California Gig Worker Law Survives First Challenge in Uber, Postmates Lawsuit
Author: Robert S. Teachout, XpertHR Legal Editor
February 19, 2020
Uber and Postmates have lost the first skirmish in their court battle over AB5, California's law that reclassifies many independent contractors as employees. A federal judge has denied the companies' request for an injunction blocking enforcement of the law while their lawsuit works its way through the courts.
The two gig economy companies filed a lawsuit at the end of 2019 challenging the law, claiming that it violates provisions of the US and California constitutions. In particular, the lawsuit alleges that AB5 violates equal protection requirements because exemptions for classifying independent contractors are applied differently for ridesharing and on-demand delivery gig workers compared to workers who do "substantively identical work" in other industries.
AB5 came on the heels of and codified the California Supreme Court's Dynamex ruling, which established an employee-friendly "ABC test" under which a worker will be considered an employee. The law also extended application of the test beyond state wage orders to include state labor and unemployment insurance laws. The law became effective on January 1, 2020.
Under the new law, many Uber and Postmates' drivers and couriers would be classified as employees instead of independent contractors. As a result, the companies would be required to provide the workers with:
- Minimum wage;
- Workers' compensation;
- Unemployment insurance;
- Paid sick leave; and
- Paid family leave.
In the ruling, Judge Dolly Gee found that the companies had proven they could suffer a degree of irreparable harm as a result of the law, but held that the public benefit and interest in setting a living wage and regulating employment outweighed those potential risks.
The court did not rule on the merits of the case and the decision does not stop the companies from moving forward with their lawsuit.