Read this over and agree or dispute sections accordingly!
Assante,
About the Authors Guild The Authors Guild is the nation’s oldest and largest professional organization for writers. Its mission is to empower working writers by advocating for the rights of authors and journalists. The Guild protects free speech and authors’ copyrights, fights for fair contracts and a living wage and provides an engaged and welcoming community for all published authors. For more information, visit www.authorsguild.org.
About Amazon Publishing Amazon Publishing is a leading trade publisher of fiction, nonfiction and children’s books with a mission to empower outstanding storytellers and connect them with readers worldwide. They publish emerging, bestselling and critically acclaimed authors in digital, print and audio formats. For more information, visit apub.com.
About Penguin Random House LLC Penguin Random House, the world’s largest trade book publisher, is dedicated to its mission of nourishing a universal passion for reading by connecting authors and their writing with readers everywhere. With over 15,000 new titles and more than 600 million print, audio and ebooks sold annually, Penguin Random House’s publishing lists include more than 80 Nobel Prize laureates and hundreds of the world’s most widely read authors.
The “ABC test” is a legal test used by many states in employment-related laws, such as for workers’ compensation or unemployment compensation, to determine whether a worker is an employee or independent contractor. It is a three-factor test, hence the name “ABC.” The ABC test gained notoriety last year when California incorporated it into a worker classification law referred to as “AB5” to make it easier to enforce the law against gig employers, like Uber and Lyft, who refused to treat their core full-time workers as employees and pay state employee taxes for them or provide them any benefits.
The ABC test is a simplified, bright-line test, as compared to the traditional common-law, multi-factor balancing tests used in California, New York, and other states, as well as by the IRS. It has also been adopted by the PRO Act as a way to bring freelancers into the National Labor Relations Act and give them collective bargaining. Some gig employers have abused the lack of bright-line clarity in the traditional test to insist that their core workers are independent contractors, and not employees, and thus not subject to state employee protection laws or taxes or eligible for benefits. California’s AB5 and other new state ABC tests under consideration are intended to curtail that abuse by providing a simpler rule with a somewhat expanded umbrella for employees. That said, because of the unique nature of professional writing services, the Authors Guild does not support using the ABC test for classifying freelance writers as employees broadly for employment taxes, benefit and other employment purposes and will continue to introduce amendments in states that are considering adopting the ABC test to exempt freelance writers from its application, and to instead classify them based on a flexible multi-factor framework (see below, AG Proposal for Professional Services Exemption from ABC Test). The Guild, however, supports use of the ABC test as laid out in the PRO Act to give freelance journalists and writers collective bargaining rights.
The three-part basic ABC test used in most laws states:
An individual performing any service shall be considered an employee and not an independent contractor, unless—
the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
the service is performed outside the usual course of the business of the employer; and
the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
What this means is that a worker providing services is deemed an employee (and not an independent contractor) unless they meet all three of the ABC prongs. Conversely, if they meet all three prongs, they are deemed an independent contractor, not an employee.
Most of a typical professional freelance writer’s work will easily meet the A and C prongs, but not the B prong if the work is performed for a publication, such as a newspaper or magazine, where the publication written for is within the employer’s “usual course of business.” For instance, under the ABC test, writing for The New York Times would be work performed within “the usual course of the business of the employer,” and so the writer would be deemed an employee for purposes of the applicable law. When writing for Amtrak’s’ magazine or the Authors Guild’s Bulletin, on the other hand, where the publication is not within the usual course of the hiring entity’s business, the writer would be considered an independent contractor under the ABC test because they would meet the B prong. (In all cases, we presume that professional freelance writers meet the A and C prongs.) The B prong is not a factor in many common-law balancing tests, but has been included in the ABC test precisely so that companies have to treat their core workers—like drivers for a driving app service—as employees.
The fact that freelance writers and journalists could be treated as employees under the ABC test caused a great deal of consternation in California and received so much bad publicity that there is now a nation-wide movement to oppose these laws. Many freelance writers and other freelance creators have stated that they prefer to remain independent contractors for several reasons:
Under the copyright law, employees do not get to keep their copyrights (unless a contract provides otherwise). Indeed, the Copyright Act does not even consider employees to be the “author” of any work they create as part of their employment. Nevertheless, in copyright matters, courts would continue to use the traditional, common-law agency test to determine who is an employee, not worker classification laws.
Employees cannot deduct business expenses under the current tax code (on the other hand, they do not have to pay self-employment taxes).
Some freelancers fear that if they are designated as employees under these laws, they will lose flexibility in working hours and workplaces, even though this does not have anything to do with their classification as “employee” or “independent contractor.” Policies about where and when employees work is governed solely by corporate policy, not law.
Publishers and other potential (or past) employers might be deterred from hiring freelancers if they fear liability for paying taxes and benefits. Some California-based freelancers, for instance, saw work evaporate under the original AB5 because the publications they had previously worked for did not want to risk having to classify these writers as employees, and instead hired freelancers from other states or used existing employees to do the work.
To add more complexity, most state laws, including California’s AB5 law, do not use the ABC test by itself. Most include one or two additional categories of workers who can still be treated as independent contractors even though they fail the ABC test, and those categories usually encompass most freelance writers. The main additional test that writers tend to fall under is one for “professional services.” It contains a separate list of requirements that the worker must meet for their work to fall within the “professional services” category and be treated as an independent contractor and not an employee.
In New York, the Authors Guild is working on a professional services exemption to include in an ABC-type law under consideration by the state legislature. The Guild’s proposal below is a simplified version of a more complex test in California’s AB5 law. The original version of AB5 had a limit of 35 submissions per year per employer for freelance writers to fall within the professional services exemption—meaning that if a freelancer wrote every 10 days or more for the same publication, they would not meet that exemption and would be treated as an employee. The 35-submisions limit was eliminated by the amendment bill AB5527, which was enacted in September 2020, but by then the damage had been done, some freelancers had lost work, and the AB5 law had a bad name.
AG Proposal for Professional Services Exemption from ABC Test
Presumption of employment (ABC test):
Any person performing any services for a hiring entity shall be classified as an employee of the hiring entity unless it can be shown that the person is a separate business entity under subdivision two of this section or all of the following criteria are met, in which case the person shall be an independent contractor:
the individual is free from control and direction in performing the job, both under his or her contract and in fact;
the service must be performed outside the usual course of business for which the service is performed; and
the individual is customarily engaged in an independently established trade, occupation, profession, or business that is similar to the service at issue.
2. Professional Services Exemption:
The presumption of employment set forth in subdivision (1) of this section shall not apply to workers under contract for professional services as defined [herein], if the individual:
maintains a business location, which may include the individual’s residence, that is separate from the hiring entity;
is skilled in the type of work being performed;
has the ability to set or negotiate his or her own rates for the services performed;
outside of project completion dates and reasonable business hours, has the ability to set his or her own hours;
is customarily engaged in the same type of work performed under contract with one or more other hiring entities or holds himself or herself out to other potential hiring entities as available to perform the same type of work;
customarily and regularly exercises discretion and independent judgment in the performance of the services; and
generally supplies his or her own instrumentalities and tools in performing the services and has control over the details of his or her work.
3. “Professional services” means professional services or work provided under contract and on a freelance basis for present or future compensation by any of the following individuals:
writers, including authors, playwrights, screenwriters, journalists, copywriters, or digital media writers or creators; or
visual artists and designers, including without limitation fine artists, graphic designers, photographers, photojournalists, animators, illustrators, industrial product designers, interior designers, fashion designers, or webpage and digital designers.
“Controlled Digital Lending” or “CDL” is a recently invented legal theory that allows libraries to justify the scanning (or obtaining of scans) of print books and e-lending those digital copies to users without obtaining authorization from the copyright owners. A position statement on CDL, along with an accompanying white paper, was issued this past October by legal scholars, the culmination of several academic meetings on the subject. The statement and paper argue that it is fair use for libraries to scan or obtain scans of physical books that they own and loan those books through e-lending technologies, provided they apply certain restrictions akin to physical library loans, such as lending only one copy (either the digital copy or the physical copy) at a time and only for a defined loan period.
CDL Would Decimate Author Earnings from Ebook Licensing
CDL’s threat to author incomes and the ebook market comes from two directions: 1) unauthorized scanning and e-lending of books that were previously published only in physical formats would usurp the market for creating new ebook versions; and 2) instead of purchasing library ebook licenses (which are more expensive than consumer editions for good reason), libraries would simply digitize the print book from their collection, depriving authors and publishers of important licensing income. Needless to say, if Internet Archive’s plans to expand Open Library broadly to all libraries are realized, it would eventually decimate the market for library ebooks, put a massive dent in the ebook market in general, and usurp authors’ rights to bring their older works back into the market.
“Controlled Digital Lending” or “CDL” is a recently invented legal theory that allows libraries to justify the scanning (or obtaining of scans) of print books and e-lending those digital copies to users without obtaining authorization from the copyright owners. A position statement on CDL, along with an accompanying white paper, was issued this past October by legal scholars, the culmination of several academic meetings on the subject. The statement and paper argue that it is fair use for libraries to scan or obtain scans of physical books that they own and loan those books through e-lending technologies, provided they apply certain restrictions akin to physical library loans, such as lending only one copy (either the digital copy or the physical copy) at a time and only for a defined loan period.
A couple dozen organizations, including Internet Archive, as well as a number of academics and academic librarians, are listed as signing the position statement. Several major library systems, including the California State University libraries and the Boston and San Francisco public libraries, are signatories and apparently already rely on CDL to e-lend scanned copies of books.
Recently, Internet Archive’s Open Library has started rejecting notices sent by Guild members asking for unauthorized digital copies of their books to be taken down, citing that it “operates consistently with the ‘Controlled Digital Lending.’” There are two problems with the justification. First, although Internet Archive managed to convince the State of California that it is a “library,” as a website open to the whole world, it is not a library with a defined user base in any traditional sense. Second, copyright law does not support the practice of even true, traditional libraries offering unauthorized scans of books to its users on an e-lending basis, despite the patina of legality in the white paper.
CDL relies on an incorrect interpretation of copyright’s “fair use” doctrine to give legal cover to Open Library and potentially other CDL users’ outright piracy—scanning books without permission and lending those copies via the internet. By restricting access to one user at a time for each copy that the library owns, the proponents analogize scanning and creating digital copies to physically lending a legally purchased book. Although it sounds like an appealing argument, the CDL concept is based on a faulty legal argument that has already been rejected by the U.S. courts.
In Capitol Records v. ReDigi, the Second Circuit held that reselling a digital file without the copyright holder’s permission is not fair use because the resales competed with the legitimate copyright holder’s sales. It found that market harm was likely because the lower-priced resales were sold to the same customers who would have otherwise purchased new licenses. In this regard, the court emphasized a crucial distinction between resales of physical media and resales of digital content, noting that unlike physical copies, digital content does not deteriorate from use and thus directly substitutes new licensed digital copies.
The same rationale applies to the unauthorized resale or lending of ebooks. Allowing libraries to digitize and circulate copies made from physical books in their collection without authorization, when the same books are available or potentially available on the market directly competes with the market for legitimate ebook licenses, ultimately usurping a valuable piece of the market from authors and copyright holders.
CDL’s supporters tout their theory as a way to make more readily available older books from the 20th century that are in libraries’ stacks but not available in electronic formats. They argue that some of the books may be orphaned and the rights owners cannot be located, but that argument is specious, and can only be made with a straight face by someone who has no idea how to find authors or publishers. The Authors Registry is able to find approximately 90% of authors of out-of-print books in approximately 30 minutes. True orphans do exist but are a small minority. For others, the white paper drafters assume that, if they are “unavailable in the digital marketplace,” no one has any plans “for revitalization in modern formats,” as though authors lose interest in their older books, even at times when they might need income from those books the most. CDL’s proponents seem completely ignorant of the large and growing markets for ebooks of older works, whether they are self-published by the authors, by publishers like Open Road and Rosetta who specialize in such books, or by authors reselling reclaimed rights to traditional publishers.
CDL Would Decimate Author Earnings from Ebook Licensing
CDL’s threat to author incomes and the ebook market comes from two directions: 1) unauthorized scanning and e-lending of books that were previously published only in physical formats would usurp the market for creating new ebook versions; and 2) instead of purchasing library ebook licenses (which are more expensive than consumer editions for good reason), libraries would simply digitize the print book from their collection, depriving authors and publishers of important licensing income. Needless to say, if Internet Archive’s plans to expand Open Library broadly to all libraries are realized, it would eventually decimate the market for library ebooks, put a massive dent in the ebook market in general, and usurp authors’ rights to bring their older works back into the market.
We Need to Stop This Nonsense!
Positions like CDL serve to widen the misperception that authors and public libraries are on opposing sides of copyright law, which is simply not the case. Most librarians respect authors and copyright law, and they want authors to be able to keep writing. The vast majority of authors, for their part, support and love their libraries and want libraries to own and circulate their works. But authors need to be compensated for their work like everyone else. Trade book authors don’t get salaries or other fixed compensation; copyright is their only currency. Open Library and other CDL proponents’ failure to understand the importance of respecting authors’ copyrights is backwards thinking hidden under a false veil of progressivism. We must stop this Controlled Digital Lending nonsense in its tracks.
The Authors Guild has proposed licensing solutions that would make those works readily available, but the tech and library sectors have refused to work with us on any such proposals, even to engage in a pilot program. If Internet Archive and their followers truly want to provide internet access to those books, they can easily create solutions to do so while respecting authors’ rights—namely, they could license them. We have drawn the roadmap for mass licensing of books, starting with the Google Books settlement, then our proposal to the Copyright Office for a pilot for mass digitization extended collective licensing, and for a platform to allow authors to license their books directly to libraries. None of it would be hard to achieve if those who wanted to provide access had the will to do it legally.
Sign our letter to Internet Archive’s Open Library and other proponents of CDL to let them know that CDL infringes the rights of authors and demand that they respect the rights of authors. Access to books should not come at the expense of those who create them.
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