With the adoption of Proposition 22 by 58% of California voters on November 3, a new employment designation was created in California law for “app-based drivers.”
Prop. 22 was placed on the ballot after Assembly Bill 5 was passed in 2019 by the Legislature and signed into law by Gov. Gavin Newsom, effectively killing the “gig economy” in California, leaving millions of independent contractors out of work. Assembly Bill 5 codified an “ABC” test to determine if workers are employees, entitled to labor protections and benefits. This not only made it more difficult for gig economy companies to justify treating drivers as independent contractors who are not entitled to basic rights and protections.
AB 5, as written by Assemblywoman Lorena Gonzalez (D-San Diego) and the AFL-CIO, also picked occupational winners and losers by exempting many different occupations from the requirements of the bill. It was revealed during Senate debate that the AFL-CIO actually wrote AB 5.
This led to Prop. 22, which successfully exempted Uber, Lyft, Doordash and Postmates from classifying drivers as employees after its passage in November.
However, the Service Employees International Union filed a lawsuit recently with the state Supreme Court arguing that Prop. 22 unconstitutionally limits the power of California’s Legislature to govern, removing its abilities to grant workers the right to organize and give access to the state workers’ compensation program, the Los Angeles Times reported.
The lawsuit claims Prop. 22 interferes with state lawmakers’ authority to establish and enforce a workers’ comp system, which would require a constitutional amendment.
However, what about the will of the people who voted to overturn the ABC test on rideshare and delivery companies?
Ironically, at a time when California needs all hands on deck during the coronavirus crisis, AB 5 has prevented desperately needed health care and medical professionals who are independent contractors, from working.
The nonpartisan Legislative Analysts’ Office estimated more than 1 million California workers have been impacted by AB 5.
As Assemblyman Kevin Kiley reported, “The Special Interest lawsuit to overturn Prop. 22’s landslide victory argues that voters cannot take away power from politicians. That tells you everything about our upside-down State Capitol.”
The Special Interest lawsuit to overturn Prop. 22's landslide victory argues that voters cannot take away power from politicians. That tells you everything about our upside-down State Capitol.
— Kevin Kiley (@KevinKileyCA) January 19, 2021
California’s initiative process gives California citizens a way to propose laws and constitutional amendments without the support of the Governor or the Legislature, the Attorney General’s website says. It also gives California voters a way to overturn bad laws, such as AB 5.
Several legislators introduced legislation to repair the bad bill in 2020, and/or carve out certain industries, such as freelance journalists.
Sen. John Moorlach (R-Costa Mesa) proposed a fix in Spring of 2020 – suspend AB 5 altogether, rather than continue with favored industries’ carve-outs. Musicians and music professionals received an exemption from the independent contractor limiting Assembly Bill 5 law, California Globe reported. “Musicians, who have been trying to get an exemption from the law since earlier this year, reached an agreement with Assemblywoman and AB 5 author Lorena Gonzalez (D-San Diego) and Assembly Majority Leader Ian Calderon (D-Whittier) to amend AB 5.”
Other industries also tried to negotiate carve-out deals behind the scenes, with some involved saying that part of the deal is an agreement to unionize. Several industries including rideshare companies, journalists and photographers, and the trucking industry, sued the state.
As the Orange County Register editorial board said, “If a law needs numerous exemptions to make sense, it probably doesn’t make sense.”
So Prop. 22 was placed in the ballot, and passed overwhelmingly. And the labor unions just can’t have that. The dangerous aspect is that if litigated, it very well may be overturned by California’s Supreme Court, which is responsible for the legally flawed Dynamex decision.
In 2018, the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles dealt a blow to independent contractors. The Court ruled that the Dynamex delivery drivers were employees, rejecting its own prior test for determining whether workers should be classified as either employees or independent contractors,” Forbes reported.
According to many legal analysts, what the Court did was legislate from the bench by adopting a new rule for the narrow purpose of interpreting California’s Industrial Welfare Commission’s wage orders.
For the California courts to accept this lawsuit, rather than tossing it out, would be one more death-blow to the state’s declining economy, as well as inflicting permanent harm on the dwindling California middle class.
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