As readers of this blog know, three separate groups have filed lawsuits seeking to block or overturn California’s AB-5, the new law that raises the bar to make it very difficult for businesses to classify workers as independent contractors: truck drivers, freelancers, and gig economy companies. Although the truck drivers were successful in winning a temporary reprieve from the law, the freelancers’ group just received bad news that could also spell trouble for gig economy companies. A federal court denied their request for a temporary restraining order that would have blocked the law from taking effect against them, and given the similarities between their arguments and the arguments presented by gig economy businesses, we may have just received a sneak preview into how the court will rule on the case we care about the most.
A federal judge took a pause from his New Year’s Eve revelries to hand a big victory to California truckers, blocking the state’s new misclassification law from impacting them before the January 1 effective date arrived. While this maneuver doesn’t directly help gig economy companies in the state – who became subject to AB-5’s ABC test immediately upon the stroke of midnight – it could be a sign of good things to come.
The truck drivers were the first group to take aim at AB5 through a lawsuit, and the freelancers followed suit. Soon before the clock strikes midnight to ring in the new year, two giants of the gig economy fired their own shot. Uber and Postmates filed a federal lawsuit on December 30, hoping to overturn the controversial new law that will raise the bar to make it very difficult for the average gig economy company to classify their workers as independent contractors.
The clock is steadily ticking towards midnight on December 31, and once the illuminated cluster of grapes drops from the Temecula Civic Center clock tower (this is actually a thing) and rings in the new year in California, employers across the state – and across the country – will have to contend with California’s new independent contractor misclassification law which threatens to wreak havoc on the gig economy. Barring a legal miracle in the coming days, AB5 will officially become law, and the ABC test will be the law of the land. As businesses and contractors begin to grapple with this impending new reality, another group has filed suit in court hoping to upend the law before it takes effect.
We’re now just a few weeks away from the nation’s most stringent independent contractor misclassification law taking effect in California. But if a group of truck drivers have their way, the law will stall out before it ever gets on the road. The California Trucking Association filed an amended lawsuit in federal court on November 12 asking the court to block the new statute from taking effect, claiming that it violates federal law and would harm over 70,000 independent truckers who have chosen to be independent workers. It appears to be the first legal challenge to California’s AB 5, and all eyes will be on this litigation over the next month.
California Governor Gavin Newsom wasted little time by signing AB 5 into law earlier today, and his signing statement should cause quite a few eyebrows to be raised. It was no surprise that he signed the bill into effect; he said he would do as much in an op-ed posted several weeks ago in the Sacramento Bee. For those unaware, the new law will dramatically raise the bar for classifying a worker as an independent contractor in California by adopting the ABC test to just about all business arrangements (read our full summary here). But what was surprising was the contemporaneous statement he made while signing the bill into effect, signaling that the unionization of the gig workforce was the next step he’d like the state to pursue.
Negotiations continued right up until the end, but when the dust settled on California’s newest employment law, gig economy companies were not spared from the worst. Yesterday, state lawmakers passed AB 5, the state law that will not only codify the same ABC test introduced to the state in last year’s Dynamex decision but will take it a few steps further.
It’s been a busy week on the Dynamex front, and the news for businesses continues to get worse. As we recently discussed, the 9th Circuit held just last week that Dynamex and the ABC test should be applied retroactively. The very next day, California’s Division of Labor Standards Enforcement (DLSE) released an opinion letter concluding that the ABC test applies to both IWC Wage Order Claims and certain Labor Code provisions that enforce Wage Order requirements.
December 3 was the first day of the new legislative session in California, the first day that members could introduce bills for the 2019-2020 legislative session. If the first day is any indication, there is one issue that will dominate employment policy discussion in 2019: Dynamex, Dynamex and Dynamex.
One of our firm’s most prolific writers and most astute analysts of all things related to workplace law in California, Ben Ebbink (Sacramento) wrote a recent post-election entry for the firm’s California Employers Blog entitled “What Will A Governor Newsom Mean For California Employers?” The entire post is worthy of your review, but two portions of his blog entry particular focus on the gig economy. Here are those two excerpts: