Uber loses bid to repeal California’s AB 5 gig worker law

In summary

A 2020 California law requires companies to offer benefits to more workers rather than treating them as independent contractors. Uber lost an attempt to overturn the law.

Uber today lost its long-running bid to overturn a California law that would require it to grant employment rights to its drivers and delivery workers.

The ruling by the 9th U.S. Court of Appeals could have major implications — depending on the state Supreme Court’s decision in a separate but related case.

Uber and Postmates, a food delivery platform that Uber now owns, alleged that Assembly Bill 5 violated their rights under the state’s Equal Protection Clause and the U.S. Constitution . AB 5 requires transportation and delivery companies to treat their workers as employees rather than independent contractors and codifies the so-called ABC test to determine which workers should receive benefits. Under the law, other gig companies face a different test, which Uber and Postmates have called unfair.

The companies sued and sought an injunction against the law that took effect in early 2020. Last year, a three-judge panel of the 9th Circuit sided with Uber and revived the case, which had previously been rejected by a federal judge.

But writing today before the 11-judge appeals court, Justice Jacqueline Nguyen said there are “plausible reasons” to treat Uber differently from other types of companies that use gig workers , like Wag, a platform that connects dog owners and dog walkers, because the legislator “perceived transport and delivery companies as the main culprits for the problem he sought to solve: misclassification workers “.

More than 1.4 million workers in California perform app-based driving and delivery jobs for major companies such as Uber, Lyft, DoorDash and Instacart, according to the latest industry estimates.

Lorena Gonzalez, executive director of the California Federation of Labor and former state lawmaker who initiated AB 5, said in a statement today: “This is a victory for all workers in the ‘state, but especially for workers chronically misclassified in ride-sharing and delivery jobs. Now we must continue to look for ways to enforce this law.

The ruling means that “the legislature can continue to pass laws that impact businesses differently if the decision to do so is rational, without fear that such laws will violate the company’s constitutional rights,” Veena said. Dubal, a law professor at UC Irvine. research centers on work and inequalities. “This is particularly important because many sectors are now concentrated by two or three large companies.”

The decision is also significant because the California Supreme Court in May heard oral arguments in a case challenging the constitutionality of Proposition 22, the initiative that the concert industry put on the ballot in 2020 and which a majority of voters Californians approved. Proposition 22 exempted Uber and other companies such as Lyft, DoorDash and Instacart from AB 5, allowing them to continue treating their workers as independent contractors while providing them with new benefits they did not previously have , such as a guaranteed minimum wage.

Uber is counting on the state’s highest court to uphold Proposition 22, on which it has spent more than $57 million of the roughly $200 million the concert industry has invested in the campaign. He says AB 5 threatens the “flexible work opportunities” many Californians desire.

Theane Evangelis, an attorney for Uber, reiterated in an emailed statement today the company’s position that “with AB 5, the legislature unfairly targeted my customers out of animosity rather than reason.” Uber had argued that AB 5 provided numerous exemptions for companies that pay workers in different industries. They include live performers, music professionals, real estate appraisers and more.

But William Gould, professor emeritus at Stanford Law School and former chairman of the National Labor Relations Board, called the view “eminently sensible.” Gould said the court “correctly believes that Uber and others can be covered when the legislature finds them disproportionately responsible for inequality in the gig economy.”

If Proposition 22 stands, it would be a huge victory for Uber and other big gig companies, but today’s ruling means they would still be held liable in any case where it turns out that they violated laws regarding worker classification before the proposal. .22 came into force. In the appeals court’s ruling, Nguyen referenced the State’s “ongoing enforcement actions seeking retrospective relief, including civil penalties,” against Uber and Postmates.

If Proposition 22 is rejected, the appeals court’s decision means that “these companies do not have this case to rely on to exempt themselves from the obligation to provide basic employment protections ” said Dubal.

The state Supreme Court files its written opinion within 90 days of oral argument, so its decision could be issued by the end of August.