San Francisco ratcheted up the pressure on California gig economy companies by not only filing a misclassification lawsuit against DoorDash, but promising that more such litigation was to come against other companies. Upon filing the June 16 unfair business practices lawsuit – which appears to be the first instance where a California District Attorney has taken such an action – the San Francisco District Attorney said, “I assure you that this is just the first step among many steps that our office will take…” What do gig economy companies need to know about this latest troubling development?
A federal court judge in Massachusetts just rejected Lyft’s attempt to escape the reach of Prong B of the ABC Test, indicating it was “likely” that its rideshare drivers are employees and not independent contractors. The news wasn’t great for Lyft, but more importantly, the May 22 decision doesn’t portend well for gig economy companies trying to fit their traditional business model into the strict confines of the ABC Test. For those operating in states where misclassification conflicts are resolved using the test – we’re looking at you, California – this development isn’t the best news, and is definitely worth tracking.
Gig economy company Instacart lost the latest round of its misclassification battle in San Diego yesterday, as a California state court judge granted a preliminary injunction forcing it to reclassify its independent contractor workers as employees. But the judge took some of the sting out of the ruling by putting on hold any enforcement efforts by the city, allowing this “lively area of the law” to work itself out a bit more before dropping the hammer on the company. The February 24 ruling is the latest example of the ABC Test in action, demonstrating just how disastrous it could be to the traditional gig economy model and just how far it can be taken by aggressive government officials.
A gig economy business just prevailed in the first round of a misclassification legal battle worth keeping your eye on. A state court judge in California rejected San Diego’s effort to use the state’s unfair competition law to force Instacart to immediately reclassify its gig workforce as employees, denying a request for a temporary restraining order (TRO) on February 4 and handing a victory to gig economy businesses across the state. But the battle is far from over. The city attorney’s office will continue to pursue litigation against Instacart using the state unfair competition statute. If the government wins, we could see other officials use this dangerous weapon against gig economy companies throughout California.
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.