Ruling won’t bring quick changes for gig workers
Saori Okawa and Jim Pyatt both work for gig companies, but they have diametrically opposite views about whether they should be employees — and about Proposition 22, the ballot measure that a judge last week ruled violated California’s constitution in a case brought by labor unions.
California Prop. 22, into which gig companies poured a record-breaking $200 million-plus, keeps workers for Uber, Lyft, DoorDash, Postmates and Instacart as independent contractors, exempting them from being reclassified as employees under California’s AB5 law. Voters passed Prop. 22 in November, but now its future is in question — along with the eventual classification of gig workers in the state.
San Francisco resident Okawa, 40, a social work student who currently shops for Instacart and used to drive for Uber and Lyft, is glad that Prop. 22 may vanish. She wants the benefits and protections of employment. Among them:
health insurance, reimbursement for the expenses she racks up on her car, and compensation for the time she spends waiting for shops or rides, which currently is unpaid.
She puts in long hours and really wants to earn overtime, another employment mandate, to help with her living expenses and the money she sends to her parents in Japan.
“I know from my experience working for Uber and Lyft there were very strict rules about how we can and can’t accept passengers,” she said. “There was very tight control. I felt like we were employees.”
Pyatt, 64, a retiree who drives for Uber, supports Prop. 22 because he feels that ridehailing lets him be his own boss. He sees his riders as customers whom he cares for with food treats, umbrellas on rainy days and good conversation. He drives his plug-in hybrid or his all-electric Chevy Bolt from his Modesto home to San Francisco on Fridays to put in two days of ride-hailing, staying in a motel on Friday night. He works longer hours when he has a vacation coming up.
“I like the flexibility that I have,” he said. “If I had a boss, I wouldn’t want to do this.”
He said most gig workers he talks to feel likewise — and polls have borne that out, although none are recent.
Prop. 22 preserves the status quo of gig workers as contractors while giving them some benefits, such as a health care stipend and minimum-earnings guarantees. Gig companies say they and workers rely on the flexibility of the freelancer model. The companies also save hundreds of millions of dollars by sidestepping the expenses of having employees.
But last week’s ruling by Alameda County Superior Court Judge Frank Roesch does not mean that gig drivers and couriers could become employees anytime soon.
The gig companies plan to appeal the ruling once the final paperwork is filed, which could happen this week or next. The ordinary procedure would be for Judge Roesch’s order to be stayed while an appeal proceeds. That could take many months — and it’s highly likely that whichever side loses would then turn to the California Supreme Court.
Even if the state Supreme Court agrees that Prop. 22 is unconstitutional, that still wouldn’t turn drivers into employees — but it would give a lot of ammunition to those who’d like to make the change.
Drivers and couriers were not employees before Prop. 22 passed, even though AB5 was already in effect. Uber, Lyft and their cohorts contend that AB5 doesn’t apply to them.
“If the Supreme Court overturns Prop. 22, none of the prior laws automatically make any worker an employee or an independent contractor,” said Kurt Oneto, an attorney who represents the gig company coalition that backed Prop. 22. “They are all tests. You have to apply the test to each worker or class of workers.”
The California Attorney General’s Office and three city attorneys argue that the tests in those prior laws, including the landmark 2018 California Supreme Court decision known as Dynamax, mean that Uber and Lyft drivers should be employees. They sued the ride-hailing companies for misclassification in May 2020. San Francisco Superior Court Judge Ethan Schulman issued a preliminary injunction in August 2020 saying the drivers should be employees.
Both Uber and Lyft threatened to halt ride-hailing in California if that order were upheld and they had to turn drivers into employees.
Judge Schulman’s decision was stayed pending an appeal, which was expedited. In late October, the First District Court of Appeals unanimously upheld Schulman’s preliminary injunction that drivers should be employees, with a
January 2021 target date.
But days later, California voters passed Prop. 22, which made reclassification moot. The California and city attorneys’ case continues, but it was limited to redress for harms up until Prop. 22 took effect.
Now, with the prospect of Prop. 22 eventually being tossed out, that case may have added ammunition for changing drivers’ statuses.
“At a minimum, we believe Uber and Lyft are responsible for reimbursing drivers for years of unpaid wages, benefits, and business expenses from before Prop. 22 took effect,” said John Cote, a spokesman for City Attorney Dennis Herrera. “With this latest decision, these companies may very well owe their drivers even more.
“Additionally, two different courts agreed with us and found that Uber and Lyft should classify their drivers as employees while our case is being decided. Prop. 22 changed that, and we’re looking into the implications of this latest decision.”
Oneto, the lawyer for the gig company coalition, said as much, but with a different spin.
“If Prop. 22 is invalidated, it will undermine the ability of drivers to remain independent and they could be forced into a rigid 19th or 20th century employment model that doesn’t work for app-based work,” he said, reiterating the arguments gig companies make about why having employees doesn’t mesh with their business models.
Private lawyers have also pursued misclassification cases against the gig companies. Boston attorney Shannon Liss-Riordan has cases pending against all the companies that backed Prop. 22.
For instance, her class-action suit against Uber includes drivers who worked up to Dec. 17, 2020, when Prop. 22 took effect. “If Prop. 22 is not valid, then our claims could be ongoing,” she said.
She sees it in even more sweeping terms for all litigation against the companies.
“If this order is upheld, then the gig economy will not have Prop. 22 to lean back on as a defense against their misclassification of their workers,” Liss-Riordan said. “They will then be subject to liability and penalties for their ongoing violations of California labor code and injunction issues against them will be reinstated, requiring them to provide drivers with the protection of employees.”
Meanwhile Okawa and Pyatt and many thousands of others continue working as contractors.