AB 5’s Legal Challenges Update
AB 5, one of the most widely publicized and controversial bills from last year, has been (mostly) officially in effect for slightly over a month. As expected, the new worker classification law is facing several legal challenges from various industry groups, one of which has resulted in an injunction. Below are updates on the legal challenges from writers, truck drivers and a couple “gig” companies.
On December 17, 2019, freelance writers and journalists filed suit in federal court challenging AB 5. The American Society of Journalists and Authors Inc. and the National Press Photographers Association argue that AB 5 violates the Equal Protection Clause and the First Amendment of the U.S. Constitution by singling out freelance journalists for “unique and significant burdens.”
AB 5 creates an exception to its ABC test for freelance writers who write 35 or fewer articles a year for the same publication, but 36 or more articles subjects the same writers to the ABC test and effectively makes them employees. The associations argue that this is arbitrary and unfair since several other similarly situated professionals (marketers, graphic designers, grant writers, etc.) who are excepted under AB 5 do not have the same type of numerical content restriction.
The associations are seeking an injunction prohibiting enforcement of the 35-submissions limit. The State has filed a motion to dismiss. A hearing is set for March 9.
Next, the California Trucking Association (CTA) filed suit in federal court on behalf of owner-operator truck drivers, arguing that the law is preempted by the Federal Aviation Administration Authorization Act (FAAAA). The FAAAA broadly preempts state laws “related to a price, route or service of any motor carrier…with respect to the transportation of property.” One of the FAAAA goals is to make interstate commerce easier by preventing a patchwork of different state laws affecting motor carriers and maintaining consistent regulations across the country.
The court agreed with the CTA that AB 5 effectively prevents motor carriers from using independent contractors because owner-operator truck drivers could never be considered independent contractors under AB 5’s stringent ABC test and that restriction would impact motor carriers’ prices, routes and services. Therefore, the court granted the CTA’s request for a preliminary injunction on January 16, 2020, preventing enforcement of AB 5 to motor carriers, pending final judgment in the case.
Finally, Uber and Postmates filed their suit on December 30, 2019, and are also seeking a preliminary injunction prohibiting AB 5 enforcement. They assert that AB 5 is an “irrational and unconstitutional statute” that specifically targets them and similar companies and interferes with people’s right to choose their occupation in violation of the Equal Protection and Due Process Clauses of the U.S. and California Constitutions. They also argue that the law violates the Contracts Clauses of both Constitutions because enforcement would impair existing contracts the companies have with their workers. The next hearing in the case is in early February.
In addition to these legal challenges, other changes to the law may be coming. CalChamber expects the Legislature to introduce numerous bills this year addressing various provisions of AB 5. Additionally, several rideshare and delivery companies have filed a ballot initiative, which may end up on the November 2020 ballot, that would make app-based drivers and couriers independent contractors. Stay tuned to HRWatchdog for updates on AB 5’s legal developments.
CalChamber’s free white paper, A Roadmap for AB 5: California’s New Law on Worker Classification, includes the many exceptions to the ABC test carved out for various occupations and professional services, as well as information on the ABC test versus the common law Borello test, the way AB 5 has expanded the ABC test, the new law’s effective dates, and some final thoughts for California employers.