A new law that’s set to take effect Wednesday is facing a lawsuit from a couple of the very workers it’s trying to protect — ride-hailing and delivery drivers — as well as the companies for which they work, Uber and Postmates.
AB 5 codifies a state Supreme Court ruling, which last year adopted a simpler test for determining when a worker must be classified an employee and therefore entitled to a minimum wage and benefits. The test, which the UC Berkeley Labor Center estimates could apply to 64 percent of workers who are independent contractors in California, could upend the business models of Uber, Postmates and other companies that rely on contractors.
“App-based independent service providers and the companies that operate the platforms they use have a constitutional right to pursue the occupation of their choice — not to be forced to be employees when they are independent, or to be forced to be taxi or delivery companies when they are technology companies,” the lawsuit states.
The lawsuit, filed late Monday and seeking preliminary and permanent injunctions, is just one way Uber and Postmates are trying to fight AB 5. The two companies, along with Lyft, Instacart and DoorDash, have also put more than $100 million into a campaign to try to bring the issue before California voters in November 2020.
Postmates said it only wants to find a solution.
“This lawsuit is an effort to preserve on-demand work opportunities while urging lawmakers, organized labor, and Governor Newsom to return to the table,” said a spokeswoman for the San Francisco company, which delivers food, drinks and groceries, on Tuesday.
“We do not negotiate on basic labor protections for working people in California because unscrupulous employers file lawsuits that have no ground,” said Assemblywoman Lorena Gonzalez, D-San Diego, and author of AB 5, in an email to this news organization Tuesday.
An Uber spokesman said the company would have no comment beyond the lawsuit.
Co-plaintiff Lydia Olson drives for Uber in Sacramento and the Bay Area to supplement her income from her consulting firm, according to the lawsuit. The other plaintiff is Miguel Perez, a former FedEx driver who now makes deliveries for Postmates in the Los Angeles area. In the lawsuit, both expressed a desire to remain independent contractors because of the schedule flexibility it provides them.
Gonzalez said individual workers don’t get to “opt out” of labor laws that are designed to protect workers, employers and the state, adding that “doing so would hurt all workers and establish a race to the bottom.”
Some Bay Area ride-hailing drivers interviewed by this publication say they make as little as $9 an hour and sleep in their cars.
Experts expressed doubts the lawsuit would succeed, especially based on its arguments that AB 5 targets app-based employers and violates the equal-protection clauses of the state and federal Constitutions.
“The Constitution has been interpreted for decades (since the 1930s) to permit economic regulation of exactly this type without running afoul of the equal protection clause,” said Beth Ross, a Bay Area labor and employment attorney. “It’s inconceivable that any court would validate this argument.”
William Gould, professor emeritus at Stanford Law School and a former chairman of the National Labor Relations Board, agreed.
“The conduct of these plaintiffs was a central concern of the Legislature because of substandard wages and conditions and diminished payments to the public treasury,” Gould said. “There is nothing arbitrary or unreasonable about their inclusion.”
Workers in other industries, including truck drivers and freelance journalists, are being affected by AB 5. Both groups also have filed lawsuits.
J. Ross Parrelli, of Auburn, is an independent musician. Like other entertainers who don’t have an exemption under AB 5, she’s confused about what it means for her. “If I want to book a tour, I have to put music together. Do I have to employ a guitarist, producer and engineer?”
But Uber and other gig-economy players sparked the law.
“There is a very strong case to be made that Uber and Lyft drivers should have been classified as employees under the earlier test and that (the companies) have been operating in violation all along,” said Ken Jacobs, chair of the UC Berkeley Labor Center, on Tuesday. “The law finally caught up with them.”
Jacobs said the question is now enforcement. AB 5 has a provision allowing large cities to sue companies that fail to comply. And the office of California Attorney General Xavier Becerra, who was named as a defendant, said it would review the complaint.