California Protections for Gig-Economy Workers Kept in Place

LOS ANGELES (CN) – A federal judge on Friday tentatively denied Uber and Postmates’ request to block enforcement of a California labor law that requires certain gig economy companies to classify workers as employees.

Assembly Bill 5 makes gig economy workers such as ride-hail and delivery drivers eligible for minimum wage and overtime protections by reclassifying them as employees rather than independent contractors.

FILE – In this Tuesday, Jan. 12, 2016, file photo, a driver displaying Lyft and Uber stickers on his front windshield drops off a customer in downtown Los Angeles. (AP Photo/Richard Vogel, File)

The law, approved this past September, codifies the labor standard established by the California Supreme Court’s 2019 ruling in Dynamex v. Superior Court, which made it more difficult for companies to classify workers as independent contractors.

Uber, Postmates and two independent contractors filed a federal lawsuit claiming the law would increase business costs, deny workers flexibility and independence in their work schedule and jeopardize jobs.

The companies say in the complaint their ride-hail apps have benefited the state’s economy by reducing barriers to employment, increasing convenient access to transportation and improving access to merchants for disabled people.

At a hearing Friday in Los Angeles, Uber and Postmates’ attorney Theane Evangelis of Gibson Dunn called the AB 5 unconstitutional because it treats ride-hail drivers differently from other independent contractors who perform seemingly similar jobs.

“[AB 5] is a patchwork scheme that is irrational,” Evangelis said in reference to the law’s exemption of real estate agents, doctors, lawyers, insurance agents and hairstylists. “There is no justification for treating [ride-hail drivers] differently.”

U.S. District Judge Dolly M. Gee told Evangelis the plaintiffs’ motion for a preliminary injunction does not sufficiently point out why the companies should qualify for an exemption, much less why the court should temporarily block enforcement of AB 5.

“Here, you have a very steep hill to climb. It is your burden to show these exemptions are irrational or capricious,” said Gee. “I can’t second-guess the Legislature unless you can show an example of irrationality.”

Gee said that even if an injunction is granted, ride-hail drivers could still seek relief through labor standards under the Dynamex ruling.

“If [ride-hail] companies wish to convert [drivers] to employees and gave them flexible schedules they’d be doing the same thing,” Gee said.

Evangelis said such action by ride-hail companies would unfairly restrict drivers from being able to switch between apps, such as using Uber for one ride and then switching to Lyft or Postmates in the next.

The attorney also said sponsors of the law, in particular the bill’s author California Assemblywoman Lorena Gonzalez, made unfair political deals with various industries – such as with newspaper delivery people, who are exempted from AB 5 – in order to gain support for the bill.

“There are serious questions as to the legitimacy of the statute,” Evangelis told Gee. “It is a confusing and convoluted statute that was the result of many favors.”

In a tentative ruling that was not made available to the public until Feb. 10, Gee denied the companies’ request for a preliminary injunction.

Spokespersons for Uber and Postmates did not immediately respond to requests for comment.

California Department of Justice attorney Jose Zelidon-Zepeda told Gee that in crafting the bill, the Legislature sought to define independent contractor status and exempted occupations that didn’t raise labor issues brought under Dynamex.

Members of Rideshare Drivers United stand outside Los Angeles federal courthouse on Feb. 7, 2020, holding signs supporting enforcement of a California labor law that requires some gig economy companies such as Uber and Postmates to classify independent contractors as employees. (Martin Macias, Jr. / CNS)

The companies’ motion for a preliminary injunction was taken under submission. Gee did not indicate when she would issue a written ruling.

A state Justice Department spokesperson did not respond to a request for comment on the tentative decision.

Outside the courthouse, former and current ride-hail drivers with Rideshare Drivers United and Mobile Workers Alliance – nonparties to the lawsuit – applauded Gee’s tentative denial of the companies’ injunction request.

Terri Beilke, a ride-hail driver since 2015 who is with Rideshare Drivers United, said in an interview companies like Uber have systematically decreased drivers’ pay, leaving many unable to keep up with expenses.

“Our complaints fall on deaf ears,” Beilke said. “[Ride-hail companies] have done such irreparable damage to drivers. We have no choice but to stand up and fight for our rights.”

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