.

Photo Credit: J. Stephen Conn


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