9th U.S. Circuit Court Of Appeals Rules Against Uber, Postmates

A revived legal challenge against California’s AB 5 employee classification law by Uber and Postmates was rejected by the 9th U.S. Circuit Court of Appeals in San Francisco in Monday, becoming the latest loss by companies in trying to reign in the law.

Originally passed and signed into law in 2019, the AB 5 law, which reclassified “gig workers” such as rideshare drivers and food deliverers as employees instead of independent contractors, has been continuously tied up in legal battles. Many of the lawsuits were over exemptions. Truck drivers have been a constant back and forth between AB 5 and the old ABC test. Freelance journalists faced much legal and legislative strife, as did musicians. However, both rideshare drivers and food delivery drivers have been at the forefront for well over  4 years challenging this law.

The largest battle has been Prop 22. The Proposition, which would exempt rideshare drivers from AB 5, was passed by Californian voters in 2020, but has spent years in California’s court system. This year, it is being fought in the California Supreme Court. But the numerous other court battles against AB 5 have also been pretty constant. Protests by affected employees still happen to this day, and pretty much every rideshare company and food delivery app have some sort of stake against AB 5. But none have been more prominent than Uber or Postmates, both of whom have had lawsuits going on against AB 5 since 2019, before the law was even in effect.

However, on Monday, their main legal challenge against AB 5 in the California Supreme Court, Olson v. California, failed to pass, with an 11-judge panel of the 9th U.S. Circuit Court of Appeals upholding a lower court ruling and keeping AB 5 in place.

Speaking for the judges, Circuit Judge Jacqueline Nguyen, an appointee by former President Barack Obama, wrote that “There are plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies. The California legislature perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address — worker misclassification.”

“The legislature may have perceived Uber as the pioneer of the on-demand app-based business model that many other services replicated. It is certainly reasonable for the legislature to try to target the problem of misclassification at its origin.”

As of Monday afternoon, Uber, Postmates, and the California state Government have yet to respond to the courts ruling. However, the author of AB 5, former Assemblywoman and current California Labor Federation head Lorena Gonzalez, wrote on X shortly after the ruling. In her post, she noted that “All my animus is rational. Don’t take it from me, take in from the 9th Circuit En Banc! I’ll be celebrating California workers right against misclassification all day long.”

Despite being passed by the Appeals Court on Monday, Uber, Postmates, and other driver app companies still have plenty of legal avenues to go down. Most notably, the California Supreme Court can still uphold Prop. 22 in court, rendering many cases moot as a result.

“Here we are, over 4 years later, and everyone is still fighting over AB 5,” Lydia Pastore, a Los Angeles lawyer who has many rideshare drivers as clients, told the Globe on Monday. “Everyone said it would take years, and even though COVID probably helped extend it, here we are.”

“The state hasn’t responded officially yet, but you can bet they’ll be excited over it. Uber and Postmates will likely say how they will continue to challenge it. And the thing is most drivers still don’t want AB 5, all these years later. I spoke to some of my clients before this interview, and they said that post AB 5 they feel a lot more stifled. They all want the old system back.”

“For now, there’s still a lot of legal matter out there over this. If someone ever writes a book of the legal history of AB 5, they are going to have a hard time looking at all the bills, court cases, exemptions, exemption rejections, appeals, reverses, propositions, and so much else.”

As of early Monday afternoon, California and Uber have yet to give statements on the ruling.