California’s worker classification law violates the US Constitution and unfairly favors some parties over platforms like
The three-judge panel was skeptical of state arguments that the law was rational in classifying thousands of gig workers as independent contractors while others are deemed employees eligible for employer-paid protections such as workers’ compensation and unemployment benefits.
And the judges questioned Uber’s arguments that California was targeting the companies. “If we agreed with you that the legislature was going after specific companies, what do we do with that?” Judge Danielle Forrest asked. Judge Morrison C. England Jr., sitting by designation from the Eastern District of California, asked: “Is your position that this statute and the proposition was directed to Uber?”
“We have all the ingredients of an equal protection violation,” said Theane Evangelis, a Gibson Dunn & Crutcher LLP partner representing the companies and two workers. The law built in exemptions for referral agencies such as Wag! dog walking service, TaskRabbit, Handy, and others, while including delivery, transportation, and courier services like Uber when “there is no rational distinction between the two.”
“They came after us like a heat-seeking missile,” Evangelis told the court.
Uber and Postmates want the court to reverse a federal trial judge’s ruling refusing to enjoin California from implementing laws that codified a California Supreme Court decision known as Dynamex Operations West, Inc. v. Superior Court of L.A. Cty. ex rel. Lee. The 2018 ruling established a three-factor “ABC test” to determine whether an employer properly classified a worker as an independent contractor rather than an employee for purposes of state wage orders.
Judges repeatedly questioned the distinction in the law for the different gig workers. “What is the conceivable reason for drawing a line between an Uber driver and somebody who provides services?” Forrest said.
“What is it that the legislature could say, this is why these two things are different? Because we’re all struggling with that,” she said.
The rational basis, said Assistant California Attorney General Jose Zelidon-Zepeda, “is the fact that the Legislature could look at a particular industry and decide that these industries are different in terms of the various considerations.”
“The legislatures are allowed leeway in terms of addressing a problem one step at a time, and this also plays into the standard under rational basis, which is courts or anyone can look at what are conceivable reasons behind their justifications,” said Zelidon-Zepeda.
But, said Forrest, “there’s got to be a line somewhere, right? Because would you be here arguing that it’s perfectly appropriate for the California Legislature to say that Lyft gets an exemption but Uber doesn’t?”
The court took the arguments under advisement and will rule later.
California enacted legislation referred to as A.B. 5 in 2019 to codify Dynamex. Lawmakers amended that law the following year with legislation to add jobs including photographers, appraisers, and home inspectors to those positions excluded from the designation of presumed employees under the law.
Separately, a California appeals court is considering a trial judge’s ruling invalidating Proposition 22, a voter-approved initiative which carved out Uber and other gig workers from A.B. 5.
The case is Olson v. California, 9th Cir., No. 21-55757, oral arguments 7/13/22.
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