California

California's 'Landmark' Labor Law Is Still Wreaking Economic Havoc

It's the sign of particularly bad legislation when lawmakers must create dozens of carve-outs and workarounds so that the supposed beneficiaries are exempted from its provisions.

|

Just for old time's sake and because my cellphone battery was about to die, I hailed an airport taxicab during a business trip last week to the East Coast rather than my usual practice of calling for a ride using Uber or Lyft. It was a reminder of how far those gig-based transportation-network services have taken us in just a few years.

I needn't remind you of the general unpleasantness of taxicabs, with their grimy vehicles and old-fashioned credit-card readers—or how much nicer it is to have a friendly driver pick you up in a late-model car, with the ride billed automatically via an app. It's nice, also, that ridesharing reportedly has reduced the incidence of drunken driving.

Yet in California, the same officials who extol the virtues of our tech-based economy like to stamp out any innovation that threatens the established order, including the one that revolutionized urban travel.  They've recently gotten assistance from the courts, after an Alameda County Superior Court judge last month gave new life to a "landmark" labor law that its authors designed to boost drivers' pay.

The well-known legislation, Assembly Bill 5, codified the state Supreme Court's 2018 Dynamex decision, which concocted an "ABC Test" to determine when companies could use independent contractors rather than permanent employees. Essentially, the high court determined that they could only use such workers in some narrowly tailored circumstances.

The decision and follow-up legislation threatened hundreds of thousands of jobs held not only by app-based drivers—but by workers in all types of old-line industries including reporters, barbers, insurance agents, sign-language interpreters, and musicians. Well, the democratic sausage-making process played itself out, however slowly and imperfectly.

The law should have been repealed. Feeling pressure from influential lobbies and then from out-of-work freelancers, the Legislature instead exempted 100 industries from its job-destroying provisions. Its author, Assemblymember Lorena Gonzalez (D–San Diego), sometimes savaged critics on Twitter, but also offered another workaround—e.g., exempting freelancers under a business-to-business exemption.

It's the sign of particularly bad legislation when lawmakers must create dozens of carve-outs and workarounds so that the supposed beneficiaries are exempted from its provisions.  Despite the post-AB 5 blowback, California's Democratic-controlled Legislature wouldn't entirely relent. Voters helped them out by passing Proposition 22 in November, thus adding ride-share drivers to the list of exempted workers.

Unfortunately, the measure's union opponents found a friendly court to challenge the measure and filed a case in one of the state's most left-leaning areas, Alameda County. It's not hard to guess the results. In August, Judge Frank Roesch overturned Prop. 22, even though it passed by an overwhelming 59 percent to 41 percent margin. So much for the People's power when the People don't do the "right" thing.

The union lawsuit challenged some narrow aspects of the initiative, and the judge agreed that the initiative is "unconstitutional because it limits the power of a future legislature to define app-based drivers as workers subject to workers' compensation law." That's a far-reaching conclusion, but one that has union activists and progressives crowing.

The initiative "deprived the workers of benefits such as overtime pay, unemployment and workers' compensation coverage, and the right to unionize. The companies, in other words, used their wealth to reshape labor law in their sole interest," opined The Los Angeles Times' Michael Hiltzik. Actually, the initiative allowed workers and companies to come to their own arrangements. Go figure that lefties don't complain when unions use their wealth to reshape state laws.

The judge found that the initiative improperly restricts the Legislature, which is odd given that the entire initiative process was designed specifically to rein lawmakers' power.  Roesch seemed to ignore decades of case law that give voters the power to make law in this state. If the decision stands, it will not only overturn Proposition 22—but could significantly constrict our direct democracy.

The judge also found that Proposition 22 violated the state's single-subject rule—the requirement that all initiatives deal only with one issue and not include a grab bag of different matters. In Roesch's view, the measure "obliquely and indirectly" limits workers' ability to join a union, which makes it a separate issue from the contractor exemption.

Had the initiative's authors dealt with the secondary subject of collective bargaining, the judge presumably wouldn't have to have searched for any oblique references. In reality, the only aspects of the initiative that deal with collective bargaining do so in the context of driver compensation and working conditions, which happens to be the core subject of the initiative.

No matter. Unions achieved their desired result, whatever the long-term consequences. The initiative's sponsors will appeal the decision. It's the status quo in the meantime, but if the state's Supreme Court justices ultimately agree with the unions, their hubris will do more than destroy these flexible ride-sharing jobs. It could force the rest of us to relearn the art of flagging a taxi in the rain.

This column was first published in The Orange County Register.

NEXT: We Lost Liberty After 9/11—COVID-19 Threatens More of the Same

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. “Wrecking”?

    Do you even edit, bruh?

    1. It’s a sad situation.

      1. Start making money this time… Spend more time with your family & relatives by doing jobs that only require you to have a computer and an internet access and you can have that at your home.GNm Start bringing up to $65,000 to $70,000 a month. I’ve started this job and earn a handsome income and now I am exchanging it with you, so you can do it too.

        Here is I started.…………… VISIT HERE

        1. Seriously I don’t know why more people haven’t tried this, I work two shifts, 2 hours in the day and 2 in the evening…THm And i get surly a check of $12600 what’s awesome is I m working from home so I get more time with my kids.

          Try it, you won’t regret it!……… VISIT HERE

      2. Start making money this time… Spend more time with your family & relatives by doing jobs that only require you to have a computer and an internet access and you can have that at your home. Haa Start bringing up to $65,000 to $70,000 a month. I’ve started this job and earn a handsome income and now I am exchanging it with you, so you can do it too.

        Here is I started.…………… Visit Here

        1. Sarah getting Paid up to $18953 in the week, working on-line at home. I’m full time Student. I shocked when my sister’s told me about her check that was $97k. It’s very easy to do.QEd everybody will get this job. Go to home media tab for additional details……

          So I started……… READ MORE

      3. This year do not worry about money you can start a new Business and do an online job I have started a new Business and I am making over $84, 8254 per month I was started HAf with 25 persons company now I have make a company of 200 peoples you can start a Business with a company of 10 to 50 peoples or join an online job.

        Join this right now…………… Visit Here

    2. I see it’s fixed now.

      1. I take the view (unpopular round these parts) that most Reason articles are pretty well done, but this kind of shit is just embarrassing– particularly because the Reason-bots crossposted it to Facebook immediately with typo intact.

        1. This year do not worry about money you can start a new Business and do an online job I have started a new Business and I am making over $84, 8254 per month I was started with 25 persons company now I have make a company of 200 peoples you can start a Business WDf with a company of 10 to 50 peoples or join an online job.

          Join this right now…………… VISIT HERE

    3. EARN $110 PER DAY BY WORKING ONLY 1 HOUR PER DAY CLICK HERE TO MORE DEATAIL http://WWW.INFO65.COM

  2. When Larry Elder wins in Commifornia, he can begin the process of taking Taxifornia back from the Commie Democrats.

    Of course, Democrats cant let that happen so they wear monkey masks and throw bananas at Larry Elder (first Black American to win CA).

    I wonder if the Commies at unreason will do a story on that “hate crime”

    1. I would love to see that happen. But the 2022 election is just one year away. So if Elder wins, he gets only a year and half before the overwhelming Democrat demographics kick him out.

      Only 46% Democrats in the state, and of them only 65% identify as “liberal”. But when it comes to partisan elections they vote as a solid bloc, just as Republicans do. It’s only on non-partisan races (like the recall) and issues that they split. So this is a one time shot for the Republicans to make a difference. And I doubt they can. You need more than a lone figurehead, you need a full team behind you. The goal for Republicans is to get more Republican voters and more Republican legislators.

      On the bright side, Faulconer is running for governor in 2022, and as a moderate he has half a chance. On the downside, the Republican organization doesn’t like him very much… because he’s a moderate.

  3. > Just for old time’s sake and because my cellphone battery was about to die, I hailed an airport taxicab during a business trip last week to the East Coast rather than my usual practice of calling for a ride using Uber or Lyft. It was a reminder of how far those gig-based transportation-network services have taken us in just a few years.

    ugh, remember the horrible old days when you’d have to hail or call (!!) a cab to come pick you up, instead of using an app, and the driver was somebody with dignity who treated driving passengers to their destination as their main Career, not a “gig”, and so invested in a medallion and submitted to licensure & regulation.

    it’s definitely better to have an exhausted, harried person, this is their 4th job, constantly having to do what some mysterious, unknowable “algorithm” wants them to do, carting you around in their Camry or whatever.

    1. Most Uber drivers I rode with said they drive full time.

      1. And most cab driver’s I’ve ridden with are exhausted and harried from working 18 hours a day to pay for their medallion. I’m guessing The Glibertine Party has never ridden in a cab or an Uber in his life

        1. The Taxi industry was so bad that OPs post reads like an article in the Onion or the Bee or something.

          And not just places like NYC with their million dollar medallions. Even smaller towns there was massive regulatory capture. A friend owned a small cab company a decade back, the large company convinced one of the beach cities to pass a law that required any cab company operating to have … then a list of things that ONLY that one cab company had. Effectively excluding the half dozen smaller companies and all independents from even dropping someone off at the train station.

          Yeah. I know Uber are assholes. But the Taxi industry is a gaping, shitfilled maw in comparison. There’s a reason that initiative passed so handily.

    2. remember the horrible old days when . . . the driver was somebody with dignity who treated driving passengers to their destination as their main Career

      Um . . . no. I do remember when you had to call a cab, it would show up maybe in 45 minutes, and the cab driver would spend the 1/2 driving everywhere in town except where you wanted to go babbling about how much it sucks to be a cab driver and how much he hates people.

  4. Betta check yo’self before you wreak yo’self ????

  5. Unions are on the way out. Even in California unions are rare. The big ones remains are oddly enough, public sector unions for government workers. The Teachers and Prison Guard unions are the two biggest ones that seem to have all the legislators by the short and curlies. And police unions have local governments begging uncle.

    But labor unions? If it’s not a government contract they are nowhere to be seen. Sure they are all over the Bullit Train, but that’s a government contract.

    An this story is about the quasi union known as taxis. (Actually a cartel, but hey, isn’t that what a union is?) Which have government contracts at airports. So it follows the same pattern. For some reason government fears the taxis. Stupid.

    Why do we give so much power to such tiny and otherwise inconsequential groups? Because the unions have the lawyers. To paraphrase Shakespeare, the first thing we do is woodchip all the lawyers.

    1. Not as rare as you might think. If you want to build something in California, you will be hiring union craft labor, or they will shut you down.

      1. Well, they’ll try. Some places they have more success than others.

        When I used to commute I’d drive past the Union Boycott protest all the time. Every new building in the tech area was supposed to be boycotted for… I dunno. Just ‘cuz, ok?

        it was always there. “Shame on (fill in company here)” banner and a dozen people holding it. Maybe after a while the company name after the shame on was changed, but everyone ignored them. Thankfully, if you get out of the Bay Area and downtown LA people don’t give a shit so it was just make-work for a dozen people who got paid to stand on a street corner every day.

  6. If Prop 22 had contained some kind of provision to allow for contract workers to somehow organize and join unions (but only in particular sectors) along with exempting those same workers from AB5, wouldn’t that have violated the “one subject rule” since it’d be establishing changes to two different portions of CA labor laws in one propsition?

    I get that doublethink is a required skill for the modern left, but I’d love to see someone shine a light on the fact that the same unions who got a judge to overturn a ballot initiative are also backing the court challenge claiming that the recall effort is “undemocratic”.

    1. I’d love to see someone shine a light on the fact that the same unions who got a judge to overturn a ballot initiative are also backing the court challenge claiming that the recall effort is “undemocratic”.

      Unions care about their self-interest more than they do ideological consistency?

  7. California is completely screwed up. On what planet would an initiative voted on by the total electorate have LESS authority than the political whims of our the corrupt legislature? It’like the time the judge declared a constitutional amendment ‘unconstitutional.’ How is that even possible? The whole point of an amendment is to change the existing constitution. These wacky judges are out of control.

  8. But labor unions? If it’s not a government contract they are nowhere to be seen.
    Anyone Interested In Watching Hot Indian Web Series For FREE ?

Please to post comments