A federal judge has ruled that Uber and Postmates failed to demonstrate that they were unconstitutionally targeted by AB 5, the new law that requires most California workers to be classified as employees rather than independent contractors.
The lawsuit, Lydia Olson et al v. State of California et al, alleged that AB 5 violated the equal protection clause because it targeted workers of app-based companies like Uber and Postmates, while exempting numerous other types of workers like hairdressers and real estate agents.
In her ruling, issued September 18, 2020, U.S. District Judge Dolly M. Gee rejected this claim, finding that lawmakers were attempting to address the rampant misclassification of employees and to ensure that workers received the "basic rights and protections they deserve under the law, the attendant problems, such as a lack paid sick leave, including a minimum wage, workers’ compensation if they are injured on the job, unemployment insurance, paid sick leave, and paid family leave."
Judge Gee ruled that Uber and Postmates did not prove that app-based companies were targeted because of animus, reasoning that AB5 maintains the traditional exemption of workers who have long been considered independent contractors under California law.
Earlier this month, the California Legislature revised AB 5 to exempt several more businesses from the classification test and to increase the state’s ability to enforce the law. Meanwhile, Uber, Lyft and other app-based companies have poured millions of dollars into Prop 22, a measure on the November ballot that would exempt their drivers from AB5 and classify them as independent contractors.
If you believe you have been misclassified as an independent contractor instead of an employee, contact Teukolsky Law today for a free consultation.
Earlier this week, the California Supreme Court issued a long-awaited decision in Dynamex Operations W., Inc. v. Superior Court. The plaintiffs were truck drivers who delivered goods for Dynamex. (The last time I ordered something from Ikea, Dynamex delivery drivers delivered it.) Dynamex classified the drivers as independent contractors, essentially claiming that the drivers ran their own delivery businesses. The drivers contended that they were actually employees. Why does this matter? Only employees get the benefit of labor laws, like minimum wage protections and entitlement to meal and rest breaks.
California courts have long disagreed over the proper test to apply to figure out whether someone is an employee or independent contractor. We now have a fairly bright-line test, called the "ABC Test." Under this test, a worker is only an independent contractor if the hiring entity proves ALL of the following: (A) the worker is free from the direction and control of the entity that hired him or her; (B) the worker performs work that is outside the usual course of the hiring entity's business; and (C) the worker has an "independently established" business and is performing work for the hiring entity out of that business. If the worker can show that any one of these factors is not met -- for example, the hiring entity is a delivery company and she is working as a delivery driver -- the test fails and the worker should be classified as an employee.
Which workers will NOT qualify as independent contractors under this test? Examples may include copywriters hired by a public relations firm to write press releases; IT workers who exclusively provide IT support to customers of a single tech firm; or a worker who performs maintenance for a maintenance company. For now, the ABC test applies only to cases involving California's wage orders (think reporting time pay). But, it's not hard to imagine that courts will extend the ABC test to other areas, like discrimination law or personal injury.
Every case is different. If you believe you have been misclassified as an independent contractor, you may want to consult with an attorney.
Lauren Teukolsky is the founder and owner of Teukolsky Law, A Professional Corporation.