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. 

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. 
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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.
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If you believe that you have been misclassified as an independent contractor instead of an employee, contact Teukolsky Law today for a free consultation.