One of the propositions on the ballot on November 3, Proposition 22, could have major implications for the future of AB 5 enforcement in California. If passed, the proposition would allow gig-economy companies like Uber, Lyft, and Instacart to classify their drivers as independent contractors instead of employees. These companies would be exempt from AB5, the new California law that requires most employers to classify their workers as employees. Courts have consistently ruled that Uber and Lyft have violated AB5 by refusing to reclassify their drivers as employees since AB5 went into effect on January 1, 2020. As recently as October 22, 2020, a California appeals court ruled that Uber and Lyft must reclassify their drivers as employees rather than independent contractors.
If Prop. 22 passes, Uber and Lyft would not need to comply with these court rulings. As independent contractors, their drivers would not receive many of the benefits and protections of the employment relationship, like minimum wage protections, paid sick leave, workers' compensation benefits if they are injured or unemployment benefits in they become unemployed.
Backers of Prop. 22, including Uber, Lyft, Instacart, Postmates (owned by Uber) and DoorDash, have poured more than $187.5 million into backing the bill, making it the most expensive proposition in California history and dwarfing the $15 million raised by the opposition, spearheaded by labor groups who have traditionally represented the interests of working people over corporate interests. Prop. 22 would not only apply to Lyft and Uber drivers, but would cover all drivers who work for a "delivery network company," potentially including FedEx, Amazon, Walmart, UPS, and any other companies that makes deliveries in California.
If passed, Prop. 22 would set a dangerous precedent in California. Companies who don't like laws that the Legislature passes, and who don't like court rulings requiring them to treat their workers fairly, could simply open their coffers -- filled with the profits they earn by not spending money on employee benefits -- and buy themselves a ballot proposition. Significantly, Prop. 22 contains a provision stating that it cannot be amended except by a 7/8 majority of the Legislature, effectively tying lawmakers' hands for the rest of eternity absent a new ballot proposition. California voters should reject this company-sponsored initiative and let the California Legislature do its job to govern in the interests of the people.
If you think you have been misclassified as an independent contractor, contact Teukolsky Law today for a free consultation.
COVID-19 has spawned a wave of employment lawsuits, including cases alleging wage-and-hour violations, employment discrimination, unsafe work environment, and whistleblower retaliation, among others. Corporate defense firm Fisher Phillips has been tracking all these lawsuits on a map; this helpful tool shows that California leads the nation in employment-related coronavirus litigation, with over 137 cases out of the total of nearly 700 as of September 17, 2020. In the last seven days, California alone has reported six new COVID-related cases in employment law.
One longstanding area of litigation that has been affected by the coronavirus is the misclassification of workers as independent contractors under California’s AB 5, a new law which creates a presumption that most workers are employees. Many gig-economy companies, including ride-share titans Uber and Lyft, classify their drivers as independent contractors rather than employees. The classification question has grown particularly relevant during the pandemic because many gig workers need paid sick leave and other disability protections available only to employees.
One case that highlights how COVID may affect existing AB5 cases is Rogers v. Lyft, Inc. (N.D. Cal., Case No. 4:20-cv-01938-VC). In this case, drivers allege that Lyft misclassified them as independent contractors under AB 5 and that Lyft failed to provide them appropriate paid sick time. In April 2020, U.S. District Judge Vince Chhabria denied the drivers’ emergency motion for a preliminary injunction that would have forced Lyft to immediately reclassify them as employees and grant them sick leave. The judge scolded the workers for using the pandemic to try to get a positive ruling on the classification question. The drivers appealed the denial of injunctive relief and the case is now in the Ninth Circuit.
Rogers v. Lyft poses a chicken-and-egg question: Did the pandemic create the need for workers to be recognized as employees and therefore receive paid sick leave and other protections only afforded to employees, or are workers using the pandemic to create reasons they should be recognized as employees and receive additional benefits? Although there may not be a clear answer to this question, there can be little doubt that the pandemic will help shape the early course of AB 5 enforcement in California.
If you believe that 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.