What's the difference between an independent Tupperware salesperson and a prolific freelance writer? OK, probably many things. But in California, we can add one more difference to the list: the former is legally allowed to exist, while the latter is not.
This and a host of other strange new distinctions come courtesy of California's AB 5, slated to take effect in the Golden State tomorrow. Now, Uber and Postmates are suing to stop it. The ride-sharing and food delivery companies, joined by two individual workers, argue that the statute unconstitutionally discriminates against them and impermissibly hampers their economic liberty.
California lawmakers passed AB 5 with the promise that this would lead companies like Uber and Postmates—along with any employer that relies heavily on independent contractors, freelancers, or consultants—to hire most workers as full-time employees and provide a range of benefits to their contingent workforces. (Well, that or go out of business, supposedly paving the way for their workers to find better jobs.) Companies and workers argued this would only lead to job cuts and, for those who remained, a loss of the flexibility and other things that drew them to freelance or gig work in the first place.
We've already seen evidence that the companies and workers were right. For instance, Vox Media recently canceled its contracts with hundreds of freelance writers in order to comply with the law, which says anyone who writes for a publication more than 35 times in one year must be considered a full-time employee (with all the benefits and burdens that entails). Freelancers, backed by the nonprofit Pacific Legal Foundation, filed a lawsuit last week to stop enforcement of the law.
"This civil rights lawsuit seeks to vindicate the constitutional rights to free speech, the press, and equal protection for the members of Plaintiffs American Society of Journalists and Authors and the National Press Photographers Association," the introduction to the freelancer lawsuit states.
The Uber and Postmates lawsuit also alleges that AB5 is unconstitutional—and their attorneys "have thrown the entire economic liberty kitchen sink at the law," The Volokh Conspiracy's Josh Blackman writes.
The complaint was filed in the U.S. District Court for the Central District of California on behalf of Uber, Postmates, and individual plaintiffs Lydia Olson and Miguel Perez. Olson "uses on-demand work to supplement her primary income while still ensuring that she can always care for her husband, who has multiple sclerosis, whenever he needs her," says the lawsuit. "Perez uses on-demand work more regularly to earn a more substantial income than he previously did as a trucker, while still making it to all of his son's little league games."
Olson, Perez, Postmates, and Uber "bring this lawsuit to protect their constitutional rights and defend their fundamental liberty to pursue their chosen work as independent service providers and technology companies in the on-demand economy," the complaint states.
It goes on to accuse AB 5 of drawing "irrational distinctions" between the types of workers and companies to whom the law applies and those to whom it does not, thereby unconstitutionally singling out "a certain class of citizens for disfavored legal status or general hardships."
Much of AB 5's text consists of "a list of exemptions that carve out of the statutory scope dozens of occupations, including direct salespeople, travel agents, grant writers, construction truck drivers, commercial fisherman, and many more," notes the lawsuit. "There is no rhyme or reason to these nonsensical exemptions, and some are so ill-defined or entirely undefined that it is impossible to discern what they include or exclude. For example, some types of workers are excluded (e.g., a delivery truck driver delivering milk) while others performing substantively identical work are not excluded (e.g., a delivery truck driver delivering juice)."
While the new restrictions do not apply to "professional service providers…[such as] fine artist services," the law does not define "fine artist services."
And while someone choosing to work as an independent salesperson for the likes of Tupperware, Mary Kay, or any of their more modern offshoots is OK, someone choosing to deliver such products would have to be classified as a full-time employee or else the person who hired them could face criminal penalties.
Lawyers for Uber and Postmates say AB 5 violates the Ninth Amendment, the protection and due process clauses of the 14th Amendment, and the Contracts Clause in Article I of the U.S. Constitution, along with a number of provisions of California's state constitution. You can read the whole thing here.
Clearly, AB5 was "designed to target and stifle workers and companies in the on-demand economy," the complaint concludes.
From a common-sense perspective, this all seems pretty spot on. But the lawsuit's legal merits might be lacking, according to Blackman. For one thing, the suit argues that a strict scrutiny standard must be applied to judging the law's constitutionality, rather than simply a rational basis or intermediate scrutiny standard.
"To pass the rational basis test, the statute or ordinance must have a legitimate state interest, and there must be a rational connection between the statute's/ordinance's means and goals," explains the Legal Information Institute. "The intermediate scrutiny test and the strict scrutiny test are considered more stringent than the rational basis test. The rational basis test is generally used when in cases where no fundamental rights or suspect classifications are at issue."
Uber and Postmates argue that with AB5, a rational basis test is too weak, since the law burdens people's "fundamental rights…to pursue their chosen profession and determine when and how they earn a living."
Writes Blackman: "I'm not sure there is a single vote on the Supreme Court for this position. I don't think even Justice [Neil] Gorsuch would review economic regulations with strict scrutiny."
Argue Uber et al.: "The right to work on one's own terms—as an independent service provider, rather than an employee—is one of those fundamental rights" that may not be expressly laid out in a constitutional amendment but which the Founding Fathers still intended to protect, as evidenced by the Ninth Amendment.
But the Ninth Amendment "doesn't limit state action," notes Blackman. Meanwhile, "the complaint makes no reference of the Fourteenth Amendment's Privileges or Immunities Clause, which would be the proper constitutional vehicle to raise this sort of claim."