Photo Credit: Zolnierek on Pixabay.com
By: John Paul Abda, Feature Editor
Labor litigation and legislation is nothing new in the United States. As far back as 1842, the Supreme Court has been weighing in on employment conditions. In Commonwealth v. Hunt, [1] the Supreme Court held that labor unions were not illegal entities, paving the way for modern laborer’s rights to unionize. [2] Over a hundred years later, Congress passed the Civil Rights Act of 1964, [3] which protected workers from discrimination based on various protected classifications. [4] Continuing into modern America, Congress passed the Americans with Disabilities Act in 1990, [5] which prohibited discrimination based on disabilities. [6] The march towards fair labor practices continues today. In January 2020, the AB5 Labor Law, [7] or the “Gig Worker Law,” went into effect in California and has had serious legal implications for employees and employers alike. [8]
In an effort to protect those who have traditionally been considered independent contractors, the California law requires businesses to reclassify those workers as employees. [9] Such a classification requires businesses to afford those workers the same employment rights as those enjoyed by full-time employees, including health benefits, insurance, and in some cases, higher wages. [10] Ridesharing companies like Uber and Lyft have been stark opponents of the law, as they employ thousands of workers as independent contractors. In an attempt to get a preliminary injunction, the ridesharing companies argued that the law is a violation of the Equal Protection clause of the Constitution. [11] Although the court agreed that there is evidence that the law targets the ridesharing tech giants, it concluded that the law addresses a legitimate issue, namely preventing the harmful misclassification of workers. [12] Thus, the court denied the preliminary injunction, concluding that California AB5 does not violate the Constitution. [13]
The law requires a worker to be classified as an employee, as opposed to an independent contractor, unless each of the following three following conditions is satisfied:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. [14]
The strict requirements of the law resulted in consequences for various workers, including photographers, journalists, truck drivers, and musicians, all of whom commonly conduct business under the classifications of freelancers or independent contractors. Recently, a federal judge blocked the law from applying to truck drivers, holding that federal law controls their employment status and thus, preempts the state law from applying to them. [15] Soon, another federal judge is scheduled to determine the fate of the law’s application to photographers and journalists. [16] State legislators have stated that they are considering changes to the law regarding how it applies to freelancers such as journalists, photographers, and musicians. [17] Although that may be a difficult task, as it will add weight to the tech giant’s Equal Protection argument.
Many California workers have spoken out against California AB5, stating that they have lost significant amounts of work as a result of the strict requirements. For example, during a protest in early February 2020, an independent music composer stated that the new law is “so broad stroke in how it defines employment and independent contractor work that it basically outlaws independent contractors in the state of California.” [18] Another California musician who earns his living by booking gigs at local venues stated that the new law requires him to incorporate and put accompanying musicians on payroll. [19] He added that he is considering leaving the state due to the financial burden of the new requirements. [20]
Alternatively, many of those who are currently employed by rideshare companies, such as Uber and Lyft, welcome the new law. One driver stated that the new law will help a lot of drivers who are currently struggling financially due to their independent contractor status with rideshare companies. [21] Another driver supported the new law, stating that drivers for the rideshare companies should be able to enjoy basic employment benefits similar to those who are otherwise employed by nationwide companies. [22]
With compelling arguments on both sides of the aisle, this highly contested issue will continue moving through the courts as each side vehemently argues their position. Uber has already stated that it is considering appealing the ruling in which its request for a preliminary injunction was denied. [23] The ongoing litigation between California lawmakers and the ridesharing tech giants may very well end up in the Supreme Court depending on the results of several upcoming hearings. With the fate of millions of workers and employers hanging in the balance, this interesting issue of law and policy is one to follow going forward.
[1] Com. v. Hunt, 45 Mass. 111 (1842).
[2] Id. at 115.
[3] Civil Rights Act of 1964, Pub.L. 88-352, 78 Stat. 241 (1964).
[4] Id.
[5] Americans With Disabilities Act of 1990. Pub. L. 101-336. 26 July 1990. 104 Stat. 328.
[6] Id.
[7] AB-5 Worker status: employees and independent contractors, Assembly Bill No.5, Ch. 296. CA (2019).
[8] Id.
[9] https://losangeles.cbslocal.com/2020/02/17/dozens-attend-fight-against-ab5-rally-in-city-of-industry-protesting-gig-worker-law/.
[10] Id.
[11] https://www.newsobserver.com/news/business/article240172313.html.
[12] Id.
[13] Id.
[14] https://www.dir.ca.gov/dlse/faq_independentcontractor.htm.
[15] https://www.sacbee.com/news/politics-government/capitol-alert/article239822623.html.
[16] See supra note 10.
[17] https://www.nbcsandiego.com/news/local/san-diego-musicians-blame-new-labor-law-for-hurting-californias-music-industry/2262692/.
[18] See supra note 8.
[19] See supra note 16.
[20] Id.
[21] https://losangeles.cbslocal.com/2019/12/30/uber-postmates-file-suit-to-block-gig-worker-bill-days-before-it-takes-effect/.
[22] Id.
[23] See supra note 10.
