Main Menu

Gig Employer Blog

Posts tagged ABC Test.

Earlier this week, the California Assembly overwhelmingly passed AB5 – a measure that would codify the ABC test introduced to the state in last year’s Dynamex decision, and make life even more challenging for the average gig economy business. The best hope now is that the legislature will take business considerations into account during necessary compromise negotiations with the state Senate, and the bill will be modified from its present form to address some key issues…and perhaps exempt typical gig economy companies.

It’s been a roller coaster two weeks for gig economy companies. On April 29, the U.S. Department of Labor handed gig economy companies a nice outcome by issuing an opinion letter confirming that typical gig workers are, indeed, independent contractors. Just days later, the 9th Circuit spoiled the party by saying that the California ABC test should be applied retroactively, opening the door for massive potential exposure against companies with a California presence. And on May 9, gig companies felt the second hit from a one-two punch when California’s Division of Labor Standards Enforcement issued an opinion letter extending the reach of the ABC test. Today, however, gig companies are feeling the good kind of whiplash after the National Labor Relations Board’s General Counsel released an advice memo concluding that a group of Uber drivers are properly classified as independent contractors and shouldn’t be permitted to proceed with their labor claims. The advice memo means it is much less likely that a traditional gig economy company, structured in a typical fashion when it comes to workforce operations, will face a valid unionization effort or could be found liable for an unfair labor practice charge.

There’s no way to sugarcoat this one. Today the 9th Circuit handed a big loss to gig economy companies by concluding that last year’s Dynamex decision from the California Supreme Court and its wide-reaching ABC test should be applied retroactively. That means that the ABC test – which makes it very difficult for gig economy businesses to properly classify their workers as independent contractors rather than employees – will be applied to federal cases when evaluating relationships that businesses thought were to be adjudged under a much more flexible standard.

In a major positive development for gig economy businesses, the U.S. Department of Labor today issued an opinion letter today confirming that certain workers providing workers for a virtual marketplace company are, indeed, independent contractors.

Last week, we shared with you the news of Uber’s proposed $20 million settlement to resolve a long-running misclassification claim – the parties agreed to the deal, and they just needed the approval of a federal court judge (read the entire post here). Of course, nothing is finalized until it’s signed, and the parties to this particular claim know that all too well; after all, they thought they had a $100 million settlement in place in April 2016 before the same judge nixed the proposed deal as not being “fair, adequate, and reasonable” to the class of drivers. This week, that judge signaled there could be another fly in the ointment, and its name is Dynamex.

Regular readers of this blog know about the Grubhub gig economy misclassification litigation. The quick version: Grubhub squared off with a former driver, Raef Lawson, in the nation’s first-ever gig economy misclassification trial in late 2017, leading to a victory for Grubhub in February 2018. Things took a turn for the worse in April 2018 when the California Supreme Court dropped a bombshell and changed the misclassification standard with its infamous Dynamex decision, which ushered in the notorious ABC test, and Lawson’s attorneys quickly pounced and argued that he should now be declared the victor given the new standard. Lawson filed an appeal with the 9th Circuit Court of Appeals and filed his opening brief in November 2018, and Grubhub filed its Response in January.

The next shot has been fired in the long-running misclassification dispute between plaintiff Raef Lawson and gig economy giant Grubhub, as the company filed its Answering Brief with the 9th Circuit Court of Appeals late last night. As regular readers of this blog know, Lawson and Grubhub squared off in the nation’s first-ever gig economy misclassification trial in late 2017, leading to a victory for Grubhub in February 2018. Things took a turn for the worse in April 2018 when the California Supreme Court dropped a bombshell and changed the misclassification standard with its infamous Dynamex decision, which ushered in the notorious ABC test, and Lawson’s attorneys quickly pounced and argued that he should now be declared the victor given the new standard. Lawson filed an appeal with the 9th Circuit Court of Appeals and filed his opening brief in November 2018. Now, it’s Grubhub’s turn.

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: DynamexDynamex 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:

The first-ever trial on the gig economy misclassification to reach a judicial merits determination has now turned into the first-ever appeal on gig economy misclassification. And late Friday evening, the plaintiff seeking to overturn the ruling filed his opening appeals brief with the 9th Circuit Court of Appeals. We’ve covered the Lawson v. Grubhub decision in detail over the past year; if you want to refresh your memory, feel free to catch up by reading any of our posts. In sum, a federal trial court ruled in February 2018 that Grubhub correctly classified plaintiff Raef Lawson as an independent contractor and rejected his misclassification claim, but then the California Supreme Court changed the game a few months later by adopting the strict ABC test for misclassification in the now infamous Dynamex case. How will the Dynamex decision impact the Gurbhub appeal? We’re not sure, but we know how the plaintiff feels about it. We digested the 61-page appeals brief and can give you the three most important takeaways from the filing.

Recent Posts

Category List

Archives

Back to Page