Uber and Lyft Fight over AB 5 will be resolved in November

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The lawsuit filed by California Attorney General Xavier Becerra and three city attorneys aimed at punishing Uber and Lyft for misclassifying workers and getting benefits for drivers will not be the final word on AB 5. That will come in November when the voters of California decide on an initiative that declares Uber and Lyft drivers and other couriers as independent contractors. 

Given the usual pace of any lawsuit working its way through the judicial process these days, sure to be slowed by court closings and the coronavirus situation, its doubtful there will be a judicial decision before the people have issued their own ruling in the November election on the worker classification law, AB 5, as it applies to certain workers. 

The battle over AB 5 and it’s attempt to set the standards for worker classification, has resembled one big political chess game of move and counter move.  

While Uber and Lyft were the target of yesterday’s lawsuit, the companies filed a lawsuit themselves last December seeking a ruling that AB 5 is unconstitutional. There have been other lawsuits by disparate industries against the law, all arguing to one degree or another that workers want the freedom to be independent contractors. While the trucking industry met success in the courts, the initial effort by writers and photographers was unsuccessful. 

There are many exemptions incorporated in AB5 for a number of professions, part of the bill’s Achilles’ heel in my opinion, and even the author of AB 5, Assembly Member Lorena Gonzalez, has offered to exempt musicians. 

The battle over AB 5 and its effect on the gig economy has been amplified because of the coronavirus outbreak. Proponents of the measure argue that workers classified as employees would receive unemployment insurance and health benefits during the economic downturn. The lawsuit demands restitution for unpaid and back wages for drivers among other items. 

Opponents say declaring drivers as employees would disrupt the companies’ business model to an extent that drivers will find limited opportunity to work and the companies’ viability would suffer if labor costs increase dramatically. 

The battle over AB 5 has national implications. Bills have been introduced in Congress and in other states along the lines of AB 5. The United States Chamber of Commerce issued a statement after the California lawsuit was filed yesterday stating: “As America looks to get back to work, California’s officials serve up an injunction instead of incentives. The litigation filed by the Attorney General and City Attorneys is nothing short of an effort to drive successful businesses out of the state and deny opportunities to millions of workers.”

While courts, including the California Supreme Court, have ruled favorably on labor’s interests on the worker classification issue, the courts will not have the last word.

Uber and Lyft along with DoorDash, Instacart and Postmates delivery services have raised $110 million to take an AB 5 reform measure to the ballot that would hold drivers and delivery carriers as independent contractors while allowing them to receive some benefits.

While yesterday’s lawsuit backers say they will pursue the court action no matter what happens in November, historically that is not the way it works. The courts give great deference to the people’s lawmaking abilities through the initiative process. I suspect after the people vote is when we will hear from the victorious side in this ongoing chess match: “Checkmate!”

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