Repairing the cracked windshield that is AB 5

When Assembly Bill 5 -- the so-called "gig worker law" -- was enacted at the end of 2019, it appeared that California lawmakers had finally cemented a worker-classification scheme that was clear and straightforward. Instead, what they seem to have done was fling a pebble at the employment windshield, creating a crack that has spider-webbed across the surface of employment laws across the country. Unless a strong sealant is applied soon, it could be just a matter of time before the entire windshield simply caves in.

In the past year, we have seen a voter initiative -- Proposition 22 -- to exempt rideshare and delivery drivers from AB 5, signaling a nationwide movement to make all such workers independent contractors. We have also seen courts strengthening the foundations of the law by declaring AB 5 retroactive, while denying retroactivity to Prop. 22, and even questioning the constitutionality of the ballot measure.

The courts have consistently denied petitions from both workers and companies to carve them out of AB 5's reach, and they have upheld the law's application to workers in a variety of industries.

AB 5 was, is and always will be enforceable

When AB 5 took effect, there was considerable confusion about how it would be applied. Would companies be required to go back to the beginning of time to see who worked when and what they were paid? Would they be bankrupted by unpaid wages and penalties?

Many companies -- notably, the Prop. 22 cartel -- boldly drew a line in the sand and dared the world to cross it. They staunchly refused to pay any past-due amounts and invested those funds into the battle for the ballot initiative. When Prop. 22 passed, these same companies practically thumbed their noses at the California Legislature, declaring their new law wiped the slate clean.

Those companies have had a rude awakening. In Vazquez v. JanPro Franchising International, Inc., 478 P.3d 1207 (2021), the California Supreme Court ruled that the "ABC test" established by Dynamex Operations West v. Superior Court, 4 Cal. 5th 903 (2018), applied retroactively to claims rooted in wage orders. On Sept. 20, a unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals in Lawson v. Grubhub, 2021 DJDAR 9791, ruled that not only was Prop. 22 not retroactive, but that AB 5 and Dynamex were not in any way abated or otherwise rendered ineffective by its passage.

The time has clearly come for gig companies to dust off their ledgers and pull out their checkbooks.

AB 5 applies to a lot of industries

While courts have been grappling with existential questions about AB 5's life or death, they have also rendered opinions solidifying the law's application to a range of workers. On Oct. 6, the 9th Circuit dismissed a free speech challenge against AB 5's application to writers and photographers. In American Society of Journalists and Authors v. Bonta, 2021 DJDAR 10538, a unanimous three-judge panel rejected arguments by freelancers that the law violated their First Amendment rights. AB 5, the court said, regulates economic activity, not speech. Any indirect impacts on speech resulting from the loss of work and economic opportunity did not rise to the level of violating the Constitution.

A few months before deciding the journalists' case, the same court ruled against trucking companies who protested AB 5's mandate they classify drivers as employees. In a split decision in California Trucking Association v. Bonta, 2021 DJDAR 3957, the court ruled that AB 5 is a generally applicable law that applies to all employers and does not single out motor carriers. The law, the court ruled, does not directly affect the prices, routes and services offered by trucking companies and therefore is not preempted by the Federal Aviation Administration Authorization Act, which applies to the trucking industry.

The sad reality is that a large sector of truck drivers have for years been paying an enormous price for their so-called "independence." Before AB 5 went into effect, owner-operators who worked for only one trucking company were required to pay their own expenses -- fuel, maintenance, insurance, etc. -- even while not receiving payment for hours spent waiting in traffic to get to the port.

The trucking industry is now pushing to get a higher court to throw out AB 5's minimum wage mandates, even though interstate truckers are not entitled to meal and rest breaks. With a split among the circuits on the issue of FAAAA preemption, the trucking companies are hoping that a conservative Supreme Court majority will rule in their favor, and hold that the federal law preempts state law.

AB 5 may be the last word

And then a court spotted what might be a simple can of sealant. On Aug. 20, California Superior Court Judge Frank Roesch enjoined Prop. 22, the second mighty pebble hurled at the windshield of a moving vehicle, ruling that the ballot measure was unconstitutional and unenforceable.

The proposition, said the judge, violated the state constitution by abrogating the Legislature's ability to make gig workers eligible for workers' compensation. It also addressed more than one subject and required a seven-eighths supermajority for amendment, both of which violated state law. Castellanos v. State of California, RG21088725 (Alameda Super. Ct., filed Feb. 11, 2021).

In essence, the judge was simply pointing out the obvious problems with California's initiative process. Instead of undergoing a rigorous review process with multiple committee votes and compromises -- a process that makes legislation both extremely time-consuming and extremely thoughtful -- laws can be put on the books on the basis of which side has the best advertising campaign. The rideshare companies have, of course, promised to appeal Judge Roesch's order, so it could be a long time before the glass fragments settle. As the case proceeds, we can expect to see more and more of these companies rushing to settle claims before the door slams shut on them.

In the meantime, it is worth looking at what has happened since AB 5 became law. The final version of AB 5 bears little resemblance to its initial draft. Through the aforementioned process of legislative give and take, the bill was carefully edited, clarified, and winnowed down into the version we all know and love. After its enactment, further exemptions were included for musicians, movie producers, and a host of other professions. Because of these changes, today there may be more workers exempt from employee classification than would be the case under the Borello standard. See S. G. Borello & Sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341 (1989).