From shipping to staffing, the Chamber and its partners have the tools to save your business money and the solutions to help you run it more efficiently. Join the U.S. Chamber of Commerce today to start saving.
In a decision that strains credulity, an Alameda County, Calif., Superior Court judge on August 20 issued a ruling that declared unconstitutional and unenforceable that state’s Proposition 22, a ballot initiative that voters passed into law decisively in the November 2020 election. The law defines drivers for app-based transportation platforms such as Uber and Lyft and delivery platforms like DoorDash and Instacart as independent contractors rather than as employees. It passed by a vote of 59% to 41%, but the judge apparently didn’t like the result.
As this blog reported at the time, the Supreme Court of California n 2018 issued a decision in Dynamex Operations West, Inc., in which it tossed out its own test for determining independent contractor status and replaced it with a version of the so-called ABC test. In doing so, the court wrote the new test in such a way as to make it difficult to classify an individual as an independent contractor unless that person has essentially no connection to the business in question.
Following that decision, the California legislature got in on the act by passing the Dynamex standard into law the next year with a statute known as AB 5. The ramifications of AB 5 were felt almost immediately after it took effect, and it left businesses either to assume all of the attendant liability associated with an employer-employee relationship or to stop using the services of independent contractors who did not meet the ABC test. The law was so disruptive that it forced the legislature to pass a series of exemptions for various industries reliant on independent contractors, many of whom saw their lives upended and livelihoods destroyed.
Meanwhile, activist politicians filed a lawsuit against the main targets of AB 5, Uber and Lyft, both of which nearly ceased operations in California before a state appeals court provided them a temporary reprieve in August 2020. Having been unable to persuade the legislature to reconsider AB 5, the companies and the broader business community decided to present the issue to the public in the election using California’s ballot initiative mechanism. As noted previously, when given the opportunity to weigh in, voters approved Proposition 22 by a substantial margin.
Nevertheless, Judge Frank Roesch concluded in his decision that Proposition 22 violates the state constitution because it would prevent the legislature from granting workers’ compensation to the app-based drivers. Because the state constitution grants “plenary power” to the legislature to establish a workers’ compensation program, he reasoned, Proposition 22 impermissibly would remove app-based drivers from California’s program, which covers them because of AB 5.
Judge Roesch further concluded that Proposition 22 violated the state constitution’s single subject requirement for initiatives because it purportedly included a prohibition on legislation authorizing collective bargaining for app-based drivers. While the measure does include a prohibition on legislation that could be read in such a way, the major flaw in the judge’s reasoning is that the state can’t authorize collective bargaining because that issue is preempted by federal law. Thus, the judge’s objection in this regard seems to be gratuitous at best.
In any event, the decision will be appealed. Where it goes from there is unclear. Although given the decisive win for Prop 22, it really shouldn’t be.