Employment

California Law Unconstitutionally Discriminates Against Certain Workers, Argue Uber and Postmates

Gig workers and companies are suing over a California law, AB 5, that criminalizes their continued employment.

|

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."

NEXT: U.S. Military Retaliation Against Iran Looms After Attack on U.S. Embassy in Baghdad

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. The only reason there is such a thing as a “gig economy” is places like California have made it virtually impossible to hire full time employees. These people freelance as a work around to the system the state already created. California has given “employees” so many rights, that employers have just stopped hiring their employees and instead call them “contractors”.

    I actually sympathize with the state here in a very odd way. These sorts of arrangements exist entirely for the purpose of avoiding California employment law. I don’t agree with California employment laws but I can’t really blame the state for trying to enforce its own laws.

    I also find the people affected by these laws to be very unsympathetic. I have yet to hear one of them object to the California employment laws that are fucking over employers and people who can’t get a gig economy work around. They just want their work around to the law. Yeah, well fuck them. If they want these laws, and I would bet dollars to doughnuts that the vast majority of them think employment laws like those in California that guarantee a gazillion benefits are great, then they should have to live with them and not be granted a special exemption from them.

    1. I don’t think so.

      The gig economy existed for millennia, way before scheduled 9 to 5 “regular” jobs. Show up at harvest time to pick my fruit? I might pay by the bushel for a few days work. Need your fence repaired? I will offer a set price.

      Progressives in California are just scoring political points by signaling worker solidarity, at least as they see it.

      1. Sure, there has always been contractors. The difference is that when the labor laws made hiring someone assuming a lot of risk of liability and made it harder to fire people, employers just made positions that once were employees into contractors to avoid the law. And that more than anything has given rise to the “gig economy” as opposed to the contractor economy that has always existed.

        1. And that more than anything has given rise to the “gig economy” as opposed to the contractor economy that has always existed.

          Sorry, without statistics to back this up, I call BS. It’s the ease of making instant and secure connections between buyer and seller that has arisen with smart phones and apps that make these arrangements more feasible than in the past. They have exploded in the past decade or so, while CA labor laws have been shit for 40+ years.

          1. Why would you hire a short term contractor to do something that you needed done all of the time? It is one thing if you just need the service once. But, if you need to fill a position, you want to keep a good person if you get them.

            The rise of smart phones has just enabled this dodge of the labor laws to work. It doesn’t mean the labor laws are not responsible for the rise. It just means that the smart phones allowed businesses to easily hire people this way and thus gave them a way to avoid the labor laws where they did not before.

            1. Because some employers don’t necessarily want to dictate when the work gets done or how much work any particular individual needs to contribute. It’s all about who has control and who has discretion.

              As a contractor, you retain a substantial amount of control over your contributions.

              The gig economy has further expanded opportunities. But it hasn’t changed the essence of control over day-to-day job execution that a contractor has vs. an employee.

              1. That comes at the price of security. For some people that is fine. For others not so much. Sometimes the gig economy is great. Sometimes it sucks and is just a poor substitute for a full time job.

                1. So, preference? Anyone who wants a full time job with benefits is free to chase one. But they don’t get to prohibit gig work in some area or field because they don’t want the competition–and thereby deny the preferences of others.

                2. It’s not the job of government to provide you with the kind of job you like.

                3. Yeah, so let people decide for themselves.

      2. Agreed. Piecework and day labor have been around a long time. Only recently were they renamed as the gig economy.

    2. The funniest part of all this is that a huge portion of these now jobless workers are journalists.

      Journalists that probably supported all the measures that made it unaffordable to hire them as full time employees in the first place. I bet you some of these people even wrote about how Uber and Lyft are so terrible for the adults that choose to contract with them. These people truly are the flunkies of the world. Their job is to interpret the world around them and write about it for other people, but they only ever get a surface-level understanding of whats happening. They leave damage and destruction in their wake from the fallout of their half truths and misunderstandings, while productive people have to pick up the pieces.

      I have a lot of sympathy for some of the contractors that got screwed in Cali. I have absolutely no sympathy for the Cali journalists. What a bunch of idiots. I hope none of them ever find work in public writing ever again.

      1. That may be true, but we should not be basing our economic policies on schadenfreude. This new law is BAD objectively, regardless of who did or did not support it and how hard their butt now hurts.

        1. Lets get rid of all the bad economic policies. Why just this one? This just allows a small group of people to avoid them. No, apply those laws to everyone and then they will want them repealed. Letting select groups have an out just makes the laws less painful and less likely to be repealed.

        2. I totally agree, Brandybuck, but I spend most of my time in misery over our disastrous economic policies. Let me have my moment of enjoyment in watching these fools reap what they sow.

          I also want to note that no where in my post did I say I support this stupid legislation. In fact, I think it was rather clear from my post that I think this legislation is extremely stupid.

      2. No need to worry for the out of work “journalists”.

        Joe Malarkey says it takes no more than 15 weeks to #LearnToCode.

    3. One must note that California workers are beginning to see and dare to say that regulation are a burden and not a benefit.

      One step at a time, and liberty and rationality may return to the once golden state.

    4. > The only reason there is such a thing as a “gig economy” is places like California have made it virtually impossible to hire full time employees.

      No, it’s more than that. Uber isn’t here because of California. It’s here because people have cars and free time. So they can earn some extra bucks on the side. Publications don’t need full time journalists who only write ten stories a year. Freelancers aren’t a new thing, freelancers have been around for centuries.

      I’m sorry that doesn’t fit your world view, but no matter how horrible you think California is, the universe simply does not revolve around it.

      1. There has always been freelancers and there has always been people who got around the taxi monopoly. But that is just one part of the “gig economy”. The majority of the gig economy is jobs that once were full time that are now contractor jobs because government regulation has made hiring full time employees very expensive.

        I am sorry there is more to this than uber and journalists. But sometimes the world is like that.

    5. These sorts of arrangements exist entirely for the purpose of avoiding California employment law.

      So they exist entirely – and have for several years – for the purpose of avoiding laws that don’t come into effect until tomorrow? These arrangements were entirely legal until tomorrow and didn’t come into being just to work around some law. I was self-employed for much of my career and my choice to do it had nothing to do with labor law: It had to do with how I chose to work for multiple clients where I was never their employee.

      If you were talking about long-term “temps” who have worked for three years for a company through a Kelley Services, I would agree, but Uber drivers, freelance translators and writers, interpreters, specialist contractors and the sort weren’t doing it to cut around the law and, until California decided to muck about, nobody considered them employees. But California is beholden to Big Labor, and the unions definitely want these folks to be considered employees.

      So, no, zero sympathy for California lawmakers, who themselves show zero sympathy for the actual wishes of the people they are there to “help,” even if their help is a hard kick in the butt downhill.

      1. The laws are designed to go after the long term temps. The UBer and journalists are just collateral damage. Like the person above, you think this is about uber and journalists. It is not. It is about the temp services and other gigs that make up the vast majority of the “gig economy”.

        1. Considering the legislators made it clear they had Uber in their crosshairs when they created these laws, what makes you think it isn’t about Uber and journalists?

          The legislators behind it specifically addressed freelancers who complained about it by telling them that their jobs suck and they should be grateful for the law (not in exactly those words, but translated from “politician” to English).

          If they specifically were aware of these problems and told the people that they were experiencing the intended effects of the law, I’m going to take them at face value in what they themselves said.

    6. Respectfully disagree. I have a very good full time job, but occasionally like to supplement that with driving for Uber. I’m not trying to avoid any labor laws, I simply like having the opportunity to earn a few extra dollars 100% on my time. Its a simple, incredibly convenient way to earn an extra night out with the family. California would like to take that away from me, somehow for my benefit.

  2. I wonder if these plaintiffs vote Democrat. Year after year.

    1. If even 10% are not lifetime Democrats, I would be surprised.

  3. So what has the US Constitution got to do with CA laws anymore?
    Probably 30% of their laws violate the US constitution.
    Secede already!

  4. How ungrateful they are for the help of the important people in the political class.

  5. That moment when your state goes so far left it actually criminalizes work.

    Democrats went from railing against warmongers to screaming bloody murder when we pull troops out of war zones.

    Democrats went from championing the poor working classes to literally making them criminals if they work.

    Democrats went from protecting blue collar jobs to telling those same workers to “learn to code”.

    Can we officially say that the Democrat/Progressive party is a party of the rich and powerful now?

    1. The Democrats have been making poor people who work criminals for a long time. What do you think minimum wage laws are? The entire point is to make it hard for poor people to work and improve themselves so that they are more dependent on the government and more likely to vote Democrat.

      1. Minimum wage laws make employers criminals, not poor people.

        Just sayin’.

        1. The point wasn’t to make anyone criminals, the point was to make it impossible for low-skilled (poor) people to get jobs, by setting a minimum wage higher than the value of their labor

  6. 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.

    On the plus side, if his son’s team plays more than 10 games, the players are entitled to MLB’s league minumum.

  7. Uber should be unconstitutional. They only exist because they skirt around the law.

    1. You’re a parody account, right?

      1. It’s Hihn.

  8. States should be able to screw themselves any way they want.

  9. Good luck arguing that the State can’t regulate the economy any way they damn well please in the People’s Republic of CA.

    How you liking all them imported Big Government voters now?

    Much of CA doesn’t deserve this. But Reason? They should be *required* to live in the Open Borders Utopia they’re doing their best to impose on all America.

  10. So if Postmates delivers me something in, say, San Diego, that’s one less chance for the local pigs to stop, search, humiliate, beat, ticket, fine, rob and shoot me, right? You can see how this would really bother them and the politicians giving them their marching orders.

  11. 90 years ago when the country was considering limiting the enormous power of big business over the individual, things like 40 hour week, weekends off, minimum wage, safe working conditions, were viewed as taking power from the workers, reducing or eliminating their ability to get work. In fact, these reforms took power from business and gave it to workers, taking the foot of big business off the throats of the workers and allowing them to breathe. Unsurprisingly, the employers needed the workers anyway, and had to begin paying the reasonable wages that led to a then-growing (but now-shrinking) middle class. Now, by a semantic game of calling the workers independent contractors, Uber wants to go back 90 years and exempt themselves from fair labor practices. They might get away with that in Arizona, but not in California.

Please to post comments