The federal court that had granted a temporary restraining order on New Year’s Eve blocking California’s misclassification law from taking effect against the trucking industry just extended that ruling by granting a preliminary injunction which will block AB-5 as to truckers for the foreseeable future. It’s a big win for the trucking industry in the state, and it keeps alive the hope that the ABC test will never be applied for those California businesses – and truck drivers – in the motor carrier field. But of course, we continue to wait for the other shoe to drop: will a court also block AB-5 when it comes to gig economy companies?
Yesterday saw a state court conclude that California’s controversial new misclassification law doesn’t apply to truck drivers, the second time in the last few weeks that a judge has come down hard on AB-5 for going too far in limiting the kinds of workers who can be classified as independent contractors. While any decision limiting the reach of AB-5 should be welcomed by the business community, we’re still on pins and needles waiting to see if a court will take a big step and block the law altogether, or at least even as it applies to typical gig economy workers.
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.
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.
A Massachusetts federal court just ruled that gig workers cannot escape arbitration provisions by claiming they are exempt transportation workers. The September 30 decision in Austin v. DoorDash marks the second win for gig businesses following a troubling Supreme Court ruling in January 2019 that opened the door to a possible arbitration exemption. However, there remain other federal courts that have ruled for workers on this issue, and the Massachusetts court even indicated there could have been worker victory had the fact pattern been slightly different, so companies are not out of the woods on this issue by a long shot.
You’ve been waiting quite a long time for a critical ruling from the 9th Circuit Court of Appeals on the very fabric of the gig economy model – and you’re going to have wait even longer. The appeals court just announced late last week that the Lawson v. Grubhub case has been put on hold while it waits to hear from the California Supreme Court on whether the new ABC test should be applied retroactively to the case, or whether the appeal would apply the older flexible misclassification test that had been in place at the time the trial took place.
A federal appeals court decided last week that ride-share drivers engaging in interstate commerce while performing work for Uber should not be subject to the company’s arbitration agreement because of a recent Supreme Court ruling broadly interpreting a federal law exemption that applies to independent contractors. This September 11 ruling threatens to upend a pivotal tool that many businesses use to better manage workplace litigation and requires all gig businesses operating near state borders to take notice.
With just a one-page, single-paragraph Order, the 9th Circuit Court of Appeals yesterday provided the faintest glimmer of hope for gig economy businesses everywhere – but especially for those in California. The federal appeals court withdrew its May 2 decision that had extended the Dynamex decision on a retroactive basis, meaning that the ABC test might not necessarily be as broadly applied as we recently thought. Instead, the 9th Circuit decided to send the issue to the California Supreme Court, asking the state’s high court to conclude once and for all whether the ABC test should be applied to alleged misclassification controversies that arose before the Dynamex decision was ever issued. (For a quick primer on the Dynamex case and the ABC test, read here.)