The Battle Continues: Prop 22 Struck Down, AB 5 Appealed

Employment Law

The long-running battle over the classification of workers as independent contractors or employees in California continues, with a trial court judge striking down Proposition 22 and an appeal to the U.S. Supreme Court to consider Assembly Bill 5.

Enacted in November 2020, Prop 22 permitted app-based driving companies such as Uber and Lyft to classify their drivers as independent contractors and not employees.

The measure exempted ride-sharing companies from AB 5, a bill that codified the “ABC” test found in the California Superior Court’s 2018 Dynamex Operations West, Inc. v. Superior Court decision.

In that opinion, the court established a presumption that workers are employees unless the employer can affirmatively prove “(A) that the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; (B) that the worker performs work that is outside the usual course of the hiring entity’s business; and (C) that the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.”

After Prop 22 took effect, four app-based drivers and a union challenged its constitutionality under the California Constitution.

Superior Court Judge Frank Roesch agreed with the plaintiffs that the ballot measure was unconstitutional and therefore unenforceable.

Prop 22 unconstitutionally limited “the power of a future legislature to define app-based drivers as workers subject to ‘workers’ compensation’ law,” impermissibly restricted amendment by the legislature (because it required a supermajority for changes) and violated the single-subject rule.

In related news, the California Trucking Association (CTA) has filed a petition for writ of certiorari with the Supreme Court to review the decision of the U.S. Court of Appeals, Ninth Circuit, that federal law doesn’t preempt AB 5.

In May, the federal appellate panel ruled that because AB 5 is a generally applicable labor law that affects a motor carrier’s relationship with its workforce and does not bind, compel or otherwise freeze into place the prices, routes or services of motor carriers, it is not preempted by the Federal Aviation Administration Authorization Act (FAAAA).

In its petition, the CTA argued to the justices that a circuit split exists as to the application of the FAAAA and preemption of state employment laws, and that the FAAAA was enacted with the aim of creating a uniform system of service-determining laws, avoiding a patchwork of state laws.

The organization also told the court that AB 5 will have a detrimental effect on the industry, “destroy[ing] the uniformity necessary for the free flow of interstate commerce and the operation of nationwide business.”

To read the order in Castellanos v. California, click here.

To read the CTA’s petition, click here.

Why it matters: The long, winding road of worker classification continues to twist and turn in California. The Superior Court’s decision on Prop 22 will be appealed and the question of AB 5’s application to motor carriers may ultimately be answered by the U.S. Supreme Court, should it choose to grant the CTA’s cert position.



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