On Monday, the Ninth Circuit handed gig workers a win, invalidating a ruling that a Grubhub driver should be classified as an independent contractor. The Court ruled that the lower court must look at the case again because the California Supreme Court has now held that the Dynamex “ABC” test applies retroactively. Under the ABC test, a worker is presumed to be an employee unless the employer can prove that the worker: (A) was not subject to the employer’s control, (B) provided services outside of the employer’s usual course of business, and (C) did not have their own independent business.
The three-judge appellate panel remanded to the district court to apply the ABC test to plaintiff Raef Lawson’s minimum wage and overtime claims. The panel rejected Grubhub’s argument that Prop 22, which was passed last year and allows some app-based drivers to be classified as independent contractors, applies retroactively. “We conclude without difficulty that Proposition 22 does not apply retroactively,” the Court wrote. The panel also rejected Grubhub’s argument that Prop 22 somehow “abates” or nullifies wage claims that accrued before Prop 22 went into effect. This is the first time a court has ruled that Prop 22 is not retroactive, and that Prop 22 does not abate previously-existing wage claims.
On remand, the lower court must determine whether Lawson is an employee under the ABC test, and also whether Lawson is exempt from the ABC test under one of the exemptions provided for by AB5, the landmark legislation that codified the ABC test after Dynamex was decided. The AB5 exemptions are retroactive. We will be following this case closely to see if the lower court will find that Lawson is an employee or an independent contractor.
If you believe you have been misclassified as an independent contractor, contact Teukolsky Law today for a free consultation.
As Prop 22 goes into effect in California, workers and unions are already fighting back against the measure, which was largely propped up by tech giants’ $200 million “Yes on 22” campaign.
Several drivers and SEIU filed a petition in California Supreme Court on January 12, 2021 seeking to overturn the new ballot measure, which aims to permanently classify gig workers as independent contractors instead of employees. The drivers and union allege that Prop 22 violates California’s constitution and are asking the Court to invalidate the new law, arguing that Prop 22 makes it too difficult for state legislators to implement workers’ compensation. On February 3, the Court declined to hear the suit 5-2. However, the Court said the case could be refiled in a lower court. On February 11, the drivers and union filed a similar suit in Alameda County Superior Court.
Prop 22’s destructive effects are being felt by workers statewide. The Knock LA reported last month that Vons, Pavilions, and other stores owned by Albertsons Companies in California plan to fire grocery delivery drivers later this month and will shift to a third-party delivery service that uses independent contractors. Drivers working for Albertsons Companies are currently classified as employees; the company’s Bay Area drivers are unionized and will not be affected by the change, but delivery drivers in Southern California not protected by a union lack the power to fight back against this move by the grocery stores.
If you believe you have been misclassified as an independent contractor instead of an employee, contact Teukolsky Law today for a free consultation.
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.
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.