Labor: Despite Prop. 22, gig work law still potent
With the passage of Proposition 22, Uber, Lyft and cohorts won exemption from AB5, California’s gigwork law that makes it harder for companies to claim that workers are independent contractors rather than employees.
AB5 already had a hefty list of of exemptions and more were added this summer with a related law.
That leaves some observers wondering: What professions are still affected under AB5? Did Prop. 22 essentially gut the law? It did not, many lawyers say. Occupations which AB5 could impact the most include janitors, retail workers, grounds maintenance workers and childcare workers, according to Ken Jacobs, chair of the UC Berkeley Center for Labor Research and Education. Construction workers, home health aides and medical technicians are also potentially affected, according to other lawyers.
“AB5 was always about so much more than Uber and Lyft and ( appbased) delivery drivers,” said Jacobs, who cowrote a research paper looking at who was covered by AB5. “They make up a small fraction of the millions
of Californians covered under the law.”
Prop. 22 specifically applies to “appbased” drivers and couriers who use their own vehicles to provide ondemand services. The five companies — Uber, Lyft, DoorDash, Instacart and Postmates — that together put up $ 205.7 million to pass it are its direct beneficiaries. In addition, some smaller gig companies with similar models, such as ride services for children, may also exempt drivers under Prop. 22.
“Even though Prop. 22 got a huge amount of attention, it didn’t impact a diverse set of markets, just ( the gig companies),” said John Baum, a managementside attorney at Hirschfeld Kraemer. AB5 remains “an impactful, significant statute on how business is conducted in the state of California.”
AB5 has particular effect on service sector jobs. “All sorts of lowwage industries have misclassification issues,” said George Warner, an attorney with the wage protection program at Legal Aid at Work. “Prop. 22 won’t affect those industries.”
In addition to janitors, retail workers and others, truck drivers represent another big category where misclassification lawsuits are in full swing. So far courts have agreed with the industry’s contention that it has a federal preemption from state laws because it engages in interstate commerce.
Besides the lowerwage professions, theater and dance companies — where actors and stagehands are subject to the control of a hiring entity — are likely to need to reclassify workers, many experts agree. Already devastated by the pandemic, performing arts organizations are struggling with how to pay for that when they reopen.
Assemblywoman Lorena Gonzalez, DSan Diego, wrote AB5 to codify and clarify Dynamex, a 2018 California Supreme Court decision that laid out a threepart test to determine employment status. It said workers are employees unless they work free from a hiring entity’s control; do work outside the hiring entity’s usual course of business; and have independent businesses doing that kind of work.
The test “will still apply to the vast majority of workers in California who are independent contractors in their main jobs,” Jacobs said.
Gonzalez said that the gig law ensures that misclassified workers don’t have to rely on lengthy court battles.
“AB5 will continue to serve as an important framework to protect the state’s most vulnerable, lowwage workforces — including janitorial, construction, home health care, and child care workers — from misclassification, while ensuring professionals operating their own independent, small businesses can do so without being impacted by the court’s Dynamex decision,” she said in an email.
Thousands of California freelance writers protested that AB5 had ripped away their ability to work, with companies leery to hire them even though they said they had control over their work and preferred to stay independent. A subsequent bill this year, AB2257, sought to clarify that workers who truly run their own businesses, such as those who have sole proprietorships, were not subject to AB5.
Behind the scenes, many companies have already quietly adjusted workers’ status. “When AB5 passed, it affected a lot of my clients who used contractors in all different capacities for projects here and there,” said Sandy Rappaport, an attorney with Hanson Bridgett, who represents management in labor cases. “Most brought them on as temporary employees as opposed to contractors.”
While lots of occupations are still potentially subject to reclassification under AB5, none of them has a “great white whale” — a massive company like Uber, Lyft or DoorDash that could be a clear target for highprofile legal actions. Instead, most of the industries consist of scores of small companies, meaning sweeping lawsuits are less likely.
Meanwhile, the major lawsuits already filed by California officials against Uber, Lyft, DoorDash and Instacart still have much the same ammunition, said Rey Fuentes, an attorney at the Partnership for Working Families.
“Prop. 22 is not retroactive, so it doesn’t eliminate the liability these companies have accrued since AB5 became law and since Dynamex was announced,” he said. “All these cases can move forward and see almost the exact same remedies as before; they just can’t get injunctions” to force reclassification. ( Indeed on Monday, Uber and Lyft filed papers seeking to overturn a preliminary injunction that would force them to reclassify drivers in January because of Prop. 22’ s passage.)
The cases can pursue wage claims for gig workers — covering minimum wage, overtime and rest/ meal breaks — back to when Dynamex was decided in April 2018, Fuentes said. Dynamex applied only to wage orders, but AB5 broadened it to other areas of employment. That means the cases can seek money for unemployment insurance payments, expense reimbursement, workers’ compensation, paid family leave and state disability insurance dating to Jan. 1, when AB5 took effect, he said.
“The gig companies won’t have a clean slate” until the statute of limitations, generally three or four years, wipes out their potential liability, he said.