Sharing Economy

Federal Judge Refuses To Grant Injunction Against California's Gig Economy Law, But Acknowledges 'Likelihood of Irreparable Harm'

Assembly Bill 5 forces many companies to reclassify contractors as employees.

|

A federal judge this week declined to grant Uber and Postmates an injunction against Assembly Bill 5 (A.B. 5), the gig-economy law in California that is forcing many companies to reclassify their contractors as employees. 

Judge Dolly M. Gee of the U.S. District Court for the Central District of California wrote that "the balance of equities and the public interest" favor enforcing the law, although she conceded that the two companies will likely experience some "irreparable harm" as a result. 

Many gig-economy companies and independent contractors are suffering across the state of California in the wake of A.B. 5 taking effect on January 1.

Filed in response to the ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, A.B. 5 imposes a much broader standard in determining if workers are contractors or employees. To pass the "ABC test," a contractor must A) control his or her own workload, B) perform tasks that are not crucial to the company's main scope of operations, and C) be "customarily engaged" in the work.

The legislation sent a slew of industries into disarray at the start of the year. Employees in California are entitled to benefits not offered to contractors, such as a minimum wage, health insurance, paid time off, and reimbursement for expenses. Experts estimate that ridesharing companies should expect to see a 20-30 percent increase in labor costs.

As a result, those companies have prepared to make major changes that will hurt the very people the law was supposed to help. Workers will first lose the flexibility that has come to define gig-economy work, as businesses have said they will need to start scheduling workers in tight shifts. And a multitude of operators will be laid off entirely. Under a 40-hour workweek, Lyft expects to kick 300,673 drivers to the curb if it experiences the more modest 20 percent increase in expenses, according to a Beacon Economics LLC study commissioned by the ridesharing company. 

As it currently stands, gig-economy businesses present some of the lowest barriers to entry, providing opportunities to lower-skilled, vulnerable populations. Lyft, for instance, merely requires that would-be drivers meet regional age standards, pass a background check, and have insurance, a license, and a decent four-door vehicle. The new regulations, however, would render ridesharing a more exclusive profession, forcing out workers who may otherwise struggle to find a well-paying gig. (As I've previously reported, 90 percent of app-based drivers in Manhattan are immigrants.)

Uber and Postmates said they will consider appealing the decision. (The rejected injunction has no bearing on the companies' lawsuit against the state of California, which is still moving forward.) In a statement, Uber characterized A.B. 5 as "biased and overtly political," a reference to the many exemptions granted to various industries under the legislation.

The law's first iteration excluded doctors, hairstylists, real estate agents, lawyers, accountants, insurance agents, dentists, and others from having to comply. And the list keeps growing. Assemblywoman Lorena Gonzalez (D–San Diego), the architect of A.B. 5, announced last week she would move to consider exempting freelance content creators and photographers, who are currently prohibited from completing more than 35 individual assignments for a single company without being hired as an employee. 

Journalists, translators, transcribers, digital marketers, and others vigorously pushed back against that restriction, with many claiming that they had lost thousands of dollars in contracts and that the legislation had decimated their livelihoods. The Pacific Legal Foundation also filed a lawsuit on behalf of the American Society of Journalists and Authors and the National Press Photographers Association, alleging First Amendment violations.

"Companies can simply blacklist California writers and work with writers in other states, and that's exactly what's happening," Alisha Grauso, an entertainment writer and the co-leader of California Freelance Writers United (CAFWU), told Reason in December. "I don't blame them."

Perhaps most notoriously, Vox Media, who originally called A.B. 5 "a victory for workers everywhere," severed ties with around 200 of its California freelancers who wrote for its sports site, SB Nation. They instead replaced those freelance positions with 20 part- and full-time positions.  

The law's 35-piece-per-year publication cap "makes it impossible for us to continue with our current California team site," wrote SB Nation's John Ness in a statement.

A.B. 5 and its freelancer ramifications briefly united progressives and more fiscally conservative types, and Gonzalez became somewhat well-known for her combative Twitter exchanges with those negatively impacted by the legislation. "[Freelancers] shouldn't fucking have to [work 2-3 jobs]," the assemblywoman told a detractor in December. "And until you or anyone else that wants to bitch about A.B. 5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous."

But in other exchanges, Gonzalez iterated a desire to hear out her constituents and get the law right. "Based on dozens of meetings with freelance journalists & photographers," she tweeted last week, "we have submitted language to legislative counsel that we hope to have available next week to put into AB1850 which will cut out the 35 submission cap & instead more clearly define freelancer journalism."

The moment was a major victory for a subset of workers whose livelihoods depend on their ability to set their own schedules and spread their work across many different businesses. In another similarly encouraging turn, a Los Angeles Superior Court judge ruled last month that truckers must also be exempt from the legislation, writing that A.B. 5 "clearly run[s] afoul" of federal law pertaining to interstate commerce.

Uber and Postmates—along with the other gig-economy titans like Lyft and DoorDash—haven't yet been so lucky, though the law does brush up against separate decisions filed by the Department of Labor and the National Labor Relations Board. Both agencies ruled that gig-economy workers are indeed contractors, noting in particular that those workers may log on whenever they please and contract for competing companies. It is not uncommon, for example, to drive for both Uber and Lyft.

Should the courts not grant them a reprieve, those businesses are hoping that a November ballot measure may exempt them from the legislation. Though A.B. 5 did not exclusively zero in on the gig-economy behemoths, they were arguably the primary target, and a successful effort to exclude them from the law would be a large step toward rendering it moot.

Advertisement

NEXT: Trump Will Raid Pentagon's War on Terror Slush Fund To Build His Border Wall

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. As I’ve previously reported, 90 percent of app-based drivers in Manhattan are immigrants.

    Hey! If we didn’t let “those people” cross the border to leech off of government programs, what did we do it for?

    /prog

    1. Not all immigrants come for the welfare that is handed out so readily. And yes most immigrants are hard workers and will work at jobs the US citizens will not do. It is not the immigrants who came to work but those who come who cannot or will not work are the problem. Be sides there rules that control who can and cannot come into the nation. If the immigrant comes in legally the more power to him/her but if he comes in by another route then send him/her back to where they come from.
      If you don’t like the immigration law then change by getting congress to vote for another law but then enforce that one!

      1. Learn to recognize sarcasm (not to mention my obvious impersonation of the prog mentality), you magnificent specimen of masculinity.

  2. “[Freelancers] shouldn’t fucking have to [work 2-3 jobs],” the assemblywoman told a detractor in December. “And until you or anyone else that wants to bitch about A.B. 5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous.”

    Translation – “Get back to your shanties, you unwashed peasants!”

    1. Not surprising they would like this outcome. A few large companies with employees who have no other choice are much easier to control than a decentralized economy.

      1. That strategy is more widespread than most realize…

    2. And until you or anyone else that wants to bitch about A.B. 5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous.

      Easy enough. Permanently disenfranchise any Californian who is currently a registered Democrat. That’ll curb the chaos that is current California state and local government right quick. And because of the 14th Amendment, the disenfranchised will reduce the number of seats the Californians get in the House and electors they get for President, too.

  3. “We’re doing what’s best for you whether you like it or not. So, STFU and get with the program!”

    1. Sounds a lot like government-mandated health insurance.

    2. “You cannot be allowed to make choices that we would reject.”

    3. “This is a free society, so shut up and do what we say!!!!”

    4. Sounds like an employer

      1. Sounds like a lefty fucking ignoramus. Oh, it IS a lefty fucking ignoramus!

  4. “”Should the courts not grant them a reprieve, those companies are hoping that a November ballot measure may exempt them from the legislation.””

    Wasn’t gay marriage shot down via ballot measure only to be overridden by the courts?

    1. I like how the favored companies are merely asking for exemptions. This increasing barrier to entry to help them.

      1. No body is forcing gig-workers to take the gig-job, it is a choice of the person taking it. The gig-work does help a lot of people who want to earn a little money. But now these companies will no longer have as many gig-jobs.

        1. The gig-work does help a lot of people who want to earn a little money. But now these companies will no longer have as many gig-jobs.

          Which will have what effect on those gig workers? More opportunities or less? More income or less? More freedom or less?

          And why should gig work be limited to “a little” money?

          1. Well, it doesn’t seem to have worked out very well for the 200 gig workers that Vox Media fired.

          2. This was bound to happen. You could see this coming a mile away. When Uber/Lyft started it was the driving equivalent of a teenage girl babysitting for the neighbors so they could go out to a swinger party. The girl had zero intentions of making that a full-time job.

            It was only a matter of time before people viewed Uber/Lyft as their full-time job and then start complaining that it wasn’t supporting them. It started off with the insurance is too expensive, then the income wasn’t enough, and before long it was going to go bust. Uber/Lyft aren’t really profitable IIRC. Their business goal is to go into debt in order to shut down the cab companies and then raise prices. It’s taking longer than expected and the law is stepping in before the job is done.

            People pay a fortune to drive a legit cab. Cabs are often shared. They then work their asses off to pay off the debt and provide for their families. Uber/Lyft comes along, bypasses all of that, sticks a middle finger to the regulations, and then cry when the government steps in. I don’t care if you like the government or not, but common sense dictates that this is the end result. It always is.

            Like AirBNB. Let’s create a company that advertises independent hotel rooms that don’t have to adhere to the ADA, fire safety codes, health department, etc and then cry when the government steps in.

            What the fuck did they think was going to happen? What kind of lawyer did they hire? I’m sure he told them about this and they just ignored it. AirBNB is fine though. It’s those renting the rooms that are going to have to adhere. AirBNB only has to worry when CDA 230 gets fucked with.

            Picture renting a spare room, someone rents it, never spends the night, and you get fined 50K for your toilet not being high enough and that power strip behind the TV that is connected to an extension cord.

            1. “it was the driving equivalent of a teenage girl babysitting for the neighbors so they could go out to a swinger party”

              Go on…………..

              1. Government really needs to crackdown on these unlicensed teenage babysitters!

  5. They should have just exempted everybody but Uber and Lyft.
    That is all the cab companies wanted.

    1. Your right, Longto. I never understood the logic of Uber/Lyft app users being employees, yet traditional taxi drivers remain private contractors.

      1. In a place like NYC I heard that the ability to drive a cab can cost about 1 million bucks. That’s just what is paid to be able to do the job. That means prices go up and someone is definitely making money off of that.

        Uber/Lyft come in and ruin that. Being a “cab” driver before required you to spend money. Now it doesn’t, but because Uber/Lyft technically aren’t cabs.

        People didn’t like this so this was bound to happen. Surprised it took this long.

      2. Actually, uber/lyft drivers are app CUSTOMERS. They certainly don’t have any control over the cut they get, which is random and based on the integral rewards model, like casinos or say, narcissists use to addict/control their targets. 3/4 uber drivers lose money because they’re unwittingly wearing out their vehicle without due compensation for repairs. As soon as they figure it out it replaced my two other idiots. The difference between Cavs and Rideshare comes down to who owns the vehicle and who Is in charge of how much money it costs and/or is distributed. I’ve driven for both, and I can tell you from experience that rideshare Is a digital Plantation.

        1. Love my autocorrect, by the way.

    2. This. The original bill exempted mostly white collar professions backed up by professional organizations that could fight back. Trucking was not exempted but won in both federal and state courts because CA can’t regulate interstate commerce. Now this bitch is willing to exempt pretty much anybody who her union bosses can’t possibly force into their racket.

      1. I think that the entire point of this was that simply saying “Uber and Lyft” in the bill would not have passed constitutional muster.

        So they exempted everyone they could think of.

        And then they found out they forgot about writers. Apparently the writers did too.

        But that points toward this law eventually being stricken. If they just exempt everyone who complains who isn’t a cab company competitor, that kinda takes off the mask.

  6. “To pass the “ABC test,” a contractor must A) control his or her own workload, B) perform tasks that are not crucial to the company’s main scope of operations, and C) be “customarily engaged” in the work.”

    The hilarious part, of course, is that companies like Uber do pass this test. Drivers control their own workload. The company’s main scope of operations isn’t being a taxi service, but is instead running an algorithm which connects drivers to passengers. (ie, Uber is a software company. None of their actual employees drive people around, and none of their contract drivers do any coding for them.) And it’s not clear to me that simply by contracting with companies like uber and lyft, drivers aren’t customarily engaged in the business. Certainly the drivers that contract with both are.

    Worst case, Uber and Lyft simply need to slightly change their model to being fee-based system where they charge drivers for the ‘connection’ and for handling the monetary transaction. That would make drivers fully independent businesses using a 3rd party business service. (No one would argue restaurants permitting use of credit cards, which requires using 3rd party services, are somehow employed by or contract workers of credit card companies).

    1. I noticed this too, so I don’t understand their problem. Have Uber and Lyft been misled into thinking AB 5 affects their operation? Is any business other than freelance writing affected? And I don’t see why even publishing businesses think they’re affected, when freelancer writers can simply syndicate their content and license it to them.

  7. Judge Dolly M. Gee of the U.S. District Court for the Central District of California wrote that “the balance of equities and the public interest” favor enforcing the law…

    What public interest is there in agreements made between private parties that necessitates prohibiting them?

    although she conceded that the two companies will likely experience some “irreparable harm” as a result.

    As long as Dolly’s eggs aren’t getting used to make that omelet, it’s all good. Right?

    1. According to the order, Dolly M. Gee does not think the plaintiffs will win the case, and does not think the case is particularly close, which is why the likelihood of irreparable harm isn’t that big of a deal because the harm is coming sooner or later. If that’s her understanding of the case, Dolly made the right decision in denying the injunction.

    2. Now, now…
      You’re assuming that Dolly has eggs not sausage!

  8. Journalists, translators, transcribers, digital marketers, and others vigorously pushed back against that restriction, with many claiming that they had lost thousands of dollars in contracts and that the legislation had decimated their livelihoods.

    …after initially cheering it on…

    But you noted that below so kudos to Reason.

  9. Not to worry, California gig workers! We’re working diligently on carve-outs to accommodate special interests effected by my stupid law. Click [here] to donate to my reelection campaign and your request will be answered in order of donation amount.

    1. Anyone writing a positive story about me gets an exemption! Submit your positive mentions now!

    2. Those who actually pay a wage are exempt, slavers should raise what they pay.

      1. Sounds like a lefty fucking ignoramus. Oh, it IS a lefty fucking ignoramus!

  10. But in other exchanges, Gonzalez iterated a desire to hear out her constituents and get the law right. “Based on dozens of meetings with freelance journalists & photographers,” she tweeted last week, “we have submitted language to legislative counsel that we hope to have available next week to put into AB1850 which will cut out the 35 submission cap & instead more clearly define freelancer journalism.

    Her constituency indeed. Too bad she wants to shield the people who buy ink by the barrel while fucking over everyone else. Fuck that bitch.

  11. The new regulations, however, would render ridesharing a more exclusive profession, forcing out workers who may otherwise struggle to find a well-paying gig. (As I’ve previously reported, 90 percent of app-based drivers in Manhattan are immigrants.)

    That’s because we don’t care about immigrants. We only care about immigration. There’s a subtle but critical difference.

    1. And it’s important for de cleats to keep immigrants on the dole. It ensures compliance at the ballot box.

  12. Google paid for every week online work from home 8000 to 10000 dollars.i have received first month $24961 and $35274 in my last month paycheck from Google and i work 3 to 5 hours a day in my spare time easily from home. It’s really user friendly and I’m just so happy that I found out about it..go to this site for more details…

    So I started

    ………………………….. Read more

    1. Clearly you’re not a contractor. Google will have to hire you for 40 hours per week, or lay you off, for your own good.

  13. I know which party probably 95% of these gig workers, especially freelance writers, vote for. You elected these clowns, now you’re getting it good and hard “for your own good”. Enjoy!

  14. Do you know who else believed they suffered irreparable harm from not being able to do uber things?

  15. I have first time heard about such a case and hope the judge does good justice in the case. Can you please ping me if a new post comes in this matter on- https://gooff.info/

  16. Make $6,000-$8,000 A Month Online With No Prior Experience Or Skills Required. Be Your Own Boss And for more info visit any tab this site Thanks a lot…….Read MoRe

  17. “The peasants are revolting”

    “And they stink too!” – Lorena Gonzalez

  18. I make a big amount online work . How ??? Just u can done also with this site and u can do it Easily 2 step one is open link next is Click on Tech so u can done Easily now u can do it also here..>>> Click it here  

  19. Take away freedom of choice. That’s what the poorly named philosophy of “liberalism” is all about.

  20. “…although she conceded that the two companies will likely experience some “irreparable harm” as a result.”

    Hey, for the California Progressives, that’s a feature, not a bug.

  21. I could but shake my head throughout this.

    What a bunch of remedial, disingenuous assholes at Vox.

    “…And the list keeps growing. Assemblywoman Lorena Gonzalez (D–San Diego), the architect of A.B. 5, announced last week she would move to consider exempting freelance content creators and photographers, who are currently prohibited from completing more than 35 individual assignments for a single company without being hired as an employee. ”

    And so the exemptions begin. A sign they lost the plot. Like how everyone supported Obamacare and when they finally read what was in it when passed, they asked for an exemption. Cui bono?

    A.B. 5 and its freelancer ramifications briefly united progressives and more fiscally conservative types, and Gonzalez became somewhat well-known for her combative Twitter exchanges with those negatively impacted by the legislation. “[Freelancers] shouldn’t fucking have to [work 2-3 jobs],” the assemblywoman told a detractor in December. “And until you or anyone else that wants to bitch about A.B. 5 puts out cognizant policy proposals to curb this chaos, you can keep your criticism anonymous.”

    Gonzalez is a dimwitted, arrogant twat. She screams petulant elitist from her vagina.

    “But in other exchanges, Gonzalez iterated a desire to hear out her constituents and get the law right.”

    The only ‘right’ answer was to have not stuck her nose in something like this.

    But keep voting Democrat California.

  22. “…But in other exchanges, Gonzalez iterated a desire to hear out her constituents and get the law right…”

    Rather than admit the law is a piece of shit, she’ll carve out exemptions for favored classes and now, you’ll need a lawyer to figure out if you qualify.
    BTW, I’m told by lefties that regulations do not add to the cost of doing business.

    1. “…. the law would exempt contractor-heavy sectors including beauty salons, law firms, doctors’ offices and real estate offices.”

      If this is not an example of a trash human being directly denying a person’s right to the pursuit of happiness I don’t know what is.

      https://www.cbsnews.com/news/california-ab5-will-affect-much-more-than-uber/

  23. “To pass the “ABC test,” a contractor must A) control his or her own workload, B) perform tasks that are not crucial to the company’s main scope of operations, and C) be “customarily engaged” in the work.”

    I just wanted to congratulate California for killing itself economically. Most employers today hire temps, even for important roles, because it is more economical. I also want to congratulate the Commiefornians on killing any future employment opportunities for their many college graduates. Many entry level jobs today start as temporary positions. Had I lived in California, I never would have gotten the job I have today because I wouldn’t have that temp role to get my foot in the door.

    In addition to congratulating them, fuck off slavers!

    1. Temps are employees. AB 5 doesn’t affect temping, only independent contractors.

  24. California may have the worse, roads, schools and severely in debt CalPERS, but at least we have the highest taxes and tell people they cannot work at gig jobs.

    The Progressive state where politicians know more than you know.

  25. Single Mom With 4 Kids Lost Her Job But Was Able To Stay On Top By Banking Continuously $1500 Per Week With An Online Work She Found Over The Internet… Check The Details….. Click it here  

  26. AB-5 = Shut down the competition (i.e. free-market)! The government HATES it when the people competes with them!!!

    Contractors are just Competitors to Gov-Named and Endorsed “Employee-Membership” card.

    Where the almighty government has written a contractual agreement for you (40hrs, min wage, o.t., etc.. etc.. etc..). The government has asserted themselves “by GUN-POINT” to be the Workers Union and all be darn — HOW DARE anyone work anywhere without joining the Gov Workers Union. We’ll use our guns and come after you if you try!

    1. Point being — This is just more of the well established dictation circling of socialism/communism. A bill requiring “More Dictation Needed” to cover-up the “Socialistic Empire”.

      This byte of individual freedom wouldn’t be necessary AT-ALL without the ton’s of socialistic predecessor laws surrounding the “Employee” membership subscription.

    2. Here in Quebec, I wanted to hire educators on a contract basis. There are plenty of qualified workers who prefer that route as would I.

      But I’m not allowed.

      Here’s the kicker. The ministry that regulates my industry is allowed to hire on a contract basis to….get this….save money.

  27. I wonder if Colorado Democrats will follow their California comrades. Colorado Democrats have strong control of government largely thanks to suburban women voters. Colorado Democrats have followed their California comrades on many issues so I see a Colorado storm brewing.

    However, the Colorado government organizations use lots of contract workers who should be classified as employees under current Colorado and federal law. My girl friend works as an interpreter for public defenders. She always uses government offices (public defenders office and local jails). The public defenders essentially schedule her time. Now she works every Tuesday morning (sometimes into the afternoon) and Thursday (afternoon and sometimes in the morning). She is paid a rate that has not been adjusted for 10+ years. The state sets difficult (and unnecessary) requirements about upgrading to a higher contract rate. She is a high demand interpreter, yet she cannot negotiate her contract rate with state government.

  28. Make $6,000-$8,000 A Month Online With No Prior Experience Or Skills Required. Be Your Own Boss And for more info visit any tab this site Thanks a lot…Start here>→→ Click it here  

  29. Part of me thinks the whole point is to get an exemption, that way your entire income is based on the whims of the politicians in power. Some people value freedom more than security. But here comes mommy government telling those idiots what’s good for them. As if the need for the cash Uber provides will also evaporate along with the job.

  30. I earned $6000 last month by working online just for 5 to 8 hours on my laptop and this was so easy that i myself could not believe before working on this site. If You too want to earn such a big money then come and join us===►► Click it here  

  31. Make an appointment today for our 24 hour mobile mechanic los angeles. It’s quick and easy – just click on contact us page and let us know the best day and time for us to come to you!

    mobile mechanics los angeles

  32. I recently read an email by my representative that the Federal government is attempting to copy this AB5 with a bill called the ProAct. This has already passed both House and Senate! Trump won’t sign it obviously, but I’m curious to see how the leftist media is going to spin it.

    1. It passed the House but was shot down in the Senate. It had a huge number of other Union handouts as well.

Please to post comments