Court confronts ‘undeveloped’ independent contractor rules
The San Diego division of the state court of appeal just reversed a trial court preliminary injunction prohibiting app-based shopping and delivery service Instacart “from failing to comply with California employment law with regard to its Full-Service Shopper employees within the City of San Diego.” Presiding Justice Judith McConnell, writing for a unanimous panel, found the order too vague. The appellate court returned the case to the trial court for further proceedings. It seems the clarity Proposition 22 was supposed to bring to the classification of app-based drivers will not be as easy as ABC.
In 2019, the city of San Diego sued Instacart, seeking to require the app-based platform to reclassify its “Full-Service Shoppers” as employees. Instacart classifies Full-Service Shoppers, who both gather groceries and drive them to the app-based user, as independent contractors.
Under California law, a worker is presumed to be an employee, entitled to overtime, breaks and reimbursement of work-related expenses. An independent contractor gets none of that. A hiring entity generally must pass all three parts of an ABC test to classify a worker as an independent contractor. The worker must: (A) perform the work relatively free of the control and direction of the hiring entity; (B) perform work “outside the usual course of the hiring entity’s business”; and (C) be “customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.” The city contends Instacart doesn’t pass any part of the ABC test.
San Diego Superior Court Judge Timothy Taylor concluded the city ultimately was likely to win the case. Judge Taylor’s Feb. 18, 2020, preliminary injunction referred to Instacart’s FullService Shoppers, with the company’s current set of controls on the workers, as “employees.”
The court of appeal concluded it was not enough, however, for the trial court to leave it to the company’s lawyers to figure out what adjustments the company needed to make to continue to classify these workers as independent contractors, if that is even legally possible. Justice McConnell agreed with Instacart that the order improperly “requires Instacart to comply with a decidedly undeveloped area of law” without enough guidance, even under the law as it existed a year ago when Judge Taylor issued his order.
Justice McConnell said passage of Prop. 22, creating a unique four-part test under which app-based drivers may be classified as independent contractors — six months after Judge Taylor issued his order — further complicates the analysis. Prop. 22 allows Instacart and other “network companies” to classify an app-based driver as an independent contractor if, among other things, the company does not: (a) set specific dates, times, or minimum hours the driver must be logged into the network; and (b) condition a driver’s continued access to the platform on the driver accepting any particular request for service.
The city argued Instacart doesn’t satisfy all of Prop. 22’s conditions, but conceded the trial court, not the court of appeal, should initially decide that question. The court of appeal declined the city’s request to leave the preliminary injunction in place until that happens. “[T]he injunction requires Instacart to follow the law, but the law has now changed and the parties disagree as to the impact of that change, namely whether Prop. 22 precludes the application of the ABC test in this case. No court has addressed this issue. Accordingly, there is no way for Instacart to know whether it is, or is not, complying with the law or the injunction and the injunction must be reversed.” Justice McConnell noted “the distinct possibility the ABC framework no longer applies in this case.”
So the case goes back to Judge Taylor to provide further focus to this snapshot of law that, like Polaroid “instant” snapshots of old, is developing too slowly for observers anxious to see the final picture. Patience.